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CSBS Examiner

A weekly report of events affecting the state banking system from the Conference of State Bank Supervisors

4/20/2012 

 In This Issue...

 Upcoming Events...

Credit Evaluation School, San Diego, May 7-11:  The Credit Evaluation School follows a blended learning model. It is delivered over a 5-month period utilizing the most effective and efficient delivery channels. Over this period, the examiner will receive all of the required training and experience necessary to review and evaluate credit. The program follows a “dance card” concept utilized by many states. In addition, the examiner will have the benefit of the instructor serving as a “coach” throughout the program. 

Certified Operations Examiner School, San Diego, May 7-11:  The full program is delivered over a 7 to 9 month period utilizing all of the EFSBS delivery channels. Over this period the examiner will receive all of the required training and experience necessary to be in charge of an operations examination. 

State-Federal Supervisory Forum, Savannah, GA, May 21-23:   The State Federal Supervisory Forum is an annual gathering of senior executives in key leadership positions with state and federal regulatory agencies. Participants will discuss current and emerging policy and operational issues affecting state financial regulation and the state/federal regulatory partnership. The program will include formal presentations on a variety of important topics, open forum Q&A sessions, as well networking opportunities. 

Examiners Forum, Portland, OR, June 18-20:  The 2012 Examiners Forum is designed to bring together Senior Certified Examiners and other "seasoned" examiners to discuss current and emerging issues. 

Senior School, Indianapolis, IN, June 25-29:  Senior School is designed to meet the specific leadership training needs of state financial regulators who are rising into supervisory and/or management positions within their departments, serve as an examiner-in-charge in the field, or currently hold a managerial position within the agency. The behavioral science and management techniques presented are developed and honed each year to apply to the unique and evolving needs of financial regulatory personnel. 

“Go, Baby, go!” – The normally unflappable Walter Cronkite cheering an early NASA launch.

This week D.C. was witness to the final flight and flyby of the Shuttle Discovery.  Thousands watched, with some schools conveniently scheduling fire drills.  Yes, it’s the end of an era, but what an era it was!  The missions saw a 100-ton-plus-payload machine fly millions of miles and return at something like Mach 8 to precision landings where there was just one chance to get it right.  On Discovery’s final descent from an orbital mission the pilot radioed that he could see the Yucatan.  Nope, said mission control, it’s Naples, Florida.  That’s how fast they were going after cutting their speed by two thirds or more.  Like Cronkite, we all could cheer for those missions.  Here’s hoping this week’s positive public reaction will propel future space exploration.
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Hoenig and Norton Join FDIC Board of Directors

Thomas M. Hoenig and Jeremiah O. Norton were sworn in Monday as members of the Board of Directors of the Federal Deposit Insurance Corporation (FDIC).  Hoenig and Norton join Acting Chairman Martin J. Gruenberg, Comptroller of the Currency Thomas J. Curry, and Consumer Financial Protection Bureau (CFPB) Director Richard Cordray in completing the five-member Board.

"I welcome Thomas Hoenig and Jeremiah Norton to the FDIC and look forward to working with them,” said Acting Chairman Martin J. Gruenberg.  “They both are accomplished individuals, and their perspectives and experience will be important additions to the board as the FDIC continues to respond to a number of challenging issues and continues with the rulemaking process."

Prior to joining the FDIC Board, Hoenig was the president of the Federal Reserve Bank of Kansas City and a member of the Federal Reserve System's Federal Open Market Committee from 1991 to 2011.  Hoenig joined the Federal Reserve Bank in 1973 and received his doctorate in economics from Iowa State University.

Jeremiah O. Norton joins the FDIC Board after serving as an executive director at J.P. Morgan Securities in New York.  He was in government for a number of years before that, most recently as the deputy assistant secretary for financial institutions policy at the U.S. Treasury Department.  Norton also was a legislative assistant and professional staff member for U.S. Representative Edward R. Royce.  Norton received his J.D. from the Georgetown University Law Center and an A.B. in economics from Duke University.

Read more.
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CSBS Urges More Consistency among Federal Agency Stress Testing Proposals

The Conference of State Bank Supervisors (CSBS) has called for more consistency among federal regulators’ large bank stress testing proposals in order to prevent inconsistencies in the final requirements.

In comment letters to the Office of the Comptroller of the Currency (OCC) and the FDIC, CSBS endorsed stress testing as a risk-management tool and supported the Dodd-Frank mandate requiring annual capital adequacy tests for institutions with more than $10 billion in assets.  However, some dissimilarity between the proposals has raised concern.

