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CSBS Examiner

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

7/30/2010 

 In This Issue...

 Upcoming Events...

Legal Seminar, August 22-25, 2010, Sacramento, CA:  The Legal Seminar provides a forum for state banking department attorneys, assistant attorneys general assigned to the department, and other regulatory attorneys.

Deputy Seminar, August 25-27, 2010, Sacramento, CA:  The Deputy Seminar is an opportunity for key banking department officials to gather to learn about upcoming issues, share challenges, and learn potential solutions.

Bank Directors Seminar, September 26-28, 2010, Coeur d'Alene, ID:  The Graduate School of Banking at Colorado and the Conference of State Bank Supervisors join forces to deliver the best and most effective bank director training. This program gets to the point and delivers clear, effective tools to serve as a community bank director.

CSBS Banker Briefing:  Your State Banking Commissioner and the CSBS cordially invite you to a roundtable briefing and open discussion of financial regulatory reform and other timely issues.  Complimentary registration.

Problem Bank School, October 4-8, 2010, LaQuinta, CA:  This program takes an examiner from the "routine" to the complex and challenging world of problem banks. In this course, examiners will learn how to: identify red flags; risk focus the exam; identify and prevent fraud; draft enforcement actions; document to prevent or prepare for litigation.

Certified Operations Examiner School, October 4-8, 2010, LaQuinta, CA:  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.

July 30, 2010

Be prepared. Do a good turn daily. – Boy Scout motto and slogan

This week, we tip our hats to the Boy Scouts of America, celebrating the organization’s 100th anniversary at their annual Jamboree at Fort A.P. Hill in nearby northern Virginia, with some 47,000 scouts attending. On Sunday, with temperatures hovering around 100 degrees, they marched in formation and in uniform on the National Mall. It was a sight to behold to those of us at home watching TV in our air conditioned quarters.  Never having been a boy, your newsletter editor remembers her days as a Brownie and a Girl Scout way back when. She remembers learning the art of making up a bed before the days of fitted sheets, hospital corners. She remembers selling cookies door to door. Once a scout, always a scout, girl or boy.

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CSBS Supports Bill Creating CRE Guarantee Program

Iowa Superintendent of Banking and CSBS Chairman Tom Gronstal addressed the House Financial Services Committee on Thursday concerning Representative Walter Minnick's Commercial Real Estate Stabilization Act (H.R. 5861), which seeks to create liquidity in the commercial real estate market, support small businesses and foster job growth.

"Some regions of the nation, portions of the banking industry, and financial markets continue to face significant challenges, even as other areas are showing signs of recovery," Gronstal said.  "Given where we are in the current economic cycle, we believe Congress can play an important role in the CRE market by providing a federal guarantee for prudently underwritten loans." Gronstal recommended that state bank regulators be represented on the program's Oversight Board, given CRESA's stated focus on smaller institutions and state bank regulators' knowledge of local economies.

Testimony from Thursday’s hearing

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Maryland Commissioner Receives Banking Committee Approval for Fed Post

Maryland Commissioner of Financial Regulation Sarah Bloom Raskin joins Federal Reserve Bank of San Francisco President and CEO Janet Yellen and Massachusetts Institute of Technology Professor Peter A. Diamond in moving one step closer to membership on the Federal Reserve Board of Governors this week when the Senate Banking Committee approved the nominees. Dr. Yellen would be the vice chairman of the board, if confirmed by the Senate. If confirmed, all three would serve on the Federal Open Market Committee.  "The members of the Board will clearly have their hands full in the coming years.  We ask much of them – but circumstances demand that we do," said Banking Committee Chairman Chris Dodd. "Fortunately I believe our nominees will rise to meet the challenges they will surely face as Governors.  As we learned during the nomination hearing, each brings a remarkable combination of skills and experience, and each has the judgment that is essential to taking on significant questions of policy.  I believe they have the potential to make important contributions to the Federal Reserve in the years ahead." The nominations will now be sent to the Senate floor for a final confirmation vote. More information

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Agencies Adopt Final Rules on Mortgage Loan Officer Registration

