"If they give you lined paper, write the other way." – William Carlos Williams
We’re not advocating the approach that Abbie Hoffman launched in Steal This Book, but there is something to be said for contrariness. This complicated world becomes more complex all the time, and the sheer bafflement of legal and legislative processes can lead us to challenge the established order of things. Contrariness can also be very positive: but for Columbus, the flat-earthers would never have left Europe; but for Fulton, we might still be using horses to get around; but for Chuck Yeager, we might still be flying sub-sonic. A spoonful of skepticism can make the world a better place.
FDIC, OCC Nominees Confirmed
Thursday evening, the Senate confirmed Thomas J. Curry as comptroller of the currency. Before his confirmation, Curry served as director of the Federal Deposit Insurance Corporation (FDIC) Board of Directors. He is also a former commissioner of the Massachusetts Division of Banks, and was chairman of the Conference of State Bank Supervisors (CSBS) in 2000-2001. The Senate also confirmed Martin J. Gruenberg, Thomas M. Hoenig, and Jeremiah Norton to the FDIC board. However, the Senate did not confirm Gruenberg as Chairman or Hoenig as Vice Chairman as expected. Gruenberg will continue to remain the vice chairman of the FDIC, and will serve as acting chairman. With Gruenberg serving as vice chairman, Hoenig and Norton as directors, Curry as Comptroller, and Richard Corday as Director of the Consumer Financial Protection Bureau, all seats on the FDIC’s five-person board are now filled.
State Regulators Comment on Confirmations
"Tom Curry will be a tremendous Comptroller of the Currency. From my early days at the Massachusetts Division of Banks, Tom served as a mentor providing invaluable guidance and expert insight. I am honored to call him a friend, pleased by his success, and eager to work with him in his new capacity."
-- David J. Cotney, Commissioner of Banks, Massachusetts Division of Banks
"Congratulations to my friend Marty Gruenberg on his confirmation. During the challenging days following hurricane Katrina, Marty, serving as acting chairman of the FDIC, stood shoulder-to-shoulder with me as we worked to restore critical financial services to the people of Louisiana. A dedicated public servant, Marty is committed to preserving the nation’s dual-banking system and strengthening community banks. I look forward to continuing our work together."
-- John P. Ducrest, Commissioner of Financial Institutions, Louisiana Office of Financial Institutions and Chairman of CSBS.
"Tom Hoenig is a tremendous regulator and is a wonderful addition to the FDIC Board. In his capacity as president of the Kansas City Federal Reserve Bank, I worked closely with Tom for over 20 years. In that time, I learned of his passion for sound financial supervision and his staunch support of the community banking system. He is a true partner of state supervision, and I am pleased by his confirmation."
-- Mick Thompson, Commissioner, Oklahoma State Banking Department
Congressional Hearings Explore Mobile Payments
Last week the Financial Institutions and Consumer Credit Subcommittee of the House Financial Services Committee held a hearing titled "The Future of Money: How Mobile Payments Could Change Financial Services." This week, the Senate Banking Committee also explored the issue of mobile payments during a hearing entitled "Developing the Framework for Safe and Efficient Mobile Payments." Both hearings come as the topic of mobile payments is garnering the attention of the media, regulators, industry and the general public.
"The evolving mobile payments system is of increasing interest to state financial regulators," said John W. Ryan, President and CEO of CSBS. "We want to encourage innovation, but to do so under a regulatory regime that identifies and mitigates potential risks that could arise from this new industry. Innovation cannot be pursued at the cost of destabilizing the traditional banking sector. While the Senate hearing focused on the federal regulatory regime, significant effort is occurring at the state level to coordinate supervision of non-bank money transmission."
Last week’s hearing in the House saw testimony from the industry and representatives from consumer groups. The hearing was the first in a series on the technological changes sweeping the financial services industry. Since different stakeholders not traditionally associated with financial services regulation, such as technology companies and telecommunications companies, are involved in the mobile payments system, ambiguity exists regarding supervisory jurisdiction of the mobile payments system.
Yesterday’s Senate hearing included testimony from the Federal Reserve Board of Governors and the Federal Reserve Bank of Boston on information security and financial disclosure issues. Generally speaking, while rules and regulations are well-established with respect to credit and debit cards, greater collaboration among regulators is necessary for prepaid cards and other new payment methods.
Ongoing hearings are expected in both the House and the Senate as policymakers continue to seek additional information on this rapidly emerging market.
NMLS Expansion to Begin Next Month
In early February, the Conference of State Bank Supervisors (CSBS) announced plans to enhance the use of the Nationwide Mortgage Licensing System and Registry (NMLS or the System) to accommodate state use of the System for non-mortgage, non-depository financial services industries. Now CSBS is pleased to announce state agencies will begin expanded use of NMLS on April 16, 2012.
NMLS is a secure, web-based licensing system owned and operated by state regulators. The System has been modified for states to voluntarily license or register entities in a number of financial services industries, including consumer lending, money-services businesses and debt collection. The following states are scheduled to start transitioning existing licenses and registrations onto NMLS: the District of Columbia, Louisiana, Maryland, Massachusetts, New Hampshire, Oklahoma, Rhode Island, Tennessee, Vermont, and Washington. Typically, states may require changes to their legislation to use NMLS for other non-mortgage, non-depository industries.
"NMLS has proven to be an effective tool in mortgage supervision by streamlining the regulatory process and enhancing consumer protection," said David J. Cotney, Commissioner of Banks at the Massachusetts Division of Banks and chairman of the State Regulatory Registry LLC – a CSBS affiliate that operates NMLS. "The expansion of NMLS will now bring these efficiencies and improved oversight to additional state-regulated industries. Consumers, regulators and industry will all benefit from the enhanced use of NMLS, particularly as NMLS creates a more level playing field for those businesses that play by the rules." Read more.
