Cabela's 2012 Annual Report Download - page 33

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23
Our Financial Services segment faces the risk of a complex and changing regulatory and
legal environment.
Our Financial Services segment operates in a heavily regulated industry and is therefore subject to a wide
array of banking and consumer lending laws and regulations. Failure to comply with banking and consumer
lending laws and regulations could result in financial, structural, and operational penalties being imposed. In
addition, as a Visa member bank, WFB must comply with rules and regulations imposed by Visa. For example,
WFB and Cabela’s could be fined by Visa for failing to comply with Visa’s data security standards.
The Dodd-Frank Wall Street Reform and Consumer Protection Act may impact the practices of our
Financial Services segment and could have a material adverse effect on our results of operations.
In July 2010, the Reform Act was signed into law. The Reform Act, as well as other legislative and regulatory
changes, could have a significant impact on us by, for example, requiring the Financial Services segment to change
its business practices, imposing additional costs on the Financial Services segment, limiting fees the Financial
Services segment can charge for services, impacting the value of the Financial Services segment and its assets,
or otherwise adversely affecting the Financial Services segment’s business. A description of the Reform Act and
other legislative and regulatory developments is contained in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations - Developments in Legislation and Regulation.”
As directed by the Reform Act, the United States Government Accountability Office released a report on
January 20, 2012, that examines the potential implications of eliminating certain exceptions under the BHCA,
including the exception for credit card banks. It is unclear whether this report will lead to any additional legislative
or regulatory action. If the credit card bank exception were eliminated or modified, we may be required to divest
our ownership of WFB unless we were willing and able to become a bank holding company under the BHCA. Any
such forced divestiture may materially adversely affect our business and results of operations.
The Reform Act will also affect a number of significant changes relating to asset-backed securities, including
additional oversight and regulation of credit rating agencies and additional reporting and disclosure requirements.
In addition, the Reform Act will prohibit issuers and payment card networks from placing restrictions on vendors
relating to credit card transactions, which could affect consumer behavior and the use of credit cards as a form
of payment.
The Reform Act will also likely result in increased scrutiny and oversight of consumer financial services and
products, including credit cards, primarily through the establishment of the Consumer Financial Protection Bureau
(the “Bureau”) within the Federal Reserve. The Bureau has broad rulemaking and enforcement authority over
providers of credit, savings, and payment services and products. The Bureau also has rulemaking and interpretive
authority under existing and future consumer financial services laws and supervisory, examination, and
enforcement authority over institutions subject to its jurisdiction. In 2012, the Bureau, acting in conjunction with
the FDIC and other agencies, announced its first high-profile enforcement actions against credit card issuers for
deceptive marketing and other illegal practices related to the advertising of ancillary products, collection practices
and other matters. By these recent public enforcement actions, the Bureau and the FDIC have signaled a heightened
scrutiny of credit card issuers. We anticipate increased activity by regulators in pursuing consumer protection
claims going forward. State officials are authorized to enforce consumer protection rules issued by the Bureau.
Many provisions of the Reform Act require the adoption of rules to implement. In addition, the Reform
Act mandates multiple studies, which could result in additional legislative or regulatory action. The effect of the
Reform Act and its implementing regulations on the Financial Services segment’s business and operations could
be significant. In addition, we may be required to invest significant management time and resources to address
the various provisions of the Reform Act and the numerous regulations that are required to be issued under it. The
Reform Act, any related legislation, and any implementing regulations could have a material adverse effect on our
business, results of operations, and financial condition.