Colorado Business Litigation Lawyer Blog

The Department of Homeland Security (DHS) and the Social Security Administration (SSA) have established an electronic system called E-Verify (formerly the Basic Pilot/Employment Eligibility Verification Program) to assist employers further in verifying the employment eligibility of all newly-hired employees. As most businesses with federal contracts know, effective September 8, 2009, compliance with the E-Verify system became mandatory. Executive Order 12989 mandates the electronic verification of all employees working on any federal contract. The amended Executive Order reinforces the policy that the federal government supports a legal workforce. In short, E-verify is mandatory if the prime contract for services or construction is more than $100,000 with a period of performance longer than 120 days. For subcontractors, the value of services or construction must exceed $3,000.

The E-verify system requires that employers run new hires, and existing employees hired after November 6, 1986, through the E-Verify system to determine the person’s eligibility to work in the U.S. E-Verify compares the information on the employees name, Social Security Number, date of birth, citizenship status, and any other non-citizen information provided.

As of October 12, 2009 there has already been close to 400,000 quires run through the system. E-Verify is an essential tool for employers committed to maintaining a legal workforce, and the number of registered employers is growing by over 1,200 per week.

The Colorado Bankers Association (CBA) based in Denver, has boldly begun pushing back against federal overregulation, which many banks feel is the cause of choking of lending.

Don Childears, president and CEO of the CBA, participated in a telephone conference with 15 of his peers is bankers associations in various states concerning the stifling effect of overregulation. As a result, Childears moved forward by sending out various documents to CBA members, as well as public officials in Washington, D.C.

As part of his campaign, Childears has also begun speaking about the issue to newspapers, special district associations and other organizations across the state.

Childears said that a part of the problem is that in the chaos of the last third of 2008, many non-bank lenders, which supplied about 70% of U.S. credit, were eliminated. This reduced the options that many potential borrowers had, forcing them to rely more on bank lending when their creditworthiness is impaired.

Politicians and the public are calling for increased lending. At the same time, regulators are requiring banks to raise capital ratios well above the 10% that traditionally has been considered “well-capitalized.” Banks with high concentrations of commercial real estate (CRE) loans are being asked to raise their levels the most, and to reduce their CRE exposure to 300 % of capital.

Colorado is especially hard hit by capital ratio requirements, because the economy relies heavily upon real estate. The banking industry CRE average is 320% of capital. To get the entire industry down to 300% would mean a substantial reduction statewide of at least $2.4 billion in CRE loans. According to Childears, that would result in a 6% reduction in CRE lending at a time when borrowers are trying to obtain more credit

It is unknown where the present campaign will lead.

[Source: Renee McGaw, “CBA leads effort to east bank regs,” Denver Business Journal, 10/9/09]