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CSBS Examiner

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


 In This Issue...

 Upcoming Events...

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.  More Information 

Trust Examiner School, March 7-11, 2011, Dallas, TX:  The 4½ day Trust Examiner School is designed for new and inexperienced examiners and may be beneficial for other examiners or supervisory staff members who have not had formal training in conducting exams of trust departments and trust companies.  More Information 

Credit Evaluation School, March 28-April 1, 2011, San Diego, CA:  This school follows a blended learning model similar to our Certified Operations Examiner School.  It is delivered over a 5-month period utilizing the most effective and efficient delivery channels.  APPROVED BY NASBA FOR 40.5 CPE HOURS.  More Information 

Certified Operations Examiner School, March 28-April 1, 2011, San Diego, CA:  The full program is delivered over a 7 to 9 month period utilizing all of the EFSBS delivery channels.  APPROVED BY NASBA FOR 40.5 CPE HOURS.  More Information 

Residential Mortgage Examiner School, March 28-April 1, 2011, San Diego, CA:  This blended-learning program provides participants with a practical overview of the residential mortgage industry and lays the groundwork for the participants to conduct examinations of mortgage brokers or lenders.  More Information

“Retirement means no pressure, no stress, no heartache … unless you play golf.”  - Gene Perret

With the election of so many new governors around the nation, there is significant turnover among Commissioners.  CSBS wishes these loyal state servants best wishes in their new endeavors and welcomes the new order with open arms.  As former Iowa Superintendent and CSBS Immediate Past Chairman Tom Gronstal stated, “Change is not hard, it is adapting to change which is difficult.”  _________________________________________________________

Fed Offers Help on Credit Reports

The Federal Reserve is offering a new online publication to help consumer better understand new notices they may receive from lenders when credit reports or credit scores affect a decision to grant credit. The publication, “What You Need to Know: New Rules about Credit Decisions and Notices,” describes the types of notices consumer may receive and provides links to sample notices. It includes information on how to dispute credit report errors. The Fed and Federal Trade Commission issued new rules that took effect of Jan. 1, which generally require a creditor to provide a consumer with a notice when, based on the consumer's credit report, the creditor provides credit to the consumer on terms that are less favorable than those provided to other consumers. Consumers who receive this "risk-based pricing" notice will be able to obtain a free credit report to check the report's accuracy. As an alternative to providing risk-based pricing notices, creditors may provide consumers who apply for credit with a free credit score and information about the score.  Read More


CFPB Implementation Team Announces Complaint Database

The Treasury Department issued a description of a proposed consumer complaint database in the January 10 Federal Register.  The system will be used by the Consumer Financial Protection Bureau to collect, respond to, and refer consumer complaints about consumer products to financial regulators and state and federal courts.  In addition, the database may be utilized to compile consumer complaint data to be used by the CFPB as they draft rules or perform other required functions.  The deadline for comments is February 9, the same day the system is scheduled to go live, unless the comments received result in a contrary determination by the Treasury Department.  Read More _________________________________________________________

New Commissioners Take Office

Ed Splichal named as the next Kansas Bank Commissioner effectively January 10.

Iris Ikeda Catalani took over as Commissioner of the Hawaii Division of Financial Institutions on January 13.

Jim Schipper became the Superintendent of the Iowa Division of Banking on January 14.


Around the States

MI:  The Michigan Office of Financial and Insurance Regulation (OFIR) recovered more than $27 million on behalf of Michigan consumers in 2010 and has recovered more than $143 million since the agency was created in 2000. In 2010, $19 million of the consumer recoveries involved mortgage and banking issues and $8 million involved insurance and securities matters. The 2010 recoveries were a result of more than 3,000 complaints resolved by OFIR during the year. OFIR’s consumer assistance staff also answered more than 100,000 consumer calls last year. “Our dedicated consumer assistance staff will remain focused on protecting and serving Michigan citizens in 2011,” said OFIR Commissioner Ken Ross. The consumer protection recoveries included money recovered by OFIR for consumers filing insurance, security, bank, credit union and mortgage complaints.  Read More


Around the Agencies

FBI:  Robberies and other crimes at banks rose in the third quarter to 1,325 incidents, up from 1,212 a year ago, according to statistics released by the FBI. There were 1,310 robberies, 13 burglaries, two larcenies and six extortions of financial institutions between July 1, 2010, and Sept. 30, 2010. Highlights of the report included: $9.3 million in loot was taken and nearly $1.4 million was recovered and returned to financial institutions; bank crimes most frequently occurred on Friday, and regardless of the day, the time frame when bank crimes occurred most frequently was between 9 a.m. and 3 p.m.; and acts of violence were committed in 4 percent of the incidents, resulting in 21 injuries, four deaths, and nine people being taken hostage. Most violations occurred in the South with 482 reported incidents, followed by 365 for the West, 275 for North Central, 185 for the Northeast and three for the Territories.  Read More