Thomas Harlow Promoted to Executive Vice President of Finance and Administration
CSBS has announced the promotion of Thomas Harlow to the position of Executive Vice President of Finance and Administration, effective immediately. As Executive Vice President of Finance and Administration, Harlow will oversee all financial and administrative operations for CSBS.
In his new role, Harlow will oversee the development and management of systems to support the overall operations of the organization. He will also maintain oversight of CSBS’s membership services and the support service functions of finance, human resources and information technology operations.
Harlow has more than 20 years’ experience in association management. Prior to joining CSBS in 2010 as Chief Financial Officer, Harlow served as CFO of the American Academy of Otolaryngology – Head and Neck Surgery Foundation where he oversaw the accounting and information technology operations. Harlow started his career in the non-profit industry with the American Chemistry Council where he spent 12 years in various roles, leaving in 2000 as the Controller.
Around the Agencies
CFPB: The Consumer Financial Protection Bureau (CFPB) has filed an amicus brief in the United States Court of Appeals for the Tenth Circuit in Denver, Colo., arguing that certain borrowers who did not receive important disclosures mandated by the Truth in Lending Act (TILA) may cancel their loans so long as they notify the lender of their intent to cancel within three years. "We are committed to making sure that borrowers can exercise their rights to the full extent allowed under this law," said CFPB Director Richard Cordray. "The consumer’s right to cancel gives lenders a powerful incentive to provide the disclosures that consumers need to make good financial choices." Read more.
FBI: During the third quarter of 2011, there were 1,094 reported violations of the Federal Bank Robbery and Incidental Crimes Statue, a decrease from the 1,325 reported violations in the same quarter of 2010. According to statistics released by the Federal Bureau of Investigation, there were 1,081 robberies, 11 burglaries, two larcenies, and one extortion of a financial institution reported between July 1, 2011 and September 30, 2011. Read more.
FHFA: The Federal Housing Finance Agency (FHFA) reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some adjustable-rate mortgage contracts, was 4.08 percent based on loans closed in February. Read more.
FTC: The Federal Trade Commission (FTC) issued a final report setting forth best practices for businesses to protect the privacy of American consumers and give them greater control over the collection and use of their personal data. In the report, "Protecting Consumer Privacy in an Era of Rapid Change: A Proposed Framework for Businesses and Policymakers," the FTC also recommends that Congress consider enacting general privacy legislation, data security and breach notification legislation and data broker legislation. "If companies adopt our final recommendations for best practices – and many of them already have – they will be able to innovate and deliver creative new services that consumers can enjoy without sacrificing their privacy," said Jon Leibowitz, chairman of the FTC. Read more.
OCC: The performance of first-lien mortgages serviced by large national and federal savings banks changed very little during the fourth quarter of 2011 and showed improvement from the previous year, according to a report released today by the Office of the Comptroller of the Currency (OCC). The OCC Mortgage Metrics Report for the Fourth Quarter of 2011 showed delinquencies remained elevated but have declined from a year earlier. Mortgages that were 30 to 59 days delinquent were 3.0 percent of the total serviced portfolio at year end, and mortgages that were seriously delinquent were at 5.0 percent of the total portfolio. Read more.
CONGRESS: Adopting the slight modifications made by the Senate, the House this week passed the Jumpstart Our Business Startups (JOBS) Act. The bill has been sent to the White House, where it is expected to be signed into law by President Obama. A compilation of six bills designed to help small businesses raise capital, the bill includes a CSBS-supported provision which raises the SEC registration threshold for banks or bank holding companies (BHCs) from 500 to 2,000. In an unrelated section of the bill, preemptive language of concern to state securities regulators remains in the bill.
WHITE HOUSE: President Obama announced the United States is nominating Dr. Jim Yong Kim to be President of the World Bank. The World Bank’s mission is to reduce poverty and support development, serving as a vital source of financial and technical assistance to developing countries across the globe. Kim is currently the President of Dartmouth College, a post he’s held since 2009. Prior to that, he held professorships in medicine and social medicine at Harvard Medical School and served as the director of the Francois-Xavier Bagnoud Center for Health and Human Rights. "Jim has spent more than two decades working to improve conditions in developing countries around the world," said President Obama. "The World Bank is one of the most powerful tools we have to reduce poverty and raise standards of living around the globe, and Jim’s personal experience and years of service make him an ideal candidate for this job." Read more.
May 7-11: The CSBS Credit Evaluation School will be held in San Diego. The school follows a blended learning model and is delivered over a five-month period utilizing the most effective and efficient delivery channels. Read more.
May 7-11: The CSBS Certified Operations Examiner School will be held in San Diego. The full program is delivered over a seven to nine month period utilizing all of the CSBS Education Foundation delivery channels. Over this period examiners will receive all of the required training and experience necessary to be in charge of an operations examination. Read more.
"The more things we can do to make it easier for community banks to raise capital, so they have the funds to lend to consumers, is beneficial."
– Scott Clarke, Assistant Director of Banking for the Illinois Department of Financial and Professional Regulation, in an interview with American Banker.
Editor’s Note: If you are receiving The Examiner by fax and prefer to receive it by e-mail, please contact Catherine Woody at email@example.com If you do not wish to receive any further fax communications by CSBS you may call (202) 296-2840 or reply by fax to (202) 296-1928 and request that you be removed.
Catherine Woody, Editor
Rockhelle Johnson, Writer
Edward Smith, Contributing Editor