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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...

Certified Operations Examiner School, September 19-23, New Orleans, LA:  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. APPROVED BY NASBA FOR 40.5 CPE HOURS. 

Bank Directors Seminar, September 25-27, 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. 

CSBS Banker Briefing, September 28, Coeur d’Alene, ID:  Your State Banking Commissioner and the Conference of State Bank Supervisors cordially invite you to a roundtable briefing and open discussion of financial regulatory reform and other timely issues.  Complimentary registration; lunch will be served.

Examiner-in-Charge School, October 3-7, La Quinta, CA:  Designed to train participants to evaluate management and to recognize practices that increase a bank’s exposure to risk. Participants also receive guidance and practice conducting board meetings.

Problem Bank School, October 3-7, La Quinta, CA:  This new 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. APPROVED BY NASBA FOR 40.5 CPE HOURS. 

"The ozone decision signaled a new phase in Washington warfare."

– Washington Post headline (Sept. 4)

We’re not quarrelling with the headline writer; alas, the wording was accurate. But we regret that the political process has fallen to the level of war. Sure, politics is a rough-and-tumble game, and sometimes there is pushing and shoving, even an elbow thrown. Horse-trading is fine. From time to time the invective can be rather amusing. But the process should not be a war. Not at all.


Approval of Cordray to Lead CFPB Remains Uncertain

Although Democrats control the Senate, the chamber's 44 Republicans vowed to oppose any nominee to lead the Consumer Finance Protection Bureau (CFPB) without structural changes that include replacing the director with a bipartisan commission and giving Congress direct power over its budget. Tuesday, during the Senate Banking Committee’s nomination hearing to consider Richard Cordray for CFPB Director, Ranking Member Richard Shelby, R-Ala., reiterated his intention to block the former Ohio Attorney General from leading the agency on a matter of accountability.

"All of the bureau’s power is concentrated in the hands of its director. The director determines which rules are enacted and which enforcement actions are brought. The director makes all hiring decisions and decides how the agency spends its resources," Sen. Shelby stated in his opening remark.

Sen. Shelby shared no disapproval of Cordray’s qualifications to lead the CFPB, but stated Cordray was simply caught in the middle of a substantive debate that had to be resolved first.

Senate Democrats have only 53 votes - seven short of the 60 needed to end the delay and approved Cordray’s nomination.


Treasury Department Approves 382 of 932 Applicants for SBLF Funding

The U.S. Treasury Department (Department) has issued preliminary approvals to 382 community banks that applied for the Small Business Lending Fund (SBLF). In a white paper released earlier this week, the Department stated that in total, these eligible and qualified institutions have been approved for $4.3 billion in SBLF funding. Of these approved institutions, 130 have already received funding and the Department expects to issue the rest of the funds to approved banks by Sept. 27, when the program ends.

According to the Department, 932 institutions applied for $11.8 billion of the $30 billion available in SBLF funding. However, more than 40 percent failed to meet minimum statutory or program requirements and therefore could not be approved. More information.


Banking Committee Approves Gruenberg and Curry Nominations, Full Senate Confirmation Awaits

The Senate Banking Committee approved seven nominees for key financial posts Thursday, including Martin Gruenberg, to lead the Federal Deposit Insurance Corporation (FDIC) and Thomas Curry, a member of the FDIC board and a former Massachusetts commissioner, to head the Office of the Comptroller of the Currency.

The nominees were approved by a voice vote, and are now subject to approval by the full Senate. The banking panel's chairman, Sen. Tim Johnson, D-S.D., said he was "hopeful that the nominations approved Thursday can be confirmed by the full Senate as soon as possible."

Other nominees to clear the panel were S. Roy Woodall, a former Kentucky insurance commissioner, to serve as an insurance expert on the Financial Stability Oversight Council; two nominees to the Securities and Exchange Commission: Daniel Gallagher Jr., a partner at the law firm Wilmer Cutler Pickering Hale & Dorr, LLP and agency commissioner Luis Aguilar, who was nominated for a second term; and Anthony Frank D'Agostino and Gregory Karawan to be directors of the Securities Investor Protection Corp. Read more.


CSBS Accepts Award on Behalf of State Bank Supervisors

The Conference of State Bank Supervisors (CSBS) was awarded the "2011 Power of A Silver Award" by the American Society of Association Executives (ASAE) on Sept. 6 in recognition of its innovativeness, effectiveness and broad-reaching work though the Nationwide Mortgage Licensing System & Registry (NMLS).

The Power of A Silver Awards recognize and celebrate the extraordinary contributions associations make to society by enriching lives, creating a competitive workforce, preparing society for the future, driving innovation and making a better world.

"We are honored to receive this award on behalf of state banking supervisors and the American Association of Residential Mortgage Regulators," said John Ryan, CSBS President and CEO. "This award is a reflection of our commitment to our members in fostering innovative state regulation of the financial services industry."

"NMLS is the embodiment of innovation, and it has quickly become an indispensable tool for regulators in fulfilling their duties and mandates pertaining to licensing, administration, accounting, and regulation of the residential mortgage industry," said Bill Matthews, President and CEO of the State Regulatory Registry, LLC, the subsidiary of CSBS that operates NMLS on behalf of state regulators.

