|In this issue...|
|CSBS Website Links|
Examination Guidelines User School (Web-based), May and June 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 and the Statement on Subprime Mortgage Lending.
State-Federal Supervisory Forum, May 18-20, 2010, Boston, Massachusetts: Regulators Only.
Examiner School, June 7-11, 2010, San Jose, CA: Delivered over
a 5-month period utilizing the most effective and efficient delivery channels.
The examiner will receive all of the required training and experience necessary
to review and evaluate credit.
School, June 7-11, 2010, San Jose, CA: Designed to train
participants to evaluate management and to recognize practices that increase a
bank’s exposure to risk. Participants also receive guidance and practice conducting board meetings.
School, June 14-18, 2010, Philadelphia, PA: Senior School
is designed to meet the specific leadership training needs of state bank regulators
who are rising into management positions within their departments or as an examiners-in-charge
in the field.
“Avoid any diet that discourages
the use of hot fudge.” - Don Kardong
Who among us knows what all is in our new health care
law? We’re not even sure how many members of Congress actually read the
bill before casting their ayes and nays. If they had, would they really have approved
the bill’s requirement that chain restaurants must post calorie counts along
with providing information on how many calories a person should consume per day?
We know, all this attention to calorie counting and eating vegetables is the federal
government’s attempt at fighting that mortal enemy, obesity. Calorie-counting
is well and good, but will it work? All it takes is to look around to see it’s
going to be a long, slow slog to turn the land of opportunity into the land of
the svelte. The next thing you know, we’ll be taxing our extra pounds to
solve the nation’s debt problem.
Announces Officer Nominees for 2010-2011
The Conference of State Bank Supervisors Nominating Committee
announces the following recommendations for CSBS officers for 2010/2011:
· Chairman: Iowa Superintendent
of Banking Thomas B. Gronstal. (chairman-elect automatically becomes chairman)
Louisiana Commissioner of Financial Institutions John P. Ducrest
Chairman: Massachusetts Commissioner of Banks Steven L. Antonakes
Tennessee Commissioner of Financial Institutions Greg Gonzales
California Commissioner of Financial Institutions William (Bill) Haraf (second year of a two-year term)
Past Chairman: North Carolina Commissioner of Banks Joseph A. Smith Jr.
provided for in the CSBS bylaws, any member wishing to make additional nominations
must do so 10 business days before the annual business meeting. This year’s
meeting will be on May 18 in Boston.
Members of the Nominating
Committee, chaired by Past Chairman Timothy J. Karsky (North Dakota), included
the five District Vice Chairs: District 1, Lloyd P. LaFountain III (Maine); District
2, Jorge A. Solis (Illinois); District 3, Candace A. Franks (Arkansas); District
4, Roger Novotny (South Dakota); and District 5, David C. Tatman (Oregon).
Extends CSBS-Supported TAG Program
The FDIC Board of Directors approved interim rules to
extend the Transaction Account Guarantee program to Dec. 31, 2010, and to give
the agency the ability to extend the program to the end of 2011 without additional
rulemaking if economic conditions warrant the extension. Under the TAG program,
customers of participating insured depository institutions are provided full coverage
on transaction accounts. The program was due to expire on June 30, 2010. FDIC
Chairman Shelia Bair said the need for the program reflects “the continuing
legacy of too-big-to-fail and the different liquidity pressures our community
banks experience as a result.”
CSBS President and CEO Neil Milner recently wrote FDIC
asking the agency to extend the program and praised the action. “Extending
the TAG Program will do much to assure consumers and small businesses of the strength
of community and regional banks, thereby further contributing to the national
economic recovery,” Milner said. More Information
About 80 percent of the industry participates in the TAG
program. Under the interim rules, participating institutions may opt out effective
July 1, 2010. The current rates will remain unchanged under the interim rules.
However, FDIC will require TAG assessment reporting be based on average daily
account balances. The interim rules have
a 30-day comment period. More Information
Regulatory Overhaul Bill May On Senate Agenda Next Week
Senate Majority Leader Harry Reid (D-Nev.) told reporters
at a news conference on Thursday that the financial regulatory reform bill will
be scheduled for floor debate next week. "It's time we start legislating," Reid
said. Senate Republicans continued to demand further negotiations on the bill,
titled The Restoring American Financial Stability Act of 2010. The bill had been
approved by the Senate Banking Committee on March 22 on a partisan vote of 13-10.
legislation addresses the too-big-to-fail problem, create systemic risk oversight,
put in place mechanisms for resolving systemically important firms and improve
regulatory oversight in such areas as derivatives,
hedge funds and consumer rating agencies. For consumer protection, the bill would
create a new independent office within the Federal Reserve with the authority
to write rules for all banks and nonbanks and to examine banks and credit unions
with assets of more than $10 billion and all mortgage-related businesses and large
non-bank financial companies. For non-consumer protection regulation, the bill
would give FDIC the authority to regulate state banks and thrifts of all sizes
and bank holding companies of state banks with assets of less than $50 billion.
