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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...

Online Courses starting May 2:  Asset Liability Management II, Fraud Identification Training, and Real Estate Appraisal Review. 

CSBS State-Federal Supervisory Forum, May 15-18:  The Forum will be held at the Westin Seattle, 1900 Fifth Avenue, Seattle, WA 98101.  REGULATORS ONLY. 

Online Courses starting May 31:  Managing the Investment Portfolio and Bank Financial Analysis.

Senior School, June 20-24, San Diego, CA:  Senior School is designed to meet the specific leadership training needs of state bank regulators who are rising into management positions within their departments or as an examiners-in-charge in the field.

Examiners Forum, June 27-29, Austin, TX:  The Examiners Forum is designed to bring together Senior Certified Examiners and other "seasoned" examiners to discuss current and emerging issues.

Deputy Seminar, August 1-3, Boulder CO:  The Deputy Seminar is an opportunity for key banking department officials to gather to learn about upcoming issues, share challenges, and learn potential solutions.

“What can we take on trust in this uncertain life? Happiness, greatness, pride -- nothing is secure, nothing keeps.”  -- Euripides

CSBS has a business-continuity plan, as we suppose is the case with most organizations. It’s a good plan, but it does presume the existence of the power grid, smart phones, laptops and the like. Having grown up in a land without a power grid, we have a special place in our heart for our ancient Underwood typewriter. It was built to order with German and French accent keys and has an open front that makes cleaning the keys easy. But most important of all, it runs on manual power, free entirely of the caprices of the power grid. Which is why we were saddened this week to learn that the world’s last typewriter factory has ended production and is switching to building refrigerators. Someday we may need those old typewriters.

Bernanke Holds First Press Conference in the Fed’s History

On Wednesday, the Federal Reserve Chairman Ben Bernanke held the first scheduled press conference in the Fed’s history, explaining the rationale behind the Fed’s management of the economy.  The 46-minute press conference also provided an opportunity for Bernanke to explain the five-paragraph statement by the Federal Open Market Committee (FOMC), released less than two hours prior to Bernanke’s historic press conference. In its statement, the FOMC stated it would maintain the unusually low federal funds rate near zero for an extended period and classified the economic recovery progress thus far as moderately-paced.

Bernanke asserted that the Fed was doing everything in its power to spur growth and job creation, without triggering a rise in inflation. While the Fed predicted domestic economic growth of 3.4 to 3.9 percent in January, these projections were lowered to 3.1 to 3.3 percent due to exports, construction spending, and military spending not performing as expected. Bernanke also said that the recovery has become self-sustaining, stating that growth could continue without “extraordinary government support.”

The Federal Reserve will now hold regular press conferences in an effort to enhance transparency and generate support for its policies. “I personally have always been a big believer in providing as much information as you can to help the public understand what you’re doing, to help the markets understand what you’re doing, and to be accountable to the public for what you’re doing,” Bernanke said yesterday.

To watch the press conference, click here.

CSBS & AARMR Roll Out the NMLS Mortgage Call Report Next Week

The Conference of State Bank Supervisors, in conjunction with the American Association of Residential Mortgage Regulators (AARMR), will launch the Nationwide Mortgage Licensing System & Registry (NMLS or the System) Mortgage Call Report next Monday in accordance with the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act).

Submission of the first NMLS Mortgage Call Report is required by May 15, 2011 for all state-licensed companies and companies employing state-licensed mortgage loan originators.  The launch of the NMLS Mortgage Call Report marks the first standardized information collection for the residential mortgage industry. The NMLS Mortgage Call Report will provide timely, comprehensive and uniform information of the non-depository mortgage industry, thereby allowing state mortgage regulators to effectively monitor both licensees and mortgage activities. Data will be submitted by companies on a quarterly basis concerning the financial condition and mortgage loan volumes by type and state.

NMLS was developed and launched in 2008 by state regulators through CSBS and AARMR to serve as the system of record for mortgage licensing in all states and territories in the United States. The NMLS Mortgage Call Report is the latest NMLS initiative to enhance and standardize residential mortgage supervision, all while increasing protections for consumers.

Beneficial to the industry, consumers and regulators, the Mortgage Call Report will: provide state regulators with the information necessary to replace unique annual reports currently required by roughly 38 states and to standardize the financial statement information required by more than 42 states; provide state regulators with pertinent information to more effectively supervise licensees; allow state regulators to better monitor licensed companies that operate in one or more states; and provide licensees to one or more state regulators in a single, uniform manner.

In order to assist industry and vendors in the submission of the Mortgage Call Report, several webinars and in-person conferences and panels have been held over the past 6 months. In addition, the NMLS Resource Center contains step-by-step instructions for completing the Mortgage Call Report as well as Field Definitions, FAQs, examples of which areas of the Mortgage Call Report are required to be completed based on business activity and a Practice Worksheet for companies to prepare for the first filing.

10 Questions with Melanie Griggs

The CSBS Questionnaire, based upon the 19th century parlor game made famous by French novelist Marcel Proust, reveals another side of Melanie Griggs, Montana State Banking Commissioner. As a new commissioner, Griggs brings much to the table. Griggs has been an attorney in private practice dealing with civil litigation in a wide variety of areas including maritime law, environmental regulation, commercial transactions, and class action litigation. Griggs obtained her B.A. in Economics from Eckerd College in St. Petersburg, Florida and her J.D. from Tulane Law School in New Orleans, Louisiana.

