|In this issue...|
|CSBS Website Links|
Model Examination Guidelines User School(Web-based), July
& August 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
School, La Quinta, CA:
Course begins with an orientation conference call on June 29, 2009.
Resident Session: September 14-18, 2009.
Camp for BSA Professionals, Washington, DC, July 20-24, 2009:
is an intensive 4 1/2 day experience that will fast forward your BSA Compliance
knowledge and value to your regulatory agency, financial institution or money
Regulatory and Compliance Orientation Program, New York City, July 28-29,
2009: U.S. Regulatory/Compliance
Orientation for head office, recently arrived officers of international banks
and representatives who would benefit from a more thorough understanding of the
U.S. Regulatory/Compliance System.
Legal Seminar, Williamsburg, VA, August 16-19, 2009:
The Legal Seminar provides a forum for state banking department attorneys, assistant
attorneys general assigned to the department, and other regulatory attorneys.
Service Business Examiners Course(Online), begins August 16, 2009: This
class is designed for inexperienced examiners or those seeking formal training
in MSB examination procedures and techniques.
Liability Management I (Online), begins September 8, 2009:
A great employee development course for current and future bank management.
What is art? What is not art?
Last week, we decided
to take a train up to the Big Apple. We had visions of a relaxing trip with scenic
views of the countryside, but what a train traveler quickly discovers is there’s
a huge amount of graffiti out there. One might think that applying graffiti from
a train track might be somewhat dangerous. Graffiti, it seems, like tattoos, will
always be with us, so we might as well appreciate it. Some people even think of
it as art. Then we heard a news story that in New York City, Mayor Bloomberg’s
graffiti removal team reportedly removed 2.5 million square feet of graffiti at
4,000 sites already this year. In fact, the city council is considering legislation
to have graffiti removal taken over by the city, unless property owners see it
as artwork. What we still can’t understand is how graffiti artists do their
work without being reported. But as they say, where there’s a will there’s
a way, and art is in the eye of the beholder.
|House Panel Puts
Bill to Establish New Federal Consumer Protection Agency on Fast Track|
House Financial Services Committee Chairman Barney Frank
(D-Mass.) this week introduced legislation (H.R. 3126) to adopt President Obama’s
plan to create a new Consumer Financial Protection Agency. The bill would create
an independent agency with a full range of rulemaking, information-gathering,
supervisory, and enforcement tools to oversee financial products offered through
banks and nonbanks. The bill does have some differences from the plan announced
by President Obama. For example, the bill preserves the current federal banking
regulators’ role for enforcing the Community Reinvestment Act. The bill
also omits references to creation of a National Bank Supervisor through the merger
of the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
Frank said such restructuring would be done separately at a later date. The bill
has 12 co-sponsors, all Democrats.
The Conference of State Bank Supervisors formed a special
task force, chaired by Maryland Commissioner of Financial Regulation Sarah Bloom
Raskin, which is analyzing the proposal and its potential impact on the state banking system.
Chairman Frank has indicated his intention to complete
committee action on the bill by the end of July. The Senate Banking Committee
plans to hold a hearing on the Obama proposal on Tuesday.
