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| Upcoming Events |
Model Examination Guidelines User School (Web-based),
February and March sessions open for registration: Developed by
AARMR and CSBS, this school is designed to assist mortgage regulators
and mortgage industry compliance personnel implement the examination
procedures for the Guidance on Nontraditional Mortgage Product Risks
(Guidance) and the Statement on Subprime Mortgage Lending
(Statement).
Problem Bank School (condensed), March 15-16, 2010,
Oklahoma City, OK: This is a two-day customized training covering
examination issues related to troubled institutions.
Residential Mortgage Examiner School, March 22-26, 2010,
Philadelphia, PA: In order to leave adequate time to complete the
pre-residence session assignments, please register for this course no
later than February 8, 2010.
Trust Forum, March 29-31, 2010, Atlanta, GA: This
annual program allows trust examiners to analyze and discuss information
on recent and emerging issues relating to bank trust departments and
trust companies.
Credit Examiner School AND Examiner-in-Charge School, June 7-11, 2010, San Jose,
CA; Register by March 5 for the Credit Examiner School and by March 12
for the Examiner-in-Charge School in order to participate in the
orientation conference calls.
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| February 5, 2010 |
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"Today, there are three kinds
of people: the haves, the have-nots, and the
have-not-paid-for-what-they-haves." - Earl Wilson
This week, the National Foundation for Credit Counseling (NFCC) issued a
press release reporting the results of a poll on how people would react
if they were in debt beyond what they could manage. The online poll had
more than 11,000 responses, and it found that 38 percent would seek help
from a legitimate credit counseling agency while 33 percent would talk
directly to creditors, and five percent said they would file for
bankruptcy. On the other hand, 10 percent said they would ignore their
debt, while 14 percent said they would consider using a debt settlement
company. While we are sympathetic to those who suddenly find themselves
without a job or in financial distress due to other unexpected
circumstances, we agree with the NFCC that ignoring debt is "the worst
possible decision a consumer can make." Going to a debt settlement
company may not be a good option either, as many of these firms charge
fees up front and don't do much else. If we ran a bank, we would make
sure our customer service representatives knew about NFCC and have this
organization bookmarked on their computers. NFCC's vision is to create a
national culture of financial responsibility. Check it out at www.nfcc.org.
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| CSBS: Obama Small
Business Lending Proposal Encouraging; Market Reaction Is
Key |
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President Barack Obama on Tuesday offered more information
about his new initiative to provide $30 billion in funds to smaller
banks that increase their small business lending. The program would be
funded by the Troubled Asset Relief Program (TARP), but would be
separate from it and would require Congressional action. Under the plan,
as participating banks increase lending to small firms compared to 2009
levels, the dividend paid to Treasury on that capital investment would
be reduced. The Administration said this approach would ensure that
lenders have a strong incentive to increase total loans to small
businesses and spur immediate activity by giving them credit for lending
during 2010.
CSBS Executive Vice President John Ryan said he was encouraged by this
major policy shift to get money into the hands of community institutions
that have stuck with small business during this crisis. Ryan noted that
the program demonstrated why regulatory reform must support a diverse
system of regional and community banks that spur local economic growth
and job creation. Banks with less than $1 billion in assets would be
eligible to receive capital investments of up to 5 percent of their
risk-weighted assets, and banks with between $1 billion and $10 billion
in assets would be eligible to receive up to 3 percent of their
risk-weighted assets. The dividend rate for a capital investment
would begin at 5 percent, but could fall to 1 percent if a bank
demonstrated increased small business lending relative to its baseline
set in 2009. The White House issued a fact sheet on the Small Business Lending Fund.
On Friday, the five federal financial regulatory agencies and the
Conference of State Bank Supervisors issued a joint statement in support
of banks engaging in prudent lending to creditworthy small business
borrowers. According to the statement, the regulators are working
with the industry and supervisory staff to ensure that supervisory
policies and actions do not inadvertently curtail the availability of
credit to sound small business borrowers. The statement noted that small
business lending increased slightly at institutions with total assets of
less than $1 billion but declined over 4% at institutions with assets
greater than $100 billion between June 30, 2008 and June 30, 2009. See
statement
Meanwhile, the Obama Administration also released details of a program
to use $1 billion in TARP funds to invest in Community Development
Financial Institutions that target more than 60 percent of their small
business lending and other economic development activities to
underserved communities. Under the program, these CDFIs could receive
capital investments at a dividend rate of 2 percent, compared to the 5
percent rate that was offered under the Capital Purchase Program. More
information about the CDFI proposal may be accessed here
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| State Regulators
Adopt Policy Opposing Refund Anticipation Loans |
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CSBS and the American Council of State Savings Supervisors
(ACSSS) this week released a policy statement opposing high-rate Refund
Anticipation Loans (RALs), loans made against the amount of a consumer's
anticipated income tax refund. These products often include fees to be
paid to the tax preparer and extremely high interest rates for the
financial institution. RALs tend to be targeted to low-income borrowers
who may qualify for the Earned Income Tax Credit (EITC), which is a tax
credit for low-to-moderate income individuals.