The Office of Thrift Supervision and the thrift charter would be eliminated. The
Office the Comptroller of the Currency would regulate national banks and federal
thrifts of all sizes and the holding companies of national banks and federal thrifts
with assets of less than $50 billion. The Federal Reserve would regulate bank
and thrift holding companies with assets of more than $50 billion.
The Conference of State Bank Supervisors is focusing on
seven concerns in the bill relating to (1) state-federal coordination; (2) role
of the Federal Reserve System; (3) exam fee "parity;" (4) lending limits; (5)
deposit cap loophole; (6) consumer protection; and (7) balance on federal preemption.
CSBS published more detailed information about these issues in the April 2 issue
of its weekly newsletter. More Information
Deposit Insurance Fund Dips Into The Red
FDIC was named receiver of 45 banks in the fourth quarter
of 2009, and resolving the failures decreased the Deposit Insurance Fund by $12.6
billion to a negative $20.9 billion, according to a report by FDIC’s chief
financial officer. The negative balance is caused by the FDIC setting aside funds
for potential failures. As of year-end 2009, the deposit insurance fund held over
$67 billion in cash and U.S. Treasury obligations. The decrease reflected a $17.8
billion increase in the provision for insurance losses, which was partially offset
by a $3.1 billion increase in assessment revenue. The fund was bolstered by the
inflow of $45.5 billion in cash and cash equivalents, primarily due to the collection
of prepaid assessments. The combined assets of the 45 institutions that failed
during the quarter were approximately $64.9 billion with a total estimated loss
of $10 billion. The corporate cash outlay during the fourth quarter for these
failures was $7.8 billion. FDIC entered into loss-share agreements with the acquiring
institutions for 34 of these banks, and expects to pay out $6.4 billion over the
length of the agreements, the report said. More Information
Offer ‘Online Form Builder’ For Privacy Notices
Eight federal regulators released an online program to
help financial institutions develop and print customized versions of the agencies’
model privacy notice. The system -- Online Form Builder -- may be downloaded from
each of the agencies’ Web sites. If used properly, the online program will
enable financial institutions to produce a privacy notice that will meet the “safe
harbor” provisions of the Gramm-Leach-Bliley Act. Instructions for the system
guide an institution to select the version of the model form that fits its practices,
such as whether the institution provides an opt-out for consumers. The model form was developed jointly by the Federal
Reserve, FDIC, the Commodity Futures Trading Commission, the Federal Trade Commission,
the National Credit Union Administration, the Office of the Comptroller of the
Currency, the Office of Thrift Supervision, and the Securities and Exchange Commission.
Closes S.C. Bank; N.C. Bank Acquires Deposits, Assets
The Office of the Comptroller of the Currency closed Beach
First National Bank, Myrtle Beach, S.C., on Friday bringing the total for the
year to 42. FDIC entered into a purchase agreement with the Bank of North Carolina,
Thomasville, N.C., to assume all of the deposits and assets of the failed bank.
Beach First National Bank had approximately $585.1 million in assets and $516
million in deposits. FDIC and Bank of North Carolina entered into a loss-share
transaction on $497.9 million of Beach First National Bank's assets. More Information
The Justice Department has announced the conviction of Robert E. Brandt of Bellevue,
WA, a disbarred attorney and escrow officer, of conspiracy and four counts of
wire fraud in an elaborate mortgage fraud scheme operating in 2004 and 2005. According
to the news release, the conspirators would identify houses and use shell companies
or third parties to purchase the homes.
At the same time they recruited “straw buyers” who would enter
into a purchase agreement to buy the same home from the conspirators at an inflated
price. The conspirators assisted the straw buyers with phony paperwork for the
home loans, making it appear that they were qualified for the mortgage loans and
planned to occupy the houses. Members of the conspiracy allegedly falsified numerous
documents including appraisals, verifications of deposits, employment verification
and closing documents. In fact, the conspirators simply split the proceeds from
the fraudulent mortgages, and the straw buyers defaulted on the loans after pocketing
as much as $20,000 for their fee. The homes were foreclosed, and financial institutions
and mortgage lenders suffered substantial losses, estimated to exceed $7 million
dollars. Brandt ran a company called “Escrow Authority,” that closed
all of the sales of the flipped properties.
