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CSBS Examiner

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

11/12/2010 

 In This Issue...

 Upcoming Events...

Stress Testing Forum for Community Banks, December 1-2, 2010, Kansas City, MO:  The Stress Testing Forum will evaluate the challenges and opportunities with stress testing for community banks. The session will include demonstrations of three models specifically developed for community banks. These scenarios will serve to further the discussion of the value and limitations of stress testing. 

  

Supervisors Symposium, December 8-10, 2010,Washington, DC:  

 

Advanced Commercial Credit Analysis, December 13-16, 2010, San Jose, CA, or January 24-27, 2011, Palm Desert, CA::  APPROVED BY NASBA FOR 24 CPE HOURS.  This seminar is designed to provide a high level of skill development for rapidly and effectively evaluating the repayment ability of a commercial business.  It is not about assessing the quality of collateral that supports a loan, but about understanding the borrower's ability to repay a loan.

 

NMLS User Conference & Training, February 7-10, 2011, Lake Buena Vista, FL:  The Nationwide Mortgage Licensing System & Registry (NMLS) will hold its third annual NMLS User Conference & Training at the Hyatt Regency Grand Cypress in Lake Buena Vista, Florida.  Register and make your hotel reservations now for a chance to win a 64GB iPad. 

“The moon gives you light, And the bugles and the drums give you music, And my heart, O my soldiers, my veterans, my heart gives you love."

--Walt Whitman

 

This week we observed Veterans’ Day, and we hope that everyone took at least a moment to pause and honor those who, selflessly and in sometimes awful situations, keep this nation safe. Our local newspapers have been carrying features on the braver-than-brave who are living with amputations, unflinching. Walt Whitman’s words from another war are very much to the point.

 

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Obama Will Nominate N.C. Commissioner Joe Smith to Head FHFA

 

President Barack Obama on Friday announced his intention to nominate Joseph A. Smith, North Carolina Commissioner of Banks, as director of the Federal Housing Finance Agency. “Mr. Smith brings to this position both tremendous expertise and a deep commitment to strengthening our housing finance system for the American people,” Obama said. “I’m grateful that he has accepted this nomination, and I look forward to working with him in the months and years to come.”

 

CSBS President and CEO Neil Milner said he was pleased with the nomination. “Joe has been a respected leader in his state, regulating banks, thrifts, mortgage banks and brokers and a variety of consumer-finance entities. In addition, Joe has been an advocate for financial literacy and economic inclusion for consumers.” Smith is immediate past chairman of CSBS and a founding member of the Board of Managers of the State Regulatory Registry LLC, a limited-liability company established to implement a nationwide mortgage-licensing system. He is a graduate of Davidson College and the University of Virginia Law School and is licensed to practice law in New York and North Carolina.

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FDIC Issues Several Proposals and Final Rule

The FDIC Board of Directors met on Nov. 9 and approved two proposed rules amending deposit insurance assessment regulations.  The first implements a provision in the Dodd-Frank Act that changes the assessment base from one based on domestic deposits to one based on assets.  The second would re-propose changes approved in April for the deposit insurance assessment system for large institutions.  The Dodd-Frank Act requires the FDIC to change the assessment base from adjusted domestic deposits to average consolidated total assets minus average tangible equity, thereby creating a much larger base.  Therefore, the FDIC is also proposing to lower assessment rates to prevent a significant change to the total amount of revenue collected from the banking industry.  The second proposal would eliminate risk categories and debt ratings from the assessment calculation for large banks, instead using scorecards which would include financial measures that are predictive of long-term performance.  Both proposals will have a 45-day comment period upon publication in the Federal Register.  The FDIC is proposing that both changes by effective as of April 1, 2011.  Read more about these two proposals here

 

The Board also approved a final rule to provide temporary unlimited coverage for noninterest-bearing transaction accounts, as required by the Dodd-Frank Act.  This coverage will become effective on Dec. 31, 2010 and will end on Dec. 31, 2012.  As defined by the Dodd-Frank Act, noninterest-bearing accounts include only traditional, noninterest-bearing demand deposit or checking accounts that allow for an unlimited number of transfers and withdrawals at any time.  This temporary coverage is similar to the Transaction Account Guarantee Program (TAGP), but differs in the definition of noninterest-bearing account.  Unlike the TAGP, the final rule does not cover NOW and IOLTA accounts.  Read more about the final rule here.

 

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States, FTC Bring Payment Case

 

 

Seven states and the Federal Trade Commission obtained a $3.6 million judgment by a federal court against a payment processor and its subsidiary that allegedly debited consumers’ bank account illegally on behalf of deceptive telemarketers.  The states and the FTC accused Your Money Access, LLC and its subsidiary, YMA Company, LLC, of processing unauthorized debits on behalf of deceptive telemarketers and internet-based schemes that violated state and federal laws.  The companies played a critical role in these schemes by providing access to the banking system and the means to extract money from consumers’ bank accounts.  The FTC alleged that in many instances the merchants either failed to deliver the promised products or services or sent consumers relatively worthless items.  The states joining in the case were Illinois, Iowa, Nevada, North Carolina, North Dakota, Ohio and Vermont.  Read more here 

 

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Around the States

 

NY:  New York Superintendent of Banks Richard Neiman spoke at the Wolters Kluwer CRA & Fair Lending Colloqium in Las Vegas on need reforms to the Community Reinvestment Act (CRA).  “The first step is to modernize the CRA, to restore what was and is a great legislative tool from the somewhat static approach to implementation that has inevitably developed over time,” he said.  “Even with the best of intentions, the regulatory process and quantitative examination ratings can lead to a ‘check-the-box’ compliance mindset.”  Neiman also called on banks to serve wider geographic areas, including rural communities.  Read more here.