The federal banking agencies adopted final rules requiring employees of banks, savings associations and certain other financial institutions that act as residential mortgage-loan originators to register with the Nationwide Mortgage Licensing System and Registry. The Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators created the database to support the licensing of mortgage loan originators by the states. The registration is required by the Secure and Fair Enforcement for Mortgage Licensing Act. The final rules cover the adoption of policies and procedures to ensure compliance with the law, which includes obtaining a unique identifier through the registry that will remain with that residential mortgage loan originator, regardless of changes in employment. The final rules take effect on Oct. 1, 2010. The agencies anticipate that the registry could begin accepting federal registrations as early as Jan. 28, 2011. Employees of agency-regulated institutions must not register until the agencies instruct them to do so. The agencies issuing the rules were FDIC, the Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Farm Credit Administration and the National Credit Union Administration. See announcement

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CSBS, ACSSS Support Expansion of CRA Investment Options

CSBS and the American Council of State Savings Supervisors (ACSSS) issued a comment letter this week indicating their support of a proposed rule that would allow banks to receive Community Reinvestment Act consideration for investment activities under the Department of Housing and Urban Development's Neighborhood Stabilization Program (NSP). NSP provides funding to state and local governments and nonprofit organizations to buy and redevelop abandoned and foreclosed properties in areas with HUD-approved plans.

"We believe that this proposal, if enacted, will provide considerable incentive to institutions to promote community development activities in their own assessment areas and the targeted areas," CSBS President Neil Milner and ACSSS President Doug Foster stated in a joint comment letter to the four federal bank regulatory agencies. Milner and Foster also made the point that the proposed sunset date for the program should be reconsidered, claiming that "the need for NSP-eligible activities will persist, and the agencies can encourage banks to continue working to revitalize and stabilize designated target areas by allowing institutions to receive CRA credit consideration for performing these activities."

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New York State Banking Department Achieves Reaccreditation

CSBS announced this week that the New York State Banking Department (NYSBD) has received its fifth certificate of accreditation, certifying that the department maintains the highest standards and practices in state banking supervision set by the organization's Accreditation Program. Established in 1851, NYSBD is the oldest bank regulatory agency in the nation. Superintendent Richard H. Neiman heads the NYSBD, which is responsible for the supervision of entities which provide financial services and are licensed in the State of New York. First accredited in 1985, the Department is structured in five key supervisory divisions including Foreign and Wholesale Banks, Community and Regional Banks, Mortgage Banking, Licensed Financial Services and Consumer Services.  It supervises 100 commercial banks and thrifts with total assets exceeding $500 billion, as of March 31, 2010. In addition, the NYSBD supervises 12 non-deposit trust companies, 40 holding companies, 136 foreign branches, agencies and representative offices, more than 180 mortgage banks and over 1500 mortgage brokers. In addition, the Department supervises money transmitters, check cashers, budget planners, licensed lenders, sales finance companies, and premium finance agencies.

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FTC Rules on Debt Relief Companies

Starting on Oct. 27, new Federal Trade Commission rules will stop for-profit companies that sell debt relief services over the telephone from charging a fee before they settle or reduce a customer’s credit card or other unsecured debt. "This rule will stop companies who offer consumers false promises of reducing credit card debts by half or more in exchange for large, up-front fees. Too many of these companies pick the last dollar out of consumers’ pockets," said FTC Chairman Jon Leibowitz. Three other Telemarketing Sales Rule provisions that take effect on Sept. 27 will require debt relief companies to make specific disclosures to consumers; prohibit them from making misrepresentations; and extend the Telemarketing Sales Rule to cover calls consumers made to these firms in response to debt relief advertising. The rules apply to telemarketers of for-profit debt relief services, including credit counseling, debt settlement and debt negotiation services. The regulations do not cover nonprofit firms, but does cover companies that falsely claim nonprofit status. Over the past decade, FTC and state enforcers have brought a combined 259 cases to stop deceptive and abusive practices by debt relief providers that have targeted consumers in financial distress. Read more

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Last Week’s Bank Closings

Regulators closed banks in the states of Florida, Georgia, South Carolina, Kansas, Minnesota, Nevada and Oregon on Friday, bringing the total for year to 103.

The Office of the Comptroller of the Currency closed Williamsburg First National Bank, Kingstree, S.C., and FDIC arranged for the purchase of all deposits for a premium of .5 percent and all the assets by First Citizens Bank and Trust Company, Inc., Columbia, S.C. Williamsburg First had approximately $139.3 million in assets and $134.3 million in deposits.