North Carolina Commissioner of Banks and CSBS Chairman Joseph A. Smith
Jr. indicated that RALs may no longer serve a public interest.
"Electronic tax filing and direct deposit of income tax refunds in
as short as two weeks have largely made RALs unnecessary," Smith
stated. "For those consumers that consider obtaining a RAL, I
would encourage them to investigate alternatives," Smith
continued. "Many consumers don't realize they can obtain their tax
refund very quickly if they file their return electronically and sign up
to receive their return via direct deposit."
The CSBS-ACSSS Policy Position on High-Rate Refund Anticipation Loans
can be viewed here
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| 'Volcker Rule'
Gets Airing Before Senate Banking Committee |
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Curbing the activities of commercial banks will provide fair
and open competition and protect essential financial services, said
former Federal Reserve Chairman Paul Volcker, who chairs President
Obama's Economic Recovery Advisory Board. Speaking at a hearing before
the Senate Banking Committee, Volcker defended Obama's recent proposal
to prohibit banks - or financial institutions that contain
banks - from owning, investing in, or sponsoring a hedge fund, a
private equity fund, or any proprietary trading operation unrelated to
serving its customers. Volcker said the plans must be viewed within the
overall context of reform and ending the too big to fail problem. He
said there are thousands of hedge funds, private equity funds and other
private institutions that should be allowed to trade, innovate and
invest and to fail. He admitted that there should be a strong
international consensus on this approach particularly among the "few
nations hosting large multi-national banks and active financial
markets." Volcker's oral statement is available
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| Fed Official
Says Policy Makers Should Analyze Past Failures |
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Substantially expanding regulatory oversight of the largest and
most systemically significant financial institutions will not be enough
to prevent another crisis, said Federal Reserve Governor Kevin Warsh.
Speaking to the New York Association for Business Economics, Warsh said
previous public policy failures need to be recognized and
addressed. For example, he said, Fannie Mae and Freddie Mac were
given license and direction to take excessive risks, were given
conflicting missions and governed by competing masters. Warsh also
called on policy makers to focus more on "what constitutes effective
prudential supervision, rather than be diverted to the less
consequential discussion as to who should perform it." He called for a
new resolution authority to include well understood bankruptcy protocols
as much as possible. "A system must be designed so that market
discipline works -- not to the exclusion of regulatory discipline -- but
in support of it," Warsh said. He said such a system will require
more financial disclosures with greater understanding of asset quality
and funding sources; will need to encourage robust competition and avoid
giving select incumbents permanent funding advantages; and will need to
mandate stronger capital and liquidity buffers, more effective boards
and more rigorous risk-management practices. See comments
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| FTC Proposes Ban
On Up-Front Fees |
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The Federal Trade Commission issued a proposal on Thursday to
prevent companies that provide foreclosure rescue and mortgage
modification services from charging up-front fees for these services.
FTC said the rule aims to stop fraudulent companies that charge a fee in
advance for mortgage negotiation work that is never performed. The
proposal generally exempts entities that own or service mortgage loans.
Under the proposal, a covered company could not be paid until it had a
documented offer from a mortgage lender or servicer that lives up to the
promises it made. The proposal would bar providers from telling
consumers to stop communicating with their lenders or mortgage
servicers, and from misleading them about key facts, such as the
likelihood of getting the results they want. The plan also would require
providers to tell consumers that they are for-profit businesses; the
total amount consumers will have to pay; that neither the government nor
the consumers' lenders have approved their services; and that there is
no guarantee that lenders will agree to change their loans. The deadline
for comments is March 29. More information
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| Bank Closings
Continue |
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Regulators closed six banks last Friday, which will cost the
Deposit Insurance Fund an estimated $1.9 billion and brings the total
closings for the year to 15.
First National Bank of Georgia, Marshall Bank, N.A. - The Office of the
Comptroller of the Currency closed two national banks -- First National
Bank of Georgia, Carrollton, Ga., and Marshall Bank, N.A., Hallock,
Minn. FDIC arranged for Community & Southern Bank, Carrollton, Ga.,
to purchase all of the deposits for a premium of 1.25 percent and all of
the assets of First National. First National had about $832.6 million in
assets and $757.9 million in deposits. FDIC arranged for United Valley
Bank, Cavalier, N.D., to purchase all of the deposits for a premium of
7.35 percent and all the assets of Marshall Bank, N.A. Marshall
Bank had around $59.9 million in assets and $54.7 million in
deposits.
