For sure, our ship of state is steering uncharted economic waters. It’s been a mere six weeks since the $700 billion bailout bill was signed into law. The Treasury Department has worked seemingly around the clock to put the Troubled Assets Relief Program (TARP) funds to work, opting for capital infusions instead of purchasing "toxic assets" as initially envisioned. Whether the effort has been successful or not probably remains to be seen. But one thing’s for sure. Americans are impatient. We want immediate results. So does Congress, as we witnessed this week, with several committees holding contentious oversight hearings calling federal policy makers to task for the market’s downward spiral and the ongoing rise in mortgage foreclosures. Maybe everyone needs to take a deep breath and exercise a little bit of patience and throw in a dose of optimism. Milton Friedman might have said that a government solution to a problem is usually as bad as the problem. Let’s hope he’s wrong this time.

The Conference of State Bank Supervisors weighed in on the FDIC’s Temporary Liquidity Guarantee Program interim rule by submitting a one-page letter decrying the rule’s references to FDIC consultations with the "appropriate Federal banking agency."

"CSBS is concerned that state supervisors—who are the primary regulators of the vast majority of financial institutions in the United States—are overlooked in the interim rule. Therefore, we encourage the FDIC to alter language in the interim rule from "appropriate Federal banking agency" to ‘primary regulator,’ " CSBS President and CEO Neil Milner wrote.

"Now more than ever, cooperation and coordination between the FDIC and state supervisors is vital as our nation moves through the current economic downturn," he added.

Texas Finance Commission Chairman John Snider announced that Charles G. Cooper will be the new Texas Banking Commissioner effective Dec. 1, 2009. Cooper has served in both the public and private sectors of the banking industry for more than 35 years. He was a bank examiner with FDIC for 12 years, ending his tenure as the field office supervisor of the Houston Northeast Field Office. His banking experience includes executive level positions in lending, credit administration and general management as well as serving as a director of several banks.

"Charles Cooper brings extensive experience in the financial services and regulatory environment to this position and a strong commitment to ensuring the safety and soundness of Texas financial institutions. The commission has great confidence that Charles’ steady leadership during these challenging economic times will benefit Texas financial institutions and Texas consumers," said Snider. He succeeds Randall S. James, who served as commissioner since 1999.

The Texas Department of Banking regulates and supervises 329 state-chartered banks that control approximately $153 billion in banking assets. The department also supervises trust companies with approximately $29 billion in fiduciary assets, foreign bank agencies and branches with $50 billion in assets, prepaid funeral licensees, money services businesses, perpetual care cemeteries and private child support enforcement agencies with assets totaling $78.9 billion.

Florida, Texas: Banks in Texas and California were closed on Friday, Nov. 7, with the FDIC being named receiver in both cases. The California Department of Financial Institutions (DFI) closed Security Pacific Bank, Los Angeles, citing inadequate capital. The Texas Department of Savings and Mortgage Lending closed Houston-based Franklin Bank, S.S.B. Pacific Western Bank of Los Angeles assumed all of Security Pacific Bank's $450 million in deposits, and the bank's four offices reopened Saturday as branches of Pacific Western, with no disruption in service. Prosperity Bank, El Campo, Texas, assumed all of Franklin Bank's $3.7 billion in deposits, including brokered deposits, for a premium of 1.7 percent. Prosperity Bank also agreed to acquire about $850 million of Franklin's assets. The failed bank's 46 offices have reopened as branches of Prosperity Bank. Nineteen banks have closed so far in 2008. Additional information about the bank closings may be accessed on the FDIC’s Web site.  

Maryland: Maryland Governor Martin O'Malley recently announced agreements with six mortgage servicing companies to create a streamlined and transparent loss mitigation process for distressed Maryland homeowners. The companies -- HSBC, Ocwen, GMAC ResCap, Litton Loan Servicing, AmeriNational Community Services and Citi -- service 23 percent of the home mortgages in Maryland. Under the agreements, the lenders pledged to abide by a predetermined timeline for loss mitigation that will ensure homeowners have an answer within 75 days from the time they submit loss mitigation packages. The firms generally will halt foreclosure actions and waive penalties. The servicers also agreed to establish or continue internal policies that offer incentives for loan modifications, and to refrain from offering incentives that encourage foreclosures. Governor O'Malley also announced the "Bridge to HOPE" Loan Program, which provides small gap loans at 0 percent interest to homeowners facing difficulty, giving them time to get back on their feet or find a solution. More information may be found here.

Michigan: Gov. Jennifer Granholm said Thursday she'll release $150 million from the state treasury for banks and credit unions to loan to businesses and consumers to help spur economic recovery throughout the state. The state will purchase $150 million in certificates of deposits from state banks and credit unions and get competitive interest on the CDs. The banks and credit unions, in turn, would use the state money to provide loans, 80 percent to Michigan businesses. She also asked for quick legislative consideration of the newly-introduced Michigan Home Foreclosure Prevention Act, which would help homeowners with subprime mortgages avoid foreclosure by providing greater outreach to borrowers who are in need of help. Gov. Granholm said the law, modeled after a successful North Carolina program, would also authorize the Office of Financial and Insurance Regulation (OFIR) commissioner to provide up to a 90-day freeze on foreclosure proceedings to allow the homeowner and the lender to work out terms. For additional information, go here.

