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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...

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.

“My goal in life is to be as good a person as my dog already thinks I am.” - Author Unknown 

This week, we ran across an article in Fox Business headlined "Six Illegal Money Habits You may be Committing." Hmmm. We had to read further just to make sure we weren't guilty. Listed there in black and white, they included: (1) signing someone else's name on a check; (2) using someone else's identity to obtain credit; (3) lying on a home loan applications; (4) writing bad checks; (5) copying U.S. currency; and (6) defacing U.S. currency. Then we remembered a philosophy course we had in college that posed this question: Is man born with an inherent sense of right and wrong or is it something that must be learned? Our class debated this question the whole semester and never came up with an answer. In theory, people should know right from wrong. But there's something about the real world that suggests otherwise.


Five States Approved for Foreclosure Prevention Funds 

The Obama Administration approved plans for state housing finance agencies in North Carolina, Ohio, Oregon, Rhode Island and South Carolina to begin to use $600 million in foreclosure-prevention assistance from the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets. The targeted states have high percentages of their population living in areas of economic distress due to unemployment. "These states have designed targeted programs with the potential to make a real difference in the lives of homeowners struggling to make their mortgage payments because of unemployment," said Treasury Assistant Secretary for Financial Stability Herb Allison. The proposals approved include programs to expand options for homeowners struggling to make their mortgage payments because of unemployment, as well as programs to address first and second liens, facilitate short sales and/or deeds-in-lieu of foreclosure, and assist in the payment of arrearages. The states estimated that approximately 50,000 struggling homeowners will receive aid. For more details, see announcement


Bernanke Suggests States Have More Rainy Day Funds 

Economic conditions will put substantial pressure on state budgets and require governors and legislatures to continue a difficult juggling act to keep essential services while meeting budgetary obligations, said Federal Reserve Chairman Ben S. Bernanke.  In a speech on Monday at the Southern Legislative Conference in Charleston, S.C., Bernanke also outlined a number of fiscal challenges facing both state and federal governments, such as unfunded pension liabilities and retiree health benefits. “States have the opportunity to serve as role models for effective long-term fiscal planning,” he said. Bernanke recommended states intensively review the effectiveness of all of their programs and be willing to make significant changes to deliver necessary services at lower cost. Because states must balance their budgets, he said, they might want to consider revenue stability in making tax code changes. Bernanke described the long-term outlook of the federal budget as having a structural budget gap that is large and increasing over time. “To steer clear of sudden, sharp, and disruptive shifts in spending programs and tax policies, and to retain the confidence of the public and financial markets, federal policymakers need to develop a credible plan to restore fiscal sustainability,” Bernanke said. Read the entire speech


Senate Passes 2 FHA Bills 

The Senate passed two Federal Housing Administration bills to allow the program to adjust annual premiums and increase its commitment to the multifamily program. The first bill (H.R. 5981) would give FHA authority to raise its annual premium for the single family program to 1.55 percent from 0.55 percent. FHA said the authority will provide approximately $300 million of additional insurance income per month to its Mutual Mortgage Insurance Fund. The other bill (H.R. 5872) would increase FHA’s commitment authority for its multifamily insurance programs by $5 billion for the remainder of the fiscal year. Without the increase, FHA would have exhausted its current authority sometime in mid-August and would have been forced to stop issuing any commitments to insure the loans in their current pipeline of applications until the next fiscal year, which begins Oct. 1, the Mortgage Bankers Association said.


Five Banks, Four Credit Unions Closed Over Past Week 

Banking regulators closed two banks in Florida and one bank each in Georgia, Washington and Oregon on July 30, bringing the total for the year to 108. 

In Florida, the Office of Thrift Supervision closed Coastal Community Bank, Panama City Beach, and the Florida Office of Financial Institutions closed Bayside Savings Bank, Port Saint Joe. FDIC arranged for the purchase of all the assets and deposits of both banks by Centennial Bank, Conway, Ark. Bayside Savings Bank had assets of approximately $66.1 million and deposits of $52.4 million. Coastal Community Bank had assets of approximately $372.9 million and deposits of $363.2 million. 

The Georgia Department of Banking and Finance closed NorthWest Bank and Trust, Acworth, and FDIC arranged for all the deposits and assets to be purchased by State Bank and Trust Company, Macon, Ga. NorthWest Bank had approximately $167.7 million in assets and $159.4 million in deposits. 