FFIEC Issues Conversion Statement
The Federal Financial Institutions
Examination Council issued a statement reaffirming the unified position of supervisors
on regulatory conversions. The statement said regulators will only consider applications
undertaken for legitimate reasons and will not entertain regulatory conversion
applications that undermine the supervisory process. The statement said prospective
supervisors will be expected to follow existing supervisors' work on examination
and enforcement actions, including consumer protection and safety and soundness
issues. FFIEC said “conversion requests submitted while serious or material
enforcement actions are pending with the current chartering authority or primary
federal regulator should not be entertained because such requests could delay
or undermine supervisory actions.” For an institution with a rating of 3,
4, or 5, substantial noncompliance regarding Community Reinvestment Act, or a
serious or material corrective program in place or being contemplated, the prospective
chartering authority will consult with the Federal Reserve Board, FDIC, or the
National Credit Union Administration, as appropriate. More Information
Hearing Focuses on Effects of the Economic Crisis
on Community Banks and Rural Communities
Community banks are
still lending in these troubled economic times, two bankers told the Senate Banking
Committee at a hearing on July 8. “In spite of the downturn, community banks
in rural communities expanded lending by 7 percent since the recession began,”
said Arthur C. Johnson, chairman and CEO of United Bank of Michigan in Grand Rapids
and chairman-elect of the American Bankers Association. Also testifying at the hearing, Jack Hopkins, president and
CEO of CorTrust National Bank Association in Sioux Falls, S.D., said while the
largest banks saw a 3.23 percent decrease in 2008 in net loans and leases, institutions
with less than $1 billion in assets experienced a 5.53 percent growth. Both bankers also identified problem areas that may hamper
banks from continuing to lend. Johnson noted that Michigan, for example, is facing
its eighth consecutive year of job losses and that other areas with a manufacturing
employment base are suffering similar problems. Hopkins told the lawmakers that
several bankers have expressed concern about the potential for regulators to second-guess
their desire to make additional loans. He also said bankers were concerned about
regulatory pressure to reduce the use of Federal Home Loan Bank advances. “FHLB
advances have become an important source of funding for community banks that must
be allowed to continue,” Hopkins said. He also urged the lawmakers to retain
the dual system of state and federal bank charters, saying that it provides checks
and balances, promotes consumer choice and helps create a diverse and competitive
financial system. More Information
Issue Guidance on California Warrants
Federal financial institution regulators issued a joint
statement providing guidance for financial institutions on California registered
warrants. Beginning July 2, and until a budget is passed, California is issuing
warrants for most general fund payments. The regulators said state chartered institutions
should ensure their holdings of warrants are consistent with their state laws
and regulations. The State Attorney General has opined that these warrants are
valid and binding obligations of the state. Because they share the same expected
source of repayment, the warrants generally have the same credit quality characteristics
as the state's other general obligations. For risk-based capital purposes, the
warrants will receive a 20 percent risk weight, the agencies said. The regulators
said banks’ risk management practices should include evaluating the credit
quality of the warrants, establishing appropriate concentration limits, and ensuring
appropriate liquidity risk management. Supervisors will evaluate financial institutions'
risk management practices as part of the normal supervisory process. The agencies
issuing the statement were FDIC, the Federal Reserve, the Office of the Comptroller
of the Currency, the Office of Thrift Supervision and the National Credit Union
Administration. More Information
Seven Banks in Two States Closed
State and federal regulators
last Wednesday closed seven banks, naming FDIC as receiver. The banks were located
in Illinois and Texas, bringing the total number of bank closings for 2009 to 52.
In Illinois, the Department
of Financial and Professional Regulation closed five banks that were controlled
by one family. They included John Warner Bank, Clinton, Ill.; First State Bank
of Winchester, Winchester, Ill.; Rock River Bank, Oregon, Ill.; Elizabeth State
Bank, Elizabeth, Ill.; and Founders Bank, Worth, Ill. In addition, the Office
of the Comptroller of the Currency closed The First National Bank of Danville, Danville, Ill.
Department of Banking closed Millennium
State Bank of Texas, Dallas. State Bank of Texas, Irving, Texas, purchased the
bank’s $115 million in deposits and all of the $118 million in assets.
an agreement with State Bank of Lincoln, Lincoln, Ill., to assume all of the deposits
of John Warner Bank. John Warner had total assets of $70 million and total deposits
of approximately $64 million.
The Winchester bank’s deposits were acquired
by the First National Bank of Beardstown, Beardstown, Ill., First State had total
assets of $36 million and total deposits of approximately $34 million.
River Bank, FDIC entered into an agreement with The Harvard State Bank, Harvard,
Ill., to assume all of the deposits for a 2 percent premium and purchase about
$72.9 million of the bank’s assets.
Rock River had total assets of $77 million and total deposits of approximately $75.8 million
State Bank and Trust, Galena, Ill., acquired all of the deposits of Elizabeth
State Bank. The bank had total assets of $55.5 million and total deposits of about $50.4 million.
Bank, FDIC reached an agreement with PrivateBank and Trust Company, Chicago, to
purchase the bank’s $848.9 million in deposits along with $888.4 million
of the bank’s assets.
First National Bank, Danville, Ill.,, FDIC arranged a purchase of all the $147
million in deposits and $148 million in assets by First Financial Bank, N.A., Terre Haute, Ind.