Florida Community Bank - The Florida Office of Financial Regulation
closed Florida Community Bank, Immokalee, Fla., and FDIC arranged a
purchase of all the deposits for a premium of 0.4 percent and $499.1
million of the assets by Premier American Bank, National Association,
Miami. Florida Community Bank had approximately $875.5 million in assets
and $795.5 million in deposits.
Community Bank and Trust - The Georgia Department of Banking and Finance
closed Community Bank and Trust, Cornelia, Ga., and FDIC arranged a
purchase by SCBT, N.A., Orangeburg, S.C., for all the deposits and
assets. Community Bank and Trust had about $1.21 billion in assets and
$1.11 billion in deposits.
First Regional Bank - The California Department of Financial
Institutions closed First Regional Bank, Los Angeles, and FDIC arranged
a purchase of all the deposits and $2.17 billion of the assets by
First-Citizens Bank & Trust Co. Raleigh, N.C. First Regional Bank
had around $2.18 billion in assets and $1.87 billion in deposits.
Marine Bank - The Washington Department of Financial Institutions closed
American Marine Bank, Bainbridge Island, Wash., and FDIC arranged a
purchase of all the deposits for a 1 percent premium and all the assets
by Columbia State Bank, Tacoma, Wash. American Marine Bank had
approximately $373.2 million in assets and $308.5 million in
deposits.
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| Around The
Agencies |
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Federal Reserve: The
Federal Reserve on Monday launched a Web site to help new bank directors
learn how they may work to ensure the safety and soundness of their
institutions. The Web site -- BankDirectorsDesktop.org -- also provides
a refresher course for experienced board members. The Fed designed
the Web site for directors of community banks. It features online
training and other resources to help directors better understand the
issues and challenges associated with serving on a bank's board. More information
FHFA: Since the establishment of
the conservatorships, Fannie Mae has experienced losses of $111 billion
and Freddie Mac has had losses of $63 billion, Acting Federal Housing
Finance Agency Director Edward J. DeMarco told congressional leaders. In
a letter to Senate Banking Committee Chairman Christopher Dodd
(D-Conn.), Ranking Minority Member Richard Shelby (R-Ala.), House
Financial Services Committee Chairman Barney Frank (D-Mass.) and Ranking
Member Spencer Bachus (R-Ala.), DeMarco said Fannie Mae has drawn $59.5
billion from the federal government, while Freddie Mac has drawn $50.7
billion. DeMarco said that Fannie Mae and Freddie Mac will continue to
act as agents for Treasury Department in adopting the Making Home
Affordable loan modification program as one of the goals of the
conservatorship and required by the Emergency Economic Stabilization Act
of 2008. DeMarco said the conservatorships of Fannie Mae and Freddie Mac
cannot be a long-term solution. See letter
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| Upcoming
Events |
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February 9-11 - The Nationwide Mortgage Licensing
System (NMLS) will conduct the second annual NMLS User Conference &
Training Program. - Rancho Bernardo Inn, San Diego.
February 10 - The House Financial Services Committee will hold a hearing
on unwinding emergency Federal Reserve liquidity programs. - 10 a.m.,
2128 Rayburn House Office Building.
February 10 - The House Budget Committee holds a hearing on the Treasury
Department budget. - 10 a.m., 210 Cannon House Office Building.
February 10 - The Senate Banking Subcommittee on Security and
International Trade and Finance will hold a hearing to discuss equipping
financial regulators with the tools necessary to monitor systemic risk.
- 9:30 a.m., 538 Dirksen Senate Office Building.
February 11 - The House Financial Services Committee and the
House Small Business Committee will hold a joint hearing titled
?Condition of Small Business and Commercial Real Estate Lending in Local
Markets.? - 10 a.m., 2128, Rayburn House Office Building.
February 11 - The Senate Permanent Subcommittee on Investigations
will hold a hearing to discuss a report on alleged money laundering
incidents involving certain African politicians and American
banks. - 342 Dirksen Senate Office Building.
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| Closing
Comment |
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"I tell you sure as I am sitting here, that if banking
institutions are protected by the taxpayer and they are given free rein
to speculate, I may not live long enough to see the crisis, but my soul
is going to come back and haunt you." - Former Federal Reserve Chairman
Paul Volcker said in response to questions from Sen. Mike Johanns
(R-Neb.) about the necessity of the proposed "Volcker Rule" during
Tuesday's Senate Banking Committee hearing.
Mary White, Editor
Teresa Dean, Contributing Writer |
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