He permitted other members of the scheme to use money out of his lawyer’s
trust account to acquire properties. Brandt
faces up to 20 years in prison and a $250,000 fine. His co-conspirators pled guilty
to state and federal charges. Brandt was the sole co-conspirator to pursue his
right to trial. The case was investigated by the FBI, the King County, WA, Prosecuting
Attorney’s Office, the Washington State Department of Financial Institutions
(DFI) and the Kirkland Police Department. |
FDIC: The FDIC issued a proposal on Tuesday to
revise the deposit insurance assessment system for large institutions that pose
unique and concentrated risks to the Deposit Insurance Fund. Under the proposal,
FDIC would continue to use the supervisory ratings as a factor in measuring risk,
but would replace the financial ratios currently used with a scorecard consisting
of well-defined financial measures that are more forward looking and better suited
for large institutions. The proposal also includes questions about how to incorporate
other risk measures, like the quality of underwriting or risk management practices,
in the future. The proposal would create two scorecards: one for large institutions
and the other for highly complex institutions. Each scorecard would have two components
— a performance score and loss severity score. The two scores would be combined
to produce a total score, which would be translated into an initial assessment
rate. The proposal also would alter the assessment rates that apply to all banks
to ensure that the revenue collected under the proposed assessment system would
equal the current assessment system. The plan has a 60-day comment period. More
The Federal Reserve Board on Monday announced the appointment of William B. English
as director of the Division of Monetary Affairs, effective July 23, 2010. English,
who has served as deputy director of the division since February 2008, succeeds
Brian F. Madigan, who has been appointed senior adviser to the Fed Board. Madigan
plans to retire later this year. As director, English will advise the chairman,
Fed board members and the FOMC on the conduct of monetary policy, including open
market operations and the discount window. He began his career at the Fed in 1992
as an economist and was appointed to the board’s staff in 2001. He holds
a B.A. in economics and mathematics from Yale University and a Ph.D. in economics
from Massachusetts Institute of Technology.More Information
Federal Trade Commission charged a payday loan operation with illegally trying
to garnish borrowers’ wages and using other illegal debt-collection practices.
FTC alleged that the operators, doing business as Ecash and GeteCash, offered
loans of up to $1,000 to be repaid from a borrower’s upcoming paycheck.
They required online loan applicants to check a box indicating their agreement
with loan terms. These terms included an inconspicuous statement consumers often
did not see that said their wages would be garnished to cover delinquent loan
payments. The statement allegedly attempted to circumvent federal requirements,
including a debtor’s right to revoke a garnishment agreement. More Information
April 19 - The Senate Finance Committee will hold a hearing
the President’s proposed fee on financial institutions regarding TARP. -
10 a.m., 215 Dirksen Senate Office Building.
April 20 - The House Financial Services Capital Markets
Subcommittee will hold a hearing on corporate governance and shareholder empowerment.
- 10 a.m., 2128 Rayburn House Office Building.
April 20 - The House Financial Services Housing and Community
Development Subcommittee will hold a hearing on the National Flood Insurance Program.
- 2 p.m., 2128 Rayburn House Office Building.
April 20-21 – The Conference of State Bank Supervisors
hosts its District IV meeting at the Hampton Inn & Suites Oklahoma City –
April 22 - The Senate Commerce Committee has scheduled
a hearing on the debt settlement industry. - 2:30 p.m., 253 Russell Senate Office Building.
23 - The American Enterprise Institute will hold a forum titled "Digital Money:
Trends and Policy Challenges." - 9:30–11:30 a.m., AEI Conference Center,
1150 17th Street, N.W., Washington, D.C.
“We need legislative changes so that government
regulators aren't performing like fire departments—arriving only after the
damage has been done. Financial authorities need to be more like police departments:
detecting, deterring and preventing fraud, abuse and manipulation in critically
important markets. When the next Bernie Madoff scandal happens—and it will—we
shouldn't be coming in with fire hoses to water down charred remains; we should
be there on the front end with sophisticated law-enforcement tools at our disposal
and stop the damage beforehand.” - Commodity Futures Trading Commission
Bart Chilton, writing in a letter to the editor in Monday's Wall Street Journal.