“We are all worms.  But I do believe that I am a glow-worm.” – Winston Churchill

Daily existence can have its glum moments, but the ability to add a sprightly turn to things is a great asset.  Sometimes even a verbal nudge can help us admit that there may – just may – be a bright side.  This is a good way to keep on keeping on and eventually to prevail.
_________________________________________________________

ICBA Survey Results Indicate CFPB Mortgage Rules Would Limit Access to Credit in Rural Areas

The Consumer Financial Protection Bureau’s (CFPB) provisions for balloon-payment mortgage loans and rural community banks need to go further to adequately protect the customers of Main Street community bank lenders, the Independent Community Bankers of America (ICBA) announced last week.

The ICBA’s comment was based on the results of its community bank qualified mortgage survey that was conducted earlier this year.  The purpose of the survey was to gather data on the impact of the accommodations made for community banks in the CFPB’s qualified mortgage and ability-to-repay rules.  Information was requested on community banks’ residential first-lien mortgage lending activities for 2012, and approximately 380 responses were received.

“Community banks are responsible mortgage lenders that did not participate in the abuses that contributed to the financial crisis,” said Bill Loving, ICBA chairman and president and CEO of Pendleton Community Bank in Franklin, W.Va.  “Nevertheless, ICBA’s survey shows that some Main Street communities could be cut off from a critical source of mortgage credit without adjustments to the CFPB’s new mortgage rules.”

Key findings of the survey show that of the 75 percent of the community banks that responded to the survey and currently make balloon mortgages, fewer than half (46%) would qualify for the balloon mortgage exception to the QM rule.  Results also revealed that of the banks that claimed to be “rural” banks, 43 percent would not qualify as “rural” under the current QM rural definition.  Additionally, for the community banks that would not qualify for the balloon exception, 43 percent would be disqualified based primarily on the definition of “rural,” while nine percent wouldn’t qualify due to a combination of the 500 loan annual originations cap and the definition of “rural.”   

The survey, which was conducted Feb. 7-14, received a response rate of approximately eight percent.   Read more.
_________________________________________________________

James M. Cooper Named Senior Vice President of CSBS’s Policy Team

CSBS announced on Monday the appointment of James M. Cooper as Senior Vice President for Policy. The appointment was effective immediately, and Cooper is now responsible for the coordination of and staff support for CSBS public policy development processes. After a busy first week on the job, the CSBS Examiner caught up with Cooper to discuss his transition and his new role at CSBS. CSBS Examiner: Congratulations, Jim! It has only been a few days since you started your new position and I’m sure you are still getting settled, but tell me, how has your first week been at CSBS?

Cooper: It has been a very interesting and busy first week. Even though I have been actively involved with CSBS for a long time, I probably didn’t fully appreciate how many different things that the CSBS staff is involved with on a daily basis. There is a lot going on and it is invigorating to be a part of the organization.

CSBS Examiner: In your role as SVP for Policy you will be responsible for overseeing the public policy development processes at CSBS. How will you approach this work?

Cooper: The organization’s committee structure allows the commissioners and state regulator members to direct the public policy development process of CSBS.  The regulatory committee has delegated authority from the board of directors to establish policy so it is really important that the committee operate in an inclusive and transparent manner.  I view my role as a facilitator of the policy development process.  The perspective that state regulators bring to the table is very important, and I am going to do my best to make sure that the diverse views of the state regulatory system are strongly represented.

CSBS Examiner: What are the biggest trends and issues of concern you’ll be tracking in your role at CSBS?

Cooper: I am going to continue to be involved with the Community Banking Task Force and Regulatory Committee, but I will also be involved in the work of the Financial Stability Oversight Council.  As for specific issues, the new capital rules and the FASB proposal on credit losses will undoubtedly be a priority in the next several months.

CSBS Examiner: If you could look into the future five years from now, what would you see as it relates to the state of the financial services system? 

Cooper: The industry has been through a very difficult period over the last few years, but there are some positive signs with respect to improved earnings and lower delinquency.  There is undoubtedly going to be some more consolidation in the industry, but it is going to occur among the smaller and mid-sized institutions.  Ultimately there will be fewer banks, but they are going to be stronger. 

CSBS Examiner: Tell me how you first got involved with financial services?

Cooper: I grew up in a small town in Indiana where my father served as the executive vice president of a local state-chartered bank, so I learned first-hand how important banks are to the communities they serve.  After I graduated from college, my dad suggested that I get a job as a bank examiner to get a broad understanding of what happens in the banking industry.  We both expected that I would examine banks for a few years and then find a job in a bank, but I really enjoyed the analytical aspects of bank supervision and made it a career.

CSBS Examiner: What do you find most challenging about today’s banking regulatory environment?

Cooper: There are so many changes taking place that it is difficult for small banks to keep up.  The risks associated with a lack of compliance tend to stifle innovation.  We need community banks to extend credit to small business and develop new financial products.  If the regulatory environment impedes those activities, there is something wrong.

CSBS Examiner: What are you most proud of?

Cooper: I don’t think there is any question that I am most proud of my family.  My wife is an exceptional special education teacher and was recently named “Teacher of the Year” at her school in Indiana.  My daughter just graduated summa cum laude from college and is following in her mother’s footsteps as a special education teacher.  My son is going to be a junior at Indiana University next year.  My career change has a big impact on my immediate family, so I am really proud of the fact that they have been supportive of the change.  I wouldn’t be here today if not for them.
_________________________________________________________

Ten Questions with Outgoing Georgia Commissioner Robert Braswell

The CSBS Questionnaire, based upon the 19th century parlor game made famous by French novelist Marcel Proust, reveals another side of Georgia Commissioner Robert Braswell. First appointed Commissioner in Dec. 2005, Braswell is retiring from the Department of Banking and Finance at the end of this month. Braswell spent his entire professional career with the Department, beginning as a financial examiner in 1984. Over the course of his career, he held the positions of supervisory examiner, district director, and deputy commissioner for mortgage. He received his bachelor's degree in business administration with a concentration in finance from Georgia Southern University. Braswell and his wife, Amy, reside in Marietta with their two children. Braswell’s last day as commissioner will be June 1.