Around The States
New Jersey: Steven Goldman has
announced plans to leave his post as commissioner of New Jersey Department of
Banking and Insurance, effective July 15. He will join the law firm of Kramer,
Levin, Naftalis and Frankel LLP, which has offices in New York and Paris. Goldman
has served as commissioner since March 1, 2006. Gov. Jon Corzine expects to name
a successor early next week.
Pennsylvania: Pennsylvania Governor Edward G. Rendell
recently signed two bills to combat mortgage fraud by strengthening communication
between homeowners and their lenders and encouraging employees at mortgage companies
to report illegal activity. "These bills will provide increased protection for
Pennsylvania consumers shopping for a mortgage or refinancing their homes," said
Rendell. The first new law will prohibit
a mortgage broker or originator from being the sole recipient of communications
from lenders. The law will help ensure that consumers receive monthly statements
and other notices intended for them by their lenders. The second law will shield
mortgage company employees who report illegal activity or take part in an investigation
from retaliation through reduced salaries, termination or other actions taken
by their employers. Both laws will
go into effect in about 60 days.
FDIC: FDIC issued a question
and answer document for its rules governing deposit accounts in the event of a
bank failure. The rules, which were published on Jan. 27, 2009, establish practices
for determining deposit and other account balances at a failed depository institution.
They also include disclosure requirements for certain sweep accounts that went
into effect on July 1, 2009. The question and answer document covers frequent
questions posed on the sweep account disclosure requirements. Some of the areas
covered in the document are: the types of sweep accounts covered by the disclosure
requirements and those excluded; the type and nature of disclosures required by
the rules; the frequency of sweep account disclosures; the principles FDIC used
to determine how swept funds will be treated in the event of failure; and the
requirements for a properly structured repo sweep. More Information
FBI: Bank robberies declined
modestly in 2008, according to statistics released by the FBI on Monday. In 2008,
there were 6,700 robberies at financial institutions, 121 burglaries and 28 larcenies
for a total of 6,849 crimes compared to 6,933 in 2007. Loot was taken in 91 percent of the crimes in 2008 for a total
value of more than $61.9 million. A note was used in 3,833 incidents; a firearm
was used in 1,734 incidents; and robbers threatened the use of a weapon in 2,839
incidents. Acts of violence were committed during 293 of the incidents. Firearms
were discharged in 78 cases, assaults occurred in 171 cases, and hostage situations
occurred in 53 incidents. Twenty-one deaths occurred in 2008, including 17 perpetrators,
one employee, and three deaths classified as other. No law enforcement officers
were killed responding to bank crimes in 2008, but seven law officers and 69 employees
were injured. Most violations occurred on Friday. Regardless of the day of the
week, crimes were most prevalent between the hours of 9 a.m. and 11 a.m. More Information
July 13 - The House Financial
Services Subcommittee on Oversight and Investigations will hold a hearing on “Preventing
Unfair Trading by Government Officials.” 2 p.m., 2128 Rayburn House Office Building.
14 - The Senate Banking Committee will hold a hearing titled "Creating a Consumer
Financial Protection Agency: A Cornerstone of America’s New Economic Foundation."
- 9 a.m., 538 Dirksen Senate Office Building.
July 14 - The House Financial Services Subcommittee
on Capital Markets, Insurance, and Government Sponsored Enterprises will hold
a hearing on SEC oversight.- 10 a.m., 2128 Rayburn House Office Building.
15 – The House Financial Services Committee will hold a hearing on “Banking
Industry Perspectives on the Obama Administration’s Financial Regulatory
Reform Proposals.” - 10 a.m.,
2128, Rayburn House Office Building.
July 20-24 –
The Conference of State Bank Supervisors has scheduled a Boot Camp for BSA Professionals,
A highly experienced team of BSA experts with senior level government and private
experience will lead each session, providing the latest information and coaching
on real life exercises and case studies. This program is also the first step in
qualifying for Certification as a Professional BSA Compliance Practitioner. –
been said that confidence grows at the rate the coconut tree grows and falls at
the rate in which the coconut falls.” - Montek
Aluwalia, the Deputy Chairman of India’s Planning Commission, commenting
on confidence in banking at this year’s Davos World Economic Forum, as reported
in the June 29 issue of Bank Systems & Technology.