August 31, 2007

“People who work sitting down get paid more than people who work standing up” – Ogden Nash

With Labor Day fast approaching, we read with interest an article this week informing us that workers who telecommute report higher job satisfaction than those who report for duty at the office every day. Hmmm. Does that mean that we’re turning into a bunch of recluses? Or we like to work in our PJs? Now we do work from home occasionally, but in general, we prefer coming to the office. Call us old-fashioned, but we like seeing our co-workers and being a part of the workday hubbub. The article notes that many companies “don’t embrace work-at-home policies.” Also, they have difficulties coming up with a way to administer telecommuting policies fairly. Nevertheless, it’s a fact that today’s workplace is evolving, thanks to the internet, cell phones, PDAs, wireless networks and laptops. Now if we could only figure out a way for cooks, miners, bus drivers, nurses, tellers, etc. to telecommute, we’d be onto something. 

President Announces Plan to Bring Help to Troubled Homeowners

President Bush today announced a series of steps to help certain homeowners with high-cost subprime adjustable rate mortgages refinance their mortgages with Federal Housing Administration (FHA) backing.  The program could help as many as 80,000 homeowners who are 90 days delinquent but paid their loans on time before the interest rates reset as long as they have 3 percent equity in their homes. The FHA program would not require Congressional approval and could take effect early next year. Bush also pressed for Congress to pass other FHA-reform proposals, including lower down-payment requirements and higher loan limits. He also proposed allowing FHA to charge risk-based. The President’s remarks are posted at

CSBS President and CEO Neil Milner commended President Bush on the FHA proposal.

The Conference of State Bank Supervisors (CSBS) announced its support of the changes to the Federal Housing Administration's (FHA) programs proposed today by President Bush. Under the programs, the FHA would assist borrowers that are facing hardship due to the payment reset of their home mortgages.

“As we stated in testimony before Congress this past spring, FHA is a ready and important tool in stabilizing the flow of credit to homebuyers that are at risk of losing their homes due to payment reset or communities where access to affordable credit has dried up,” said CSBS President and CEO Neil Milner.  "Today's announcement of the FHASecure plan shows that the administration recognizes this too."

“We believe that to further improve FHA’s ability to assist subprime borrowers, Congress should pass FHA reform legislation this year,” Milner said.  “We urge Congress to pass FHA reform legislation to increase FHA’s ability to provide affordable financing to vulnerable homeowners.”

CSBS noted that today’s announced changes to FHA’s programs are two-fold in nature:

  • FHA will be allowed to refinance credit-worthy borrowers who are in default due to the payment reset of their current mortgage; and
  • FHA will make some adjustments to their insurance premiums based on risk.

“Both changes appear to be lending practices that have been prudently applied in the banking industry in the past, and CSBS would be willing to work with FHA to bring the experience of our regulators in this regard,” Milner said.

As an insurer of higher risk borrowers, FHA does not have to outlay any money to assist subprime borrowers.  Rather, FHA insures mortgages, underwritten to sustainable credit guidelines, made by private lenders with private funds. The mortgage insurance premiums paid by borrowers fund FHA’s insurance programs. 

“We would note that in FHA’s 75+ year history, through various crises, FHA has operated its insurance funds without the need for taxpayer dollars to its single-family programs,” Milner said

In this regard, empowering FHA to assist in the current subprime credit crisis is a market-based approach that uses a government program to assure the flow of private credit to borrowers at a time of great uncertainty, he added.

Sen. Johnson to Return to Senate

South Dakota Senator Tim Johnson (D) announced on Wednesday that he will return to work in the Senate starting on Sept. 5. Johnson underwent surgery for a brain hemorrhage on Dec. 13, 2006. In announcing his return, Johnson said his speech is not 100 percent. But he said he has been given a second chance at life and will use that second chance to work harder than ever “to be the best I can be for each and every South Dakotan.” Johnson is the chairman of the Subcommittee on Financial Institutions of the Senate Banking Committee. The Financial Institutions Subcommittee has legislative jurisdiction over banks, savings associations, credit unions and other financial institutions and has oversight over FDIC and the Federal Reserve. Johnson also sits on the Securities, Insurance and Investment Subcommittee and the Security and International Trade and Finance Subcommittee. Sen. Johnson’s remarks may be found at