FDIC: FDIC issued guidance recently describing the potential risks associated with relationships with firms that process payments for telemarketers and other merchant clients. The agency said these types of relationships pose a higher risk and require additional due diligence and close monitoring. Account relationships with these companies could expose financial institutions to increased strategic, credit, compliance, transaction and reputation risks. The guidance outlines risk management principles for this type of higher risk activity. For example, the guidance calls for financial institutions to be alert to consumer complaints that suggest a payment processor's merchant clients are inappropriately obtaining personal account information. FDIC also said financial institutions should act promptly when they believe fraudulent or improper activities have occurred related to a payment processor. See guidelines here.

HUD: The Department of Housing and Urban Development issued final rules on Wednesday to govern the Real Estate Settlement Procedures Act, which the agency said should save consumers nearly $700 in closing costs. The rules call for lenders and mortgage brokers to provide consumers with a standard “Good Faith Estimate” to disclose clearly key loan terms and closing costs. HUD received approximately 12,000 comment letters on its proposal and said the final rules reflect considerable modifications to the original plan. For example, HUD originally proposed that settlement agents read a closing script at the closing with a copy of the script provided to borrowers. HUD discarded the script in favor of a new page on the HUD-1 Settlement Statement that allows consumers to compare their final loan terms and closing costs with those listed on their Good Faith Estimate. HUD will require the new standardized disclosure forms beginning in Jan. 1, 2010. The agency also said the rules require lender payments to mortgage brokers to be disclosed in a more meaningful way. Another provision gives lenders and settlement services 30 days from the date of closing to correct errors or violations and repay consumers any overcharges. More information here.

NCUA: The National Credit Union Administration recently announced the approval of a federal credit union charter for the members and employees of the National Association of Realtors. The Realtors FCU will operate as an Internet credit union without physical branch locations. The credit union plans to offer a wide range of products and services, such as share drafts, automated teller machine cards and debit cards, Internet banking, mortgage and home equity loans, and an audio response system. The credit union will have a national field of membership. NCUA Chairman Michael E. Fryzel praised the formation of the credit union, calling it a commendable and valuable service to NAR members.

Treasury: The Treasury Department announced last week that it is revoking the "U-turn" license for Iran to eliminate the last general entry point for Iranian banks – both state-owned and private – to the U.S. financial system. U-turn transactions allowed U.S. banks to indirectly process payments involving Iran if they began and ended with a non-Iranian foreign bank. Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey said there is now “a global consensus that Iran poses an unacceptable threat to the international financial system.”  He noted that the Financial Action Task Force, which has members representing 32 jurisdictions, issued its fourth warning on Iran last month, calling for countries worldwide to strengthen measures to protect their financial sectors from this threat. Levey said the action does not affect otherwise permissible payments, such as for shipments of food and medicine, family remittances, and the export of informational materials to Iran.

November 14-15 – World leaders will meet in Washington to address the global financial crisis. The meeting will be attended by leaders of the Group of 20, which includes leading industrial and developing economies.

November 17-18 – The Conference of State Bank Supervisors District II fall meeting will take place at the  Canterbury Hotel, Indianapolis, Ind.

November 17-19 – CSBS holds its Examiner Education Forum in Newport Beach, Cal.

November 18 – The House Financial Services Committee will hold an oversight hearing on the Troubled Asset Relief Program (TARP) program being managed by the Treasury Department and related initiatives taken by the Federal Reserve Bank and the FDIC in response to the turmoil in domestic and global financial markets.  – 10 a.m., 2128 Rayburn House Office Building. 

November 19 – The Cato Institute holds its annual monetary conference. – 8 a.m.-6 p.m., Washington, D.C.

November 18 - The House Financial Services Committee will hold a hearing entitled "Oversight of Implementation of the Emergency Economic Stabilization Act of 2008 and of Government Lending and Insurance Facilities; Impact on Economy and Credit Availability". - 10 a.m., 2128 Rayburn House Office Building.

November 19 - The House Financial Services Committee will hold a hearing entitled “Stabilizing the Financial Condition of the American Automobile Industry". - 10 a.m., 2128 Rayburn House Office Building.

MARK YOUR CALENDAR

May 19-21, 2009 -: The 2009 CSBS Annual Meeting & Conference will be held at the Rancho Bernardo Inn, San Diego, Cal.

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Closing Comments

"As I was preparing this speech against the background of recent fast-moving events in the financial markets, I couldn’t help but think of Bob Dylan’s song “It’s Alright, Ma (I’m Only Bleeding)." One of my favorite lyrics in that song is: “Money doesn’t talk, it swears.”  Financial institutions have been bleeding, and the markets have been cussing up a blue streak lately...." - Richard W. Fisher, president and CEO of the Federal Reserve Bank of Dallas, from a speech given Sept. 25 to the Money Marketeers of New York University.