CSBS Examiner: What are you currently reading?
Braswell: At my daughter’s request, I just finished reading “The Guernsey Literary and Potato Peel Pie Society” written by Mary Ann Shaffer and Annie Barrows.  We’re visiting Guernsey, England for her high school graduation trip and she said it was required reading.  I enjoyed it thoroughly!

CSBS Examiner: What are the current themes of your speeches or public statements?
Braswell: Since announcing my retirement, I have been thanking the various financial industry groups for the cooperative and friendly, yet professional, working relationship that we’ve shared over the years.  I have always thought that this type of relationship was more productive in achieving our shared goal of a healthy financial industry.

CSBS Examiner: Which words or phrases do you most overuse?
Braswell: If I’m not careful, I will use the word “obviously” when it may not be so obvious.

CSBS Examiner: What is your greatest fear?
Braswell: I never want to let anyone down that is counting on me.

CSBS Examiner: Which talent would you most like to have?
Braswell: I would love to be able to sing.  I have a good ear for music, but I can’t carry a tune in a bucket.

CSBS Examiner: Which living person do you most admire?
Braswell: Billy Graham, the Christian evangelist.

CSBS Examiner: What do you consider your greatest achievement?
Braswell: Wooing my wonderful wife 24 years ago and becoming engaged just 30 days after our first date.

CSBS Examiner: What is your most treasured possession?
Braswell: Setting aside the truly treasured things such as family, friends, faith, good health, and my dog, the closest thing to a treasure to me would be my pick-up truck.  No Southern male should be without one.

CSBS Examiner: What other state regulator do you look to for perspective?
Braswell: John Harrison of Alabama.  I want to be like him when I grow up.  John’s smart, practical, has a great sense of humor, and is a godly man.  He’s been a dear friend and colleague over the past seven and half years that I’ve been commissioner.

CSBS Examiner: What is your motto?
Braswell: “Always do the right thing, and everything else will take care of itself.”  I must also admit that there were times during the financial crisis in which I related to Norm Peterson of “Cheers” when he said, “It’s a dog eat dog world, and I’m wearing Milk Bone underwear.”
_________________________________________________________

Around the Agencies

FDIC: The Federal Deposit Insurance Corporation (FDIC) Advisory Committee on Economic Inclusion (ComE-IN) met on Thursday to discuss the FDIC's 2013 economic inclusion priorities.  The meeting featured a panel discussion on Safe Accounts and prepaid cards.  Read more.

FRB: Eighteen large U.S. bank holding companies are required to submit the results of their company-run, midyear stress tests to the Federal Reserve on July 5, the Federal Reserve said in instructions to those firms Monday.  Read more.

FTC: The Federal Trade Commission (FTC) has issued its annual letter to the CFPB on FTC enforcement and related activities regarding the Truth in Lending Act, Consumer Leasing Act, Electronic Fund Transfer Act, and Equal Credit Opportunity Act.  This year's letter also discusses the Dodd-Frank Act, and the FTC’s and CFPB’s memorandum of understanding that set forth a framework for coordinating certain law enforcement, rulemaking, and other activities.  Read more.

TREASURY: The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury released the April edition of the Obama Administration's Housing Scorecard–a comprehensive report on the nation's housing market.  The latest data show important progress across many key indicators—as home values continue to rise and home sales remained strong in April—although officials caution that the overall recovery remains fragile.  Read more.
_________________________________________________________

Around D.C.

FREDDIEMAC: Freddie Mac announced it is making its new Streamlined Modification program immediately available to all eligible borrowers nationwide in order to expedite financial relief for potentially thousands of distressed families.  Freddie Mac's Streamlined Modification program had originally been scheduled to start on July 1, 2013.  Read more.
_________________________________________________________

Upcoming Events

May 21: The House Energy and Commerce Committee will hold a hearing on "Cyber Threats and Security Solutions," focusing on steps the federal government and the private sector are taking to bolster the security of America's critical infrastructure and mitigate exposure to cyber-attacks.  The hearing starts at 10:00 a.m. in 2322 Rayburn.  Read more.

May 22: The House Financial Services Committee's Subcommittee on Oversight and Investigation will hold a hearing on how the Justice Department determines whether a financial institution is "Too Big to Jail" at 2:00 p.m. in 2128 Rayburn.  Read more.

June 6: The FTC and the CFPB will co-host a roundtable to examine the flow of consumer data throughout the debt collection process.  The event will bring together consumer advocates, credit issuers, collection industry members, state and federal regulators, and academics to exchange information on a range of issues.  The roundtable is free and open to the public; it will be held at the FTC’s Satellite Building.  Read more.

June 13: The California Department of Financial Institutions will host a small business lending fair.  The event will bring together lenders—banks, credit unions, and community development financial institutions—with representatives of the state small business loan guarantee programs to learn about programs that expand access to credit for small businesses.  Read more.
_________________________________________________________

Closing Comment

"While much work remains for regulators and banks implementing pending capital requirements, most large, medium-sized, and community banks are in stronger capital positions today than they were prior to the financial crisis.”

– Federal Reserve Board Governor Sarah Bloom Raskin, May 16 in the American Banker.
_________________________________________________________

Catherine Woody, Editor
Rockhelle Johnson, Writer
Edward Smith, Contributing Editor