 

  

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Around the Agencies

 

FHA:  Vice President Joe Biden and Housing and Urban Development Secretary Shaun Donovan announced a new pilot program to offer creditworthy borrowers low-cost loans to make energy-saving improvements to their homes.  The FHA PowerSaver loans will have a 90% Federal Housing Administration guarantee.  The program will provide homeowners with up to $25,000 to make energy-efficient improvements of their choice, including the installation of insulation, duct sealing, doors and windows, water heaters, solar panels, and geothermal systems.  HUD is looking for a limited number of mortgage lenders to participate in the two-year pilot program, which is slated to begin in early 2011.  Lenders will be selected to participate based on their capacity and commitment to provide affordable home energy improvement financing.  HUD will accept comments on the program through Dec. 27.  Read more here.

 

Fed:  Federal Reserve Governor Kevin Warsh said the Fed’s latest decision to purchase more assets may not provide durable benefits, but he rejected accepting subpar growth and high unemployment.  “We should not lower our expectations.  We should improve our policies,” Warsh said at a meeting in New York.  Warsh was critical of short-term economic policies and called for pro-growth policies.  He recommended simplifying the tax code and making it more transparent and conducive to long-term investment.  Warsh also called for regulatory reform that would provide more timely, clear and consistent rules that would not protect incumbent firms based on size or scope.  “The steep correction in housing markets, while painful, lays the foundation for recovery … far better than the countless programs that sought to subsidize and temporize the inevitable repricing,” he said.  Read more here.

 

FTC:  The Federal Trade Commission extended the public comment period until Dec. 1, 2010, on a proposed policy statement clarifying when the agency will take action under the Fair Debt Collection Practices Act and the FTC Act against companies that contact the relatives of deceased consumers to collect the decedent’s debts.  FTC published a proposed policy statement on Oct. 8, clarifying whom debt collectors are allowed to contact to discuss a decedent’s debt; how collectors may contact and identify the right party to discuss a decedent’s debt; and how collectors should avoid giving relatives the misleading impression that they are personally obligated to pay the debt from their own assets, rather than from the decedent’s estate.  Read more here 

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Upcoming Events 

Nov. 15:  Model Examination Guidelines Web-Based School.  This online school, which has been developed by AARMR and CSBS, is designed to assist mortgage regulators and mortgage industry compliance personnel implement the examination procedures for the Guidance on Nontraditional Mortgage Product Risks and the Statement on Subprime Mortgage Lending.

 

Nov. 16:  The FDIC Advisory Committee on Economic Inclusion (ComE-IN) will meet to discuss children’s savings programs and recent studies of underserved consumers.  Read more here.

 

Nov. 16:  The FDIC will be hosting a Fair Lending Teleconference from 2:00 – 4:00 pm Eastern to discuss how the FDIC reviews institutions flagged for disparities based on the FDIC’s analysis of HMDA data.  The teleconference is primarily open to FDIC supervised institutions.  Bank directors, officers, and employees are welcome to attend.  Read more here.

 

Nov. 16:  Senate Banking Committee holds a hearing, “Problems in Mortgage Servicing from Modification to Foreclosure.”  The hearing begins at 2:00 pm.  Read more here.

 

Nov. 18:  House Financial Services Committee holds a hearing, “Robo-Signing, Chain of Title, Loss Mitigation and Other Issues in Mortgage Servicing.”  The hearing begins at 10:00 am.  Read more here.

Nov. 15:  Model Examination Guidelines Web-Based School.  This online school, which has been developed by AARMR and CSBS, is designed to assist mortgage regulators and mortgage industry compliance personnel implement the examination procedures for the Guidance on Nontraditional Mortgage Product Risks and the Statement on Subprime Mortgage Lending.

 

Nov. 16:  The FDIC Advisory Committee on Economic Inclusion (ComE-IN) will meet to discuss children’s savings programs and recent studies of underserved consumers.  Read more here.

 

Nov. 16:  The FDIC will be hosting a Fair Lending Teleconference from 2:00 – 4:00 pm Eastern to discuss how the FDIC reviews institutions flagged for disparities based on the FDIC’s analysis of HMDA data.  The teleconference is primarily open to FDIC supervised institutions.  Bank directors, officers, and employees are welcome to attend.  Read more here.

 

Nov. 16:  Senate Banking Committee holds a hearing, “Problems in Mortgage Servicing from Modification to Foreclosure.”  The hearing begins at 2:00 pm.  Read more here.

 

Nov. 18:  House Financial Services Committee holds a hearing, “Robo-Signing, Chain of Title, Loss Mitigation and Other Issues in Mortgage Servicing.”  The hearing begins at 10:00 am.  Read more here.

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Closing Comments

 

“The bankers I have talked with are not looking to Washington to solve their problems.  But they are looking for a market that allows them to compete.  They are looking for a regulatory structure that doesn’t require an army of lawyers, and a level playing field that lets customers see the true cost of a product—so lenders do not need to compete against a phantom price.”

 

--Elizabeth Warren in an opinion piece published in Politico outlining her intention to have the Consumer Financial Protection Bureau become a strong partner with community banks.

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Editor’s Note:  If you are receiving The Examiner by fax and prefer to receive it by e-mail, please contact Catherine Woody at cwoody@csbs.org  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

Edward Smith, Contributing Editor

Teresa Dean, Contributing Writer

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