The Florida Office of Financial Regulation closed Sterling Bank in Lantana, and FDIC arranged for the purchase of all the deposits and assets by IBERIABANK, Lafayette, La. Sterling Bank had approximately $407.9 million in assets and $372.4 million in deposits.

The Georgia Department of Banking & Finance closed Crescent Bank and Trust Company, Jasper, and FDIC arranged the purchase of all the deposits for a 1 percent premium and all the assets by Renasant Bank, Tupelo, Miss. Crescent Bank had approximately $1.01 billion in assets and $965.7 million in deposits.

The Kansas Office of the State Bank Commissioner closed Thunder Bank, Sylvan Grove, and FDIC arranged for the purchase of all the deposits and assets by the Bennington State Bank, Salina, Kan. Thunder Bank had approximately $32.6 million in assets and $28.5 million in deposits.

The Minnesota Department of Commerce closed Community Security Bank, New Prague, and FDIC arranged for the purchase of all the deposits for a premium of 0.89 percent and all the assets by Roundbank, Waseca, Minn. Community Security Bank had approximately $108 million in assets and $99.7 million in deposits.

The Nevada Financial Institutions Division closed SouthwestUSA Bank, Las Vegas, and FDIC arranged for the purchase of all the deposits and $137.3 million of the assets by Plaza Bank, Irvine, Calif. SouthwestUSA Bank had approximately $214 million in assets and $186.7 million in deposits.

The Oregon Department of Consumer and Business Services closed Home Valley Bank, Cave Junction, and FDIC arranged the purchase of all the deposits for a premium of 1.05 percent and all the assets by South Valley Bank & Trust, Klamath Falls, Ore. Home Valley Bank had approximately $251.8 million in assets and $229.6 million in deposits. Read more

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Around the States

West Virginia: West Virginia Attorney General Darrell McGraw announced a settlement with Internet payday lender FFD companies to refund illegal fees and interest to West Virginians. The company operates at least five Internet payday loan websites and will no longer market or collect loans in the state. Under the settlement, FFD will pay refunds totaling $305,446.53 to 576 affected West Virginia consumers who obtained payday loans by computer through interactive websites. Payday loans are illegal in West Virginia. Since McGraw began investigating the industry in 2005, his office has reached settlements with 107 Internet payday lenders and their collection agencies, resulting in more than $2.4 million in refunds and cancelled debts for 8,044 West Virginians. Additional information

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Around the Agencies

FinCEN: The Financial Crimes Enforcement Network has a new toll free number and e-mail address for the Bank Secrecy Act Electronic Filing Service Desk. Effective July 31, the new number is 1-866-346-9478 (Option 1) and the new e-mail address is BSAEFilingHelp@fincen.gov. The old number will be disconnected on July 31. The Help Desk hours and days of operation will remain the same: Monday through Friday 8 a.m. to 6 p.m. E.T. More information

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Upcoming Events

August 2 – Treasury Secretary Timothy Geithner will speak at New York University on implementation of the Dodd-Frank Act.

August 5 - The Federal Reserve Board will hold the second of four public hearings this year on potential revisions to Regulation C, which implements the Home Mortgage Disclosure Act. - 8 a.m.-1 p.m., Federal Reserve Bank of San Francisco, 101 Market Street, San Francisco, Cal.

August 9–September 10 - Congress is out on recess.

August 6 - Federal bank regulatory agencies will hold the second in a series of four public hearings on modernizing the regulations that implement the Community Reinvestment Act. - Federal Reserve Bank of Atlanta, 1000 Peachtree Street Northeast, Atlanta, Ga.

August 10 – The Federal Open Market Committee meets to discuss interest rates.

August 12 - Federal bank regulatory agencies will hold the third in a series of four public hearings on modernizing the regulations that implement the Community Reinvestment Act. - Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, Ill.

August 17 - The Obama Administration will host a conference on the future of the nation's housing finance system, including Fannie Mae and Freddie Mac. - Treasury Department, Washington D.C.

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Closing Comment

"The New Abnormal: Americans are broke and depressed—and also swilling $3 lattes and waiting in line for iPhones. Welcome to the schizophrenic economy."  - Headline on cover story in this week’s Bloomberg Businessweek.

Mary White, Editor

Teresa Dean, Contributing Writer

 

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