We Knew Him When…

Ventriloquist Terry Fator (a.k.a. “The Human Jukebox”), who had attendees at the 2007 CSBS Annual Conference in Coeur d’Alene pretty much rolling in the aisles, beat out 9 finalists last week to win NBC’s America’s Got Talent contest. Reportedly, as a child he dreamed of being a great magician but turned to ventriloquism after reading a book from his school library. His award-winning performance yielded a $1 million paycheck and promises no shortage of future bookings. Needless to say, CSBS was lucky to have gotten him before he struck fame and fortune. For more information, check the program’s Web site at

Around The States

Texas: Texas has adopted new legal limit calculations for loans, investments and fixed assets effective Sept. 1, said Texas Banking Commissioner Randall S. James. The change was adopted during the 2007 state legislative session at the request of the Texas Department of Banking. The legal limit calculations for loans, investments and fixed assets were amended to more closely conform to federal standards and ease the regulatory burden for banks.  The concept of “certified surplus” is eliminated, and legal lending and investment limits will now be calculated based upon “unimpaired capital and surplus,” to be defined by the rule as the equivalent of Tier 1 capital. The legal lending limit will be 25 percent of Tier 1 capital, and the general investment limit will be 15 percent of Tier 1 capital. “We do not expect this change to have a major impact on our banks,” said James. The Department’s memo to bank CEOs may be found at

Around The Agencies

FTC: The Federal Trade Commission on Thursday stopped telemarketers who defrauded more than 30,000 Spanish-speaking consumers out of more than $4 million with their marketing scam involving pre-approved, advance fee MasterCards and other items. The scheme used national advertising on Spanish-language television networks. For $138-$200, the consumers were promised pre-approved, guaranteed Amerikash MasterCards and a number of incentive items, including free automated teller machine cards, phone cards and vacation vouchers. They also were offered free-trial memberships in the Amerikhealth discount health plan, which consumers had to cancel before the free-trial period expired to avoid monthly charges. FTC alleged that in numerous instances the consumers never received the MasterCards or other items and were improperly charged for the discount health plan. A district court ordered restitution of the money and banned from telemarketing activities those involved -- Remote Response Corporation and its owners, Alberto Salama, Samuel Salama, Elias Salama and Joseph Bensabat; and German Espitia, president of Instant Way Corp. More information about the case may be found at

OTS: Community banks need regulatory relief in the area of compliance with anti-money laundering rules, said Office of Thrift Supervision Director John Reich on Tuesday in a speech at a conference sponsored by the Federal Financial Institutions Examination Council. Reich spoke in support of an initiative by the Treasury Department to create a more risk-based approach to examining community banks for anti-money laundering compliance and clarifying the definition of money service businesses. But Reich also stressed the importance of information supplied by the banking industry in the fight against terrorism finance. He said that the FBI identified more than 88,000 SARs and CTRs that were related to terrorism investigations. He also noted a decline in enforcement actions related to Bank Secrecy Act compliance. Director Reich’s speech may be accessed at

Upcoming Events

September 3:  Labor Day federal holiday. CSBS office is closed.

September 4:   Congress returns from its August recess.

September 5:   The House Financial Services Committee will hold a hearing onr ecent e vents in the c redit and m ortgage m arkets and i mplications for U.S. c onsumers and the g lobal e conomy". - 10 a.m., 2129 Rayburn House Office Building.

September 5:  The Senate Special Aging Committee will hold a hearing on financial advisors to seniors. - 2 p.m., 628 Dirksen Senate Office Building.

September 6:  The House Financial Services Committee holds a hearing on housing for the elderly. - 10 a.m., 2128 Rayburn House Office Building.

September 6:  A subcommittee of the House Financial Services Committee holds a hearing on homeowners' insurance. - 2 p.m., 2128 Rayburn House Office Building.

Closing Comments

"I believe I have an unfair advantage over my colleagues -- my mind works faster than my mouth does." – Sen. Tim Johnson (D-SD), quoted in Wednesday’s USA Today, speaking to constituents in his first public appearance since his stroke last December.

Mary White, Editor
Teresa Dean, Contributing Writer