In Cairo, election watchers await the results “with baited breath.” – cnn.com, June 23.

Recognizing that we may be tempting fate, we take the podium today to decry the Death of Editing As We Know It. Of course, the Egyptians were tense about their election results, but surely they were merely metaphorically holding their breath – not dangling a lure for electoral fish. Even venerable publications like The Washington Post are riddled with malapropisms, subject-verb disagreements and other sophomoric sins, and we’re only talking about the headlines, not the stories themselves. We are not urging pedantry. The real problem for news organizations is that alert readers will ask themselves what other inaccuracies may lurk in the reports they’re reading. For the record, this little commentary has been run through spellcheck.
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Largest U.S. Banks Prepare to Submit Resolution Plans to Financial Regulators
 
Financial institutions with more than $250 billion in nonbank assets will submit draft resolution plans, or so-called living wills, to the Federal Deposit Insurance Cooperation (FDIC) and the Federal Reserve Board (FRB) this week detailing how each firm can be wound-down in the event of financial collapse.

Mandated as part of the Dodd-Frank Act, these living wills are meant to demonstrate how a firm could go through bankruptcy or serve as guides for federal regulators to unwind complex financial firms at no cost to taxpayers and with minimal threat to the economy. Between five and 10 firms are expected to file in this first round that must submit by July 1. The names of the institutions have not been announced, however, according to America Banker, JPMorgan Chase, Bank of America, Citigroup and Goldman Sachs are among those expected to file this week.  The second subset of institutions must file first drafts by July 1, 2013, and the third group by Dec. 31, 2013.

In terms of what will follow once the draft living wills are submitted, it is expected to spark more dialogue between the firms and regulators than push any real change. American Banker quoted Mitchell Glassman, former FDIC director of resolutions and receiverships, describing the first round of submissions as a “check mark that says they at least finished the first step in compliance.”

Bloomberg quoted Jim Wigand, director of the FDIC’s Office of Complex Financial Institutions, in a June 28 article saying that the resolution plans are not likely to be found non-credible in the first year.  “It will be in the second round where there’s likely to be more of an engaged dialogue about what actions are necessary to remedy deficient plans,” Wigand said.

The FDIC issued the final rule requiring firms to have resolution plans in January 2012. The final rule became effective April 2012.  The rule is available online here.
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CFPB Report: Reverse Mortgages Difficult for Consumers to Understand

The Consumer Financial Protection Bureau (CFPB) released a report this week that examines reverse mortgages and consumer protection concerns regarding reverse mortgages.

In the report, the CFPB highlights several key findings, including: reverse mortgages are complex products and difficult for consumers to understand; the loans are currently being used in ways different than they had been in the past, which increases the risk to consumers; product features, market dynamics and industry practices also create risks for consumers; consumer counseling needs to be improved; and enforcement and regulation can be improved in areas such as cross-selling, fraud, advertising and disclosures.

The CFPB noted in the report that only about 2 percent to 3 percent of eligible homeowners currently have a reverse mortgage, and only about 70,000 new reverse mortgages are originated each year. But the agency went on to state that reverse mortgages have the potential to become a much more prominent part of the financial landscape in the coming decades.

“Reverse mortgages are complex and have the potential to become a much more pervasive product in the coming years as the baby boomer generation enters retirement,” said CFPB Director Richard Cordray. “With one in ten reverse mortgages already in default, it is important that consumers understand what they are signing up for and that it is the right product for them.” 

The CFPB was directed to study reverse mortgages as part of the Dodd-Frank Act. Dodd-Frank also authorizes the CFPB to issue regulations it determines necessary or appropriate as a result of the study. In carrying out this directive, the CFPB has also announced a Request for Information to gather public input on follow-up questions regarding reverse mortgages. Comments are due in 60 days.

The full report is available here.
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10 Questions with Charles G. Cooper

The CSBS Questionnaire, based upon the 19th century parlor game made famous by French novelist Marcel Proust, reveals another side of Charles G. Cooper, Banking Commissioner of the Texas Department of Banking.

Cooper was appointed Texas Banking Commissioner by the Texas Finance Commission on Dec. 1, 2008. His career in the banking industry spans more than 35 years and includes senior level positions in both the public and private sectors. Cooper began his career in banking in 1970 with the FDIC in the Dallas Region. He made the transition to the private sector in 1982. Prior to being appointed as Texas Banking Commissioner, he was affiliated with Diamond A - Ford Corporation, a private equity firm based in Dallas, Texas, where he was a senior advisor on strategic transitions. A native Texan, Cooper holds a BBA degree in Finance and Economics from Baylor University and is also a graduate of the Southwestern Graduate School of Banking at SMU. He also received an advanced peace officer certification. He was recently elected Treasurer of the CSBS Board of Directors, serves on the board of the Fort Worth Stock Show Syndicate, and is a member of the State Fair of Texas Youth Livestock Auction Committee. Cooper is married and has two daughters and one granddaughter.

CSBS Examiner: What are you currently reading?
Cooper: Lone Survivor by Marcus Luttrell.

