Cabela's 2012 Annual Report Download - page 46

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The Reform Act imposes a moratorium on the approval of applications for Federal Deposit Insurance
Corporation (“FDIC”) insurance for an industrial bank, credit card bank, or trust bank that is owned by a
commercial firm. Furthermore, the FDIC must, under most circumstances, disapprove any change in control that
would result in direct or indirect control by a commercial firm of a credit card bank, such as WFB. For purposes of
this provision, a company is a “commercial firm” if its consolidated annual gross revenues from activities that are
financial in nature and, if applicable, from the ownership or control of one or more insured depository institutions,
in the aggregate, represent less than 15% of its consolidated annual gross revenues. The Reform Act does not,
however, eliminate the exception from the definition of “bank” under the Bank Holding Company Act of 1956,
as amended (the “BHCA”) for credit card banks, such as WFB. 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 required divestiture may materially adversely
affect our business and results of operations.
The Reform Act established the new independent Consumer Financial Protection Bureau (the “Bureau”)
which has broad rulemaking, supervisory, and enforcement authority over consumer products, including credit
cards. The Bureau has extensive rulemaking authority and enforcement authority, and WFB is subject to the
Bureau’s regulation. While the Bureau will not examine WFB, it will receive information from WFB’s primary
federal regulator. The Bureau is specifically authorized to issue rules identifying as unlawful acts or practices it
defines as “unfair, deceptive or abusive acts” in connection with any transaction with a consumer or in connection
with a consumer financial product or service. It is uncertain what rules will be adopted by the Bureau, how such
rules will be enforced and whether or not such rules will require WFB to modify existing practices or procedures.
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.
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.
The changes resulting from the Reform Act or any rules or regulations adopted by the Bureau may impact our
profitability, require changes to certain of the Financial Services segment’s business practices, impose upon the
Financial Services segment more stringent capital, liquidity, and leverage ratio requirements, increase FDIC
deposit insurance premiums, or otherwise adversely affect the Financial Services segment’s business. These
changes may also require the Financial Services segment to invest significant management attention and resources
to evaluate and make necessary changes.
Several rules and regulations have recently been proposed or adopted that may substantially affect issuers of
asset-backed securities.
The Jumpstart Our Business Startups Act (the “JOBS Act”) was signed into law on April 5, 2012, and will
implement extensive changes to the laws regulating private offerings of securities, including Rule 144A private
offerings such as the private offerings of asset-backed securities of the Cabela’s Master Credit Card Trust and
related entities (collectively referred to as the “Trust”) that WFB sponsors. On August 29, 2012, the SEC issued
proposed regulations to amend Rule 144A to provide that securities may be offered pursuant to Rule 144A by
means of general solicitation or general advertising, including to persons other than qualified institutional buyers,
so long as the issuer reasonably believes that each ultimate purchaser is a qualified institutional buyer. The impact
that the JOBS Act will have on the securitization market and the Financial Services segment is unclear at this time.