Examiner: What are you currently reading?
War and Peace.  When I got my Kindle, I set a goal – for every new release I purchase, I must first read (or re-read) a classic. 

Examiner: What are the current themes of your speeches or public statements?
The Importance of Communication with Your Regulators.

Examiner: Which words or phrases do you most overuse?
Very.  Incredibly.  Extremely.  I’m a bit dramatic.

Examiner: What is your greatest fear?
Being buried alive.

Examiner: Which talent would you most like to have?
I would love to be able to carry a tune.

Examiner: Which living person do you most admire?
Sandra Day O’Connor.

Examiner: What do you consider your greatest achievement?
Trying my first jury trial, even though I lost.  Much was learned in trying and even more was learned in losing.

Examiner: What is your most treasured possession?
My Weimaraner, Shelby.

Examiner: What other state regulator do you look to for perspective?
Tough one.  I, thankfully, have a lot of mentors right now!  But, I must say I love John Harrison’s perspective (and accent).

Examiner: What is your motto?
Be yourself; everyone else is already taken.  -- Oscar Wilde

Around the States

NJ: The New Jersey Department of Banking and Insurance (DOBI) commissioner Tom Considine took the opportunity late last week to remind New Jersey banks to apply for funding from the Small Business Lending Fund (SBLF) as the impending May 16 deadline approaches. Last month the Treasury Department extended the deadline to apply for funding roughly six weeks from March 31 to May 16. As of last Thursday, 16 state-chartered banks in the state of New Jersey had applied for $165 million from the SBLF, only a fraction of the $30 billion being made available nationally through the fund. Read more

Around the Agencies

FASB: Last Friday, the Financial Accounting Standards Board (FASB) issued an accounting standards update intended to simplify the requirements for how an entity tests its goodwill for impairment. The amendment would permit the evaluation of qualitative factors to determine whether two-step quantitative goodwill impairment tests are necessary. Current guidelines mandate that entities test goodwill for impairment no less than once a year. The deadline for comment on the proposal is June 6. Read more

FTC: The Federal Trade Administration (FTC) mailed 3,162 checks last Friday totaling roughly $1.5 million to borrowers discriminated against by Golden Empire Mortgage, Inc. and Howard Koostra. The lawsuit filed with the FTC alleged that Koostra and Golden Empire illegally charged Hispanic consumers inflated prices for mortgage loans as opposed to white borrowers, price disparities that could not be rationalized by credit characteristics or underwriting risk. The settlement agreement requires the defendants to pay a $5.5 million judgment or $1.5 million to borrowers for redress and implement a multitude of measures to prevent similar future events from occurring. Read more

SEC: On Wednesday, the Securities and Exchange Commission (SEC) proposed amendments that would remove references to credit ratings under the Securities Exchange Act of 1934. Under Dodd-Frank mandate, federal agencies are required to review how existing regulations rely on credit ratings when evaluating creditworthiness. As such, each agency is required to report to Congress on how the agency modified such references and replaced each with alternative conditions the agency deemed appropriate. The deadline for public comment is 60 days from publication in the Federal Register. Read more

SEC & CFTC: The SEC voted on Wednesday to propose rules that would further clarify the definitions of “swap,” “security-based swap,” and “security-based swap agreement.” Furthermore, the SEC proposed rules regarding mixed swaps and books and records for security-based swap agreements. “The proposal seeks to provide guidance in rules and interpretations by using clear and objective criteria that should clarify whether a particular instrument is a swap regulated by the CFTC, a security-based swap regulated by the SEC, or a mixed swap regulated by both agencies,” said SEC Chairman Mary Schapiro. The latest round of proposals was in accordance with Title VII of the Dodd-Frank Act and was proposed jointly with the Commodity Futures Trading Commission (CFTC). The deadline for public comment is 60 days from publication in the Federal Register. Read more

Upcoming Events

May 2: CSBS is moving!  Our phone and fax numbers will stay the same (Main: 202-296-2840; Fax: 202-296-1928), as will individual staff phone numbers and email addresses.  However, effective May 2, our new location will be:

 1129 20th Street, NW
 9th Floor
 Washington, DC  20036

May 15-18: The 2011 CSBS State-Federal Supervisory Forum will be held May 15 to May 18 at the Westin Seattle in Seattle, Washington.

May 31: CSBS will host an online course entitled, “Managing the Investment Portfolio,” covering topics such as: investment risks, accounting and regulatory issues; fixed income prices and yields; interest rates and analysis of the yield curve; securities in a bank's investment portfolio; mortgage backed securities; and an extended section on portfolio management including setting objectives, policy and strategy. To register or for more information, click here.

June 14-15: The OCC will host two upcoming workshops for directors of nationally chartered community banks and federal savings associations. Held in Louisville, Kentucky, the first workshop will center on risk assessment, while the latter will put the spotlight on compliance risk. Workshops are limited to the first 35 registrants and are primarily meant for outside directors at institutions with less than $1 billion in assets however, management directors may also find the workshops useful. To register, click here.

Closing Comment

“In a way, the OCC made the Sears catalog possible -- and it helped make a national economy possible, too. It wasn't formed ‘of the banks, by the banks, and for the banks.’ The OCC was created to protect people's savings, and to encourage commerce.”

-- “Why We Regulate -- and Why John Walsh Needs to Resign” by Richard (RJ) Eskow, in the Huffington Post on Wednesday, April 27, 2011

Catherine Woody, Editor
Edward Smith, Contributing Editor
Andrea Corson, Contributing Writer


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