CSBS Examiner: What are the current themes of your speeches or public statements?
Cooper: That we should have a balanced approach when regulating community banks.

CSBS Examiner: Which words or phrases do you most overuse?
Cooper: I seem to be using “federal overreach” too much these days.

CSBS Examiner: What is your greatest fear?
Cooper: That I have not done enough to make things better.

CSBS Examiner: Which talent would you most like to have?
Cooper: To be a good public speaker.

CSBS Examiner: Which living person do you most admire?
Cooper: I cannot name just one.  I most admire the men and women of our military.

CSBS Examiner: What do you consider your greatest achievement?
Cooper: To serve as the Commissioner of the Texas Department of Banking.

CSBS Examiner: What is your most treasured possession?
Cooper: My father’s badge and gun that he was wearing when killed in the line of duty.

CSBS Examiner: What other state regulator do you look to for perspective?
Cooper: Naming one is tough. I look to the makeup of CSBS for proper perspective.

CSBS Examiner: What is your motto?
Cooper: Tough but fair.
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Around the States

KY: The Kentucky Department of Financial Institutions (the Department) has received a certificate of accreditation, certifying that the Department maintains the standards and practices in state banking supervision set by CSBS’s accreditation program.  This marks almost 20 years that the Department has maintained its accreditation.  “We are pleased to have received reaccreditation,” said Charles Vice, Commissioner of the Kentucky Department of Financial Institutions.  “The DFI staff is very committed to carrying out effective supervision, and this is really a tribute to their hard work.” Read more.
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Around the Agencies

FASB: The Financial Accounting Standards Board (FASB) issued for public comment a proposed Accounting Standards Update (ASU) intended to improve financial reporting about certain risks inherent in financial instruments and how they contribute to the reporting organization’s broader risks. Stakeholders are asked to provide input by Sept.25, 2012.  Read more.

FBI: The FBI released bank crime statistics for calendar year 2011. Between Jan. 1, 2011 and Dec. 31, 2011, there were 5,014 robberies, 60 burglaries, 12 larcenies and seven extortions of financial institutions reported to law enforcement. The total 5,093 reported violations represent a decrease from 2010, during which 5,641 violations of the Federal Bank Robbery and Incidental Crimes Statute were reported. Read more.

FRB:  The Federal Reserve Board announced Wednesday that Chairman Ben S. Bernanke will host a town hall meeting with educators from across the country on August 7. The educators will join the Chairman in the Board Room of the Federal Reserve Board's main building in Washington, D.C., and will gather in Federal Reserve Bank offices throughout the country to participate via videoconference. The Chairman will give brief remarks about the importance of personal financial education and then respond to questions from both in-person and videoconference participants. Read more.

OCC: The Office of the Comptroller of the Currency (OCC) published a Community Developments Insights report that looks at bank participation in the USDA Business & Industry Guaranteed Loan Program. The report highlights how banks can make loans through this program to support businesses, expand employment, further economic development in rural areas, and help meet their Community Reinvestment Act goals. “Job creation and improving the economic climate in rural America are among this program’s primary goals,” said Comptroller of the Currency Thomas J. Curry.  “The USDA program enables lenders to help mitigate risk and assist rural businesses with their financing needs.” Read more. 

OCC: The percentage of first-lien mortgages that were current and performing at the end of the first quarter of 2012 increased to the highest levels in three years, according to a report published by the OCC. The OCC Mortgage Metrics Report for the First Quarter of 2012 showed percentages of mortgages that were 30 to 59 and 60 to 89 days delinquent also decreased to their lowest levels since the OCC began publishing its report on mortgage performance in first quarter of 2008.  The OCC attributes the improvement in mortgage performance to several factors, including strengthening economic conditions during the quarter, seasonal effects, servicing transfers, and the ongoing effects of home retention programs as well as home forfeiture actions. Read more.
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Around D.C.

Congress: The House Financial Services Committee, with strong support from both parties, approved a measure (H.R. 4367) this week that would eliminate a federal requirement for ATMs to include a physical sign that notifies consumers of potential transaction fees. Similar legislation (S. 3204) has been introduced in the Senate.  Read more.

Congress: The Insurance, Housing and Community Opportunity Subcommittee of the House Financial Services Committee held an oversight hearing on regulation of the appraisal industry Thursday where two panels of witnesses representing government, industry, and consumer advocates testified, including President of the Appraisal Institute Sara Stephens. In her testimony Stephens made clear that states have the ability to fulfill their historical responsibilities in overseeing the appraisal industry and described how the NMLS model can be applied to the appraisal industry.
Read more.
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Upcoming Events

July 30 – Aug. 1: The CSBS Education Foundation will host its Deputy Seminar in New Orleans. The Deputy Seminar is an opportunity for key banking department officials to gather to learn about upcoming issues, share challenges, and learn potential solutions. Read more. 

Aug. 1 – Aug 3: CSBS will host its Legal Seminar which provides a forum for state banking department attorneys, assistant attorneys general assigned to the department, and other regulatory attorneys. Read more.

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Closing Comment