The Washington Department of Financial Institutions closed The Cowlitz Bank, Longview, and FDIC arranged for the purchase of the deposits for a premium of 1 percent and $280 million of the failed bank’s assets by Heritage Bank, Olympia, Wash. The Cowlitz Bank had approximately $529.3 million in assets and $513.9 million in deposits. 

The Oregon Division of Finance and Corporate Securities closed LibertyBank, Eugene, and FDIC arranged for the purchase of all the deposits for a premium of 1 percent and $419.7 million of the assets by Home Federal Bank, Nampa, Idaho. LibertyBank had $768.2 million in assets and $718.5 million in deposits. 

Also, the National Credit Union Administration disposed of four credit unions this past week.  NCUA assumed control of the operations of Family First Federal Credit Union of Orem, Utah, and liquidated Norbel Credit Union of Fort Collins, Colo. Family First Federal Credit Union had assets of $139.5 million and 19,476 members residing in Utah County, Utah. For Norbel Credit Union, NCUA arranged for the assets, liabilities and members to be purchased and assumed by Security Service Federal Credit Union of San Antonio, Texas. Norbel had approximately $120 million in assets and 16,098 members. NCUA also liquidated Certified Federal Credit Union of Commerce, Calif., and arranged for Vons Employees Federal Credit Union of El Monte, Calif., to assume its assets and liabilities. Certified had $37.6 million in assets and more than 8,580 members. On Tuesday, NCUA placed Kappa Alpha Psi Federal Credit Union, Addison, Tex., into liquidation.  The credit union had $780,000 in assets and 1,341 members. 


Around the States 

Texas: The FDIC has announced a series of steps to provide regulatory relief to financial institutions and facilitate recovery in areas of Texas affected by Hurricane Alex. Affected areas include Cameron, Hidalgo, Jim Hogg, Maverick, Starr, Val Verde, Webb and Zapata counties. FDIC is encouraging banks to work constructively with borrowers experiencing difficulties beyond their control because of damage caused by Hurricane Alex. Extending repayment terms, restructuring existing loans or easing terms for new loans, if done in a manner consistent with sound banking practices, may contribute to the health of the community and serve the long-term interests of the lending institution. FDIC also will consider regulatory relief from certain filing and publishing requirements.


Around the Agencies 

FBI: The number of bank crimes investigated by the FBI decreased in the first quarter of 2010 to 1,183 violations, down from 1,304 violations in the first quarter of 2009. The FBI said there were 1,160 robberies, 21 burglaries, two larcenies, and three extortions of financial institutions between Jan. 1, 2010, and March 31, 2010. The bureau said loot was taken in 92 percent of the incidents, totaling more than $9.3 million. Of the amount taken, 21 percent, or more than $1.9 million, was recovered and returned to financial institutions. Bank crimes most frequently occurred on Friday, and regardless of the day, the most frequent time was between 9 a.m. and 11 a.m. In the first quarter, acts of violence were committed in 3 percent of the incidents, resulting in 18 injuries, two deaths, and 35 people being taken hostage. The most common method used by robbers was oral demands, closely followed by demand notes. See report 

FTC: A mortgage relief operation will return more than $2.4 million to consumers, under a settlement announced by the Federal Trade Commission. FTC alleged that Home Assure LLC, Clearwater, Fla., conducted a nationwide marketing campaign designed to take advantage of struggling homeowners by offering mortgage foreclosure rescue services. Home Assure typically charged consumers an up-front fee of $1,500 to $2,500. For more information, go to the FTC’s website


Upcoming Events 

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

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

August 10 - The FDIC Board of Directors will meet in open session. Agenda topics include (a) proposed templates for safe, low-cost transactional and basic savings accounts and (b) advanced notice of proposed rulemaking on alternatives to using credit ratings in the banking agencies’ regulatory capital guidelines. - 10 a.m., 6th floor boardroom, FDIC headquarters, 550 17th Street, N.W., Washington, D.C. 

August 10-13 - The American Association of Residential Mortgage Regulators holds its 21st annual regulatory conference. - The Westin Hotel, St. Louis, Mo.

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.


Closing Comment 

“It basically was a car sitting in a showroom. We’re putting the fuel in the tank.” - Sen. Dick Durbin (D-Ill.), chairman of the Senate subcommittee that oversees spending on financial agencies, quoted in an article in the Jan. 29 issue of The Hill headlined “Agencies plan spending spree to implement Wall Street reform bill.”

Mary White, Editor
Teresa Dean, Contributing Writer

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