FRB:  Federal Reserve Chairman Ben S. Bernanke told a Congressional Committee that there is increasing evidence that a “self-sustaining recovery in consumer and business spending may be taking hold.” The Fed chairman acknowledged that the previous positive numbers had been due to expansionary monetary and fiscal policies, a powerful inventory cycle and stabilization of the financial system. However, he also noted that the housing market continues to be depressed and vacant house weigh heavily on home prices and construction. Overall, the chairman predicted at moderately stronger recovery in 2011 than in 2010 with unemployment taking four to five years to normalize fully. On the issue of fiscal policy, Bernanke also said “the deficit is expected to remain unsustainably elevated even after economic conditions have returned to normal.” He said failure to act to avoid the current unsustainable fiscal path would lead to broad financial turmoil. “Doing nothing will not be an option indefinitely; the longer we wait to act, the greater the risks and the more wrenching the inevitable changes to the budget will be,” he said.  Read More

FRB:  The Federal Reserve named 10 new members to its Consumer Advisory Council and selected a new chairman and vice chairman for 2011. The council advises the Fed Board on consumer financial services and its responsibilities will be transferred to a new council that will be created to advise the Bureau of Consumer Financial Protection in 2011. The new chairman is Jim Park, who is CEO of New Vista Asset Management in San Diego. The vice chairman is Mary Tingerthal, who is president of Capital Markets Companies for the Housing Partnership Network in St. Paul, Minn. Some of the new members include: Nancy Andrews, who is president and CEO of Low Income Investment Fund in San Francisco; Barrett Burns, who is president and CEO of VantageScore Solutions LLC, Stamford, Conn.; Susan Ehrlich, who is president of Sears Financial Services, Hoffman Estates, Ill.; Josh Fuhrman, who is senior vice president of Homeownership Preservation Foundation, Minneapolis; and James Gutierrez, who is CEO of Progreso Financiero, Mountain View, Calif.  Read More

FRB:  Reports from the 12 Federal Reserve Districts suggested that economic activity continued to expand moderately from November through December, according to the Federal Reserve’s Beige Book economic report. Conditions were described as improving in the Boston, New York, Philadelphia, and Richmond Districts. The rest of the Districts generally described activity as modest or moderate. The Districts generally reported that conditions were better in manufacturing, retail, and nonfinancial services sectors than in financial services or real estate. Most Districts indicated that business contacts were positive about the outlook, although still generally cautious. Residential real estate markets remained weak across all Districts. Reports on credit activity were mixed.  Read More

FTC:  The Federal Trade Commission published a report to Congress describing how it is conducting a study on the accuracy of credit reports. FTC will contact approximately 1,000 consumers, randomly selected throughout the nation, and use an expert to review their credit reports from all three national credit bureaus. The expert will help the consumers identify potential errors on their reports. Participants will be encouraged to dispute errors that could affect their credit standing. Credit reports with alleged errors will be sent to Fair Isaac Corporation for rescoring. Overall, the study will categorize errors by type and seriousness in terms of potential consumer harm. So far, FTC has contacted 295 consumers and expects to complete the data collection phase by October 2011 with an analysis of the findings to be published in December 2012.  Read More

FinCEN:  A former Chase Bank official was found guilty of disclosing the existence of a Suspicious Activity Report (SAR), and then soliciting thousands of dollars in bribes to help the borrower deal with a possible criminal investigation. Frank E. Mendoza was convicted of demanding a $25,000 bribe, ultimately accepting $10,000 in bribes from the customer, and disclosing the existence of a SAR. The Financial Crimes Enforcement Network believes Mendoza is the first bank official in the nation to receive a criminal conviction for revealing the filing of a SAR. Mendoza worked as a loss mitigation specialist for Chase Bank and conducted an investigation on a delinquent mortgage borrower. After notifying the bank that he suspected fraud, a SAR was filed by the bank. The borrower contacted the FBI after Mendoza’s bribery solicitation. Mendoza faces a maximum penalty of 95 years in federal prison.  Read More

SEC:  Charles Schwab Investment Management (CSIM) and Charles Schwab & Co., Inc. (CS&Co.) will pay more than $118 million to settle charges brought by the Securities and Exchange Commission over misleading statements regarding the Schwab YieldPlus Fund and failing to prevent the misuse of nonpublic information. In bringing the case, SEC Enforcement Director Robert Khuzami said “all financial firms and professionals — including large mutual fund providers — must be vigilant in accurately describing the risks of the products they sell to the public.” SEC Associate Director Antonia Chion noted that "Schwab marketed the fund as a cash alternative with only slightly more risk than a money market fund even though, at one point, half of the fund's assets were invested in private-issuer, mortgage-backed and other securities with maturities and credit quality that were significantly different than investments made by money market funds." The fund declined during the credit crisis of 2007 and 2008, falling to $1.8 billion from $13.5 billion during an eight-month period due to redemptions and declining asset values.  Read More


Upcoming Events

Jan. 15:  Model Examination Guidelines 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.

Jan. 17:  CSBS will be closed in observance of Martin Luther King, Jr. Day.

Jan. 18:  The FDIC will hold a board meeting at 3:30 pm Eastern to discuss implementation of certain sections of the Dodd-Frank Act, including enhanced compensation structure and orderly liquidation.  Read More _________________________________________________________

Closing Comment

"Small banks have been playing just an incredibly important role, particularly as large banks have cut back on their lending to small business, and in other contexts they have in many cases stepped up and proven their worth to the U.S. economy."

--Federal Reserve Board Chairman Ben Bernanke in testimony before the Senate Budget Committee. _________________________________________________________

Catherine Woody, Editor

Edward Smith, Contributing Editor

Teresa Dean, Contributing Writer

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