For the latest quarterly report on NMLS click here.


Around the Agencies

CFPB: The Consumer Financial Protection Bureau (CFPB) announced that it is seeking public input on consumer financial products and services tailored to servicemembers and their families. The information provided will help the CFPB’s Office of Servicemember Affairs to develop financial education and outreach initiatives for military families. "Military families face unique challenges especially when it comes to their finances," said Holly Petraeus, Assistant Director for the Office of Servicemember Affairs (OSA). "We believe that open dialogue is key to addressing these challenges. By identifying the products and services that aim to assist their particular needs, our office will be able to better serve servicemembers and their families." Read more.

FHFA: The Federal Housing Finance Agency (FHFA), as conservator for Fannie Mae and Freddie Mac (the Enterprises), filed lawsuits against 17 financial institutions, certain of their officers and various unaffiliated lead underwriters. The suits allege violations of federal securities laws and common law in the sale of residential private-label mortgage-backed securities (PLS) to the Enterprises. Read more.

FINCEN: The Financial Crimes Enforcement Network (FinCEN) released its analysis of identity theft suspicious activity reports (SARs) filed by securities and futures firms that shows identity thieves prefer to use stolen account identifiers to take over existing legitimate investment accounts rather than to set up new unauthorized accounts. "The analysis illustrates how through the review of SARs, FinCEN can spot criminal patterns that help an investigation and lead to holding criminal actors accountable for their actions," said FinCEN Director James H. Freis, Jr. "This report contains information that provides a window into the type of activities identity thieves undertake, of which financial institutions should be aware in order to protect their customers and the financial system from criminal abuse." Read more.

SEC: The Commission is seeking public comment on the process it should use to conduct retrospective reviews, such as how often rules should be reviewed, the factors that should be considered, and ways to improve public participation in the rulemaking process. Because today's financial markets are dynamic and fast-moving, the regulations affecting the markets and its participants must be reviewed over time and revised as necessary so that the regulations continue to fulfill the SEC's mission. The SEC has long had formal and informal processes in place to review its existing rules, and a considerable portion of its rulemaking already involves changes to existing rules. Public comments should be received by Oct. 6, 2011. Read more.

FBI: During the second quarter of 2011, there were 1,023 reported violations of the Federal Bank Robbery and Incidental Crimes Statue, a decrease from the 1,146 reported violations in the same quarter of 2010. According to statistics released by the FBI, there were 1,007 robberies, 15 burglaries, one larceny, and two extortions of financial institutions reported between April 1, 2011 and June 30, 2011. Read more.


Around D.C.

CONGRESS: Senate Banking Committee Chairman Tim Johnson (D-SD) held a hearing to consider the nomination of Richard Cordray to be the first Director of the Consumer Financial Protection Bureau. In his opening comment, Chairman Tim Johnson stressed the important role the Director of the Consumer Finance Protection Bureau will play in maintaining the agency’s independence, promoting an equitable and transparent consumer financial market place and exercising enforcement of consumer protection laws. Read more.

FREDDIEMAC: Freddie Mac’s full menu of relief policies for borrowers affected by disaster is being extended to homeowners whose homes were damaged or destroyed by Hurricane Irene and are located in counties that the President has declared to be Major Disaster Areas and where he has made federal Individual Assistance programs available to affected individuals and households. "Freddie Mac has authorized the nation’s mortgage servicers to provide a full range of mortgage relief options to affected borrowers with mortgages owned or guaranteed by Freddie Mac," said Anthony Renzi, Executive Vice President of Single-Family Business, Operations and Technology at Freddie Mac. "Forbearance on mortgage payments for up to one year are among the options our servicers have been instructed to offer borrowers on a case-by-case basis." Read more.

FANNIEMAE: Americans’ pessimism about the economy, home prices, and household finances are deepening, according to findings from Fannie Mae’s August National Housing Survey. More than 78 percent of Americans say the economy is on the wrong track, and only 16 percent think the economy is on the right track (compared to 70 percent wrong track and 23 percent right track in July). Twenty-seven percent of Americans believe home prices will go down and 22 percent of Americans polled expect their financial situation to worsen over the next year — the highest levels of pessimism for both indicators since August 2010. Read more.


Upcoming Events

Sept. 19–23: CSBS is hosting a Certified Operations Examiner School in New Orleans, LA. Examiners will receive all of the required training and experience necessary to be in charge of an operations examination. Read more.

Sept. 25-27: CSBS and the Graduate School of Banking at Colorado will host a Bank Directors Seminar in Coeur d’Alene, ID. This will be the best and most effective bank director training.  Read more.

Sept. 28 - Sep 28: Your State Banking Commissioner and the Conference of State Bank Supervisors cordially invite you to a roundtable briefing and open discussion of financial regulatory reform and other timely issues. Complimentary registration and lunch will be served. Read more.


Closing Comment

"I think South Dakota has a very strong banking community. While literally hundreds of banks have failed across the country, in this recession we've only had one."

-- South Dakota Division of Banking Director Bret Afdahl (Argus Leader, Aug. 27)


Catherine Woody, Editor

Edward Smith, Contributing Editor

Rockhelle Johnson, Contributing Writer

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