“We believe consistency and comparability are critical to the implementation of the stress testing requirement,” CSBS President and CEO John W. Ryan said in a released statement.  “The Dodd-Frank Act requires each federal banking agency to ’issue consistent and comparable regulations.’  As currently drafted, some key differences in the proposals would result in significant inconsistencies in the implementation of these requirements.”

Some key differences include a significant disparity in the OCC’s proposal allowing the OCC to exempt an institution from some or all of the stress testing requirements outlined in the Dodd-Frank Act.  This exemption authority is not detailed in the FDIC’s or the Federal Reserve Board’s proposal.  Also, the OCC’s proposal contemplates allowing an institution to develop and use its own scenarios for the annual stress tests.  Once again, this specific flexibility is not considered in the FDIC’s or the FRB’s proposal.

CSBS has asked federal regulators to reconcile inconsistencies in the final stress testing requirements in order to achieve effective consistency and comparability across the proposals.

CSBS comment letter to the FDIC is available here, and the CSBS comment letter to the OCC is available here.
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FDIC Advisory Committee to Unveil Results of Pilot Program for Underserved Communities

The FDIC Advisory Committee on Economic Inclusion (ComE-IN) will hold a meeting April 26 to discuss the results of its Model Safe Accounts Pilot program and welcome new members to the Advisory Committee.

ComE-IN was established in 2006 for the purpose of advising and recommending to the FDIC important initiatives aimed at expanding access of banking services to underserved populations. As part of the FDIC’s continuing efforts to expand this access, it launched the Model Safe Accounts Pilot in January 2011. The year-long pilot evaluated the feasibility of financial institutions offering safe, low-cost transactional and savings accounts that are responsive to the needs of underserved consumers. During next week’s meeting the results of this pilot will be presented to committee members and made available to the public.

"We are pleased with the results of the pilot," said FDIC Acting Chairman Martin Gruenberg. "We believe the results demonstrate that affordable transaction and savings accounts offered by banks can help bring more individuals into the financial mainstream."

The committee will also welcome four new members at next week’s meeting: Robert Annibale, Global Director of Citi Community Development and Microfinance; José Cisneros, Treasurer of the City and County of San Francisco; Andrea Levere, President and CEO of the Corporation for Enterprise Development (CFED); and John C. Weicher, Senior Fellow and Director, Center for Housing and Financial Markets, Hudson Institute. CSBS President and CEO John W. Ryan is also a member of the committee.

The meeting will be open to the general public and will be webcast live. The meeting agenda can be found here.
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Around the Agencies

CFPB:  The CFPB announced Wednesday that it will use all available legal avenues, including disparate impact, to pursue lenders whose practices discriminate against consumers.  The Bureau will equip consumers with the information they need to spot the warning signs of discrimination.  “We want consumers to avoid the marketplace’s silent pickpocket—discrimination,” said CFPB Director Richard Cordray.  “We cannot afford to tolerate practices, intentional or not, that unlawfully price out or cut off segments of the population from the credit markets. That’s why the CFPB is educating consumers about their fair lending rights and pursuing lenders whose practices are discriminatory.”  Read more.

FHFA:  The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to develop enhanced and aligned strategies for facilitating short sales, deeds-in-lieu and deeds-for-lease in order to help more homeowners avoid foreclosure.  The effort will come in stages with the first taking place this June.  Read more

INTERAGENCY:  The Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) published the final report on the Principles for Financial Market Infrastructures.  The report updates, harmonizes, and strengthens the risk management and related standards applicable to financial market infrastructures (FMIs), including systemically important payment systems, central securities depositories, securities settlement systems, central counterparties, and trade repositories.  Read more.  
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Around D.C.

NAR:  The National Association of Realtors (NAR) issued a press release applauding the move by the Federal Housing Finance Agency to issue new guidance requiring servicers of Fannie Mae and Freddie Mac loans to speed responses to short sale requests.  “As the leading advocate for housing and homeownership, NAR knows that delays in approving short sale requests remain a significant challenge for Realtors and consumers and often results in canceled contracts and the property going into foreclosure,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami.  “Realtors greatly appreciate FHFA’s efforts in establishing a timeframe for responding to sellers and potential buyer offers to help streamline the short sales process.”  Read more.
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Upcoming Events

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.
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Closing Comment

“While community banks and thrifts provide nearly four out of every ten dollars in credit that small businesses receive, their share of the total loan market is much smaller--only 12 percent.  So in many ways, the fortunes of small banks and small business are inextricably linked, and community banks and thrifts will have trouble growing without strong loan demand from small companies.”

– Thomas J. Curry, Comptroller of the Currency, during a speech at the Small Business Lending Summit, April 17.
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Catherine Woody, Editor
Rockhelle Johnson, Writer
Edward Smith, Contributing Editor

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