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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...

Stress Testing Forum for Community Banks, December 1-2, 2010, Kansas City, MO:  The Stress Testing Forum will evaluate the challenges and opportunities with stress testing for community banks. The session will include demonstrations of three models specifically developed for community banks. These scenarios will serve to further the discussion of the value and limitations of stress testing.

Supervisors Symposium, December 8-10, 2010, Washington, DC

Advanced Commercial Credit Analysis December 13-16, 2010, San Jose, CA and January 24-27, 2011, Palm Desert, CA, :  APPROVED BY NASBA FOR 24 CPE HOURS.  This seminar is designed to provide a high level of skill development for rapidly and effectively evaluating the repayment ability of a commercial business.  It is not about assessing the quality of collateral that supports a loan, but about understanding the borrower's ability to repay a loan.  Click More Info below for an important note regarding pre-course requirements.

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.

CSBS State-Federal Supervisory Forum, May 16-18, 2011, Seattle, WA:  The 2011 CSBS State-Federal Supervisory Forum will be held May 15 to May 18 at the Westin Seattle, 1900 Fifth Avenue, Seattle, WA 98101.

"People are coming in to buy 50 or 100 coins at a time, which is pretty hefty for individuals. It's not just rich people, either. A lot of people are putting 30 to 35 percent of their net worth in gold; they are scared to put money in paper assets.” – Coin Broker Mark Oliari   

Paper assets? Except for what’s in our pocket, our assets these days are in digital files, not even paper. It’s only natural for a coin broker to decry paper money, but precious metals require that you pay someone to guard them, and someone else to insure them, and if you have to move them you need an armored car. One can appreciate the sentiments of today’s gold bugs, but really the best place for money is still in the bank.


Massachusetts Commissioner Antonakes Joins CFPB 

The Treasury Department announced this week that Massachusetts Commissioner of Banks Steve Antonakes has been appointed to lead the Depository Supervision Unit of the Consumer Financial Protection Bureau (CFPB) implementation team.  Antonakes has served as the Massachusetts Commissioner for seven years, overseeing nearly 240 state-chartered banks and credit unions and more than 4,500 non-bank financial entities.  Conference of State Bank Supervisors President and CEO Neil Milner expressed delight at the appointment, saying Antonakes “has proven to be a pragmatic and effective regulator not only of banks, but also of a broad range of depository and non-depository financial services providers.”  Antonakes is an officer of CSBS and is a founding member of the Board of Managers of the State Regulatory Registry, a wholly owned subsidiary of CSBS that operates the Nationwide Mortgage Licensing System and Registry on behalf of state regulators.  Read More


G-20 Leaders Endorse Policy Framework for Addressing “Too Big to Fail” Problem 

The Group of 20 Leaders at the Seoul Summit endorsed the Financial Stability Board’s policy framework for reducing the moral hazard of systemically important financial institutions, including the recommended work process and timelines.  Systemically important firms are financial institutions whose disorderly failure, because of their size, complexity and systemic interconnectedness, would cause significant disruption to the wider financial system and economic activity.  Financial Stability Board jurisdictions have agreed to put into place the policy framework to reduce the risk profile of these institutions and establish a resolution framework to ensure that all financial institutions can be resolved safely, quickly and without destabilizing the financial system and exposing the taxpayer to the risk of loss.  The policy also calls for these institutions to have higher loss absorbency capacity to reflect the greater risks that these institutions pose to the global financial system and more intensive supervisory oversight.  The institutions that will be considered systemically important will be determined by mid-2011.  The rules are being developed in coordination with the Basel Committee on Banking Supervision.  Read More


House and Senate Hold Hearings on Servicing and Foreclosure Problems 

The Senate Banking Committee and the House Financial Services Committee each held hearings this week to examine problems in servicing practices and foreclosures brought to light by the “robo-signing” issues.  The hearings included a variety of regulatory, industry, academic and consumer protection witnesses.  In his testimony before the Senate Banking Committee, Iowa Attorney General Tom Miller said that one of the fundamental problems behind the mortgage mitigation and foreclosure problems is that the servicing systems “are being asked to perform a task for which they were not designed.”  Miller told the senators that the multi-state group of banking regulators and attorneys general is investigating more than robo-signing in foreclosure procedures.  “The multi-state group intends to look at issues regarding the accuracy of the information used by servicers in the foreclosure process, as well as issued such as the imposition of various servicing related fees and force-placed insurance,” he said.     

The House hearing featured testimony from federal regulators.  Lawmakers expressed their frustration that regulators were unaware of problems in the documentation of foreclosures until the media began reporting improper documentation at some of the larger servicers.  Read more about the Senate hearing.  Read more about the House hearing.


Congressional Oversight Panel Reports on Impact of Robo-Signing 

The Congressional Oversight Panel (COP) released a report this week looking at the consequences of mortgage irregularities for financial stability and foreclosure mitigation.  The report did not come to any definitive conclusions, saying it remains unclear whether “robo-signing” represents a deeper problem that could threaten financial stability and undermine foreclosure prevention efforts.  However, the COP urged the Treasury Department and bank regulators to undertake new stress tests to gauge the ability of major financial institutions to cope with a potential documentation-related crisis.   

In the best-case scenario, the report said concerns about mortgage documentation irregularities may prove to be the actions of a handful of employees who failed to follow procedures in signing foreclosure-related affidavits, but the facts underlying the affidavits are demonstrably accurate.  In the worst-case scenario, loan servicers may not be able to demonstrate the facts required to conduct a lawful foreclosure and banks may be unable to prove that they own the mortgage loans they claim to own.  The report noted that if “documentation problems prove to be pervasive and throw into doubt the ownership of pooled mortgages, the consequences could be severe.”  Read More.


Around the States 

Massachusetts:  David Cotney, the Acting Commissioner of Banks for the Massachusetts Division of Banks, has been appointed to the State Liaison Council (SLC) of the Federal Financial Institutions Examination Council (FFIEC).  The SLC was established in 1978 to encourage the application of uniform examination principles and standards by state and federal agencies and to allow state regulators to participate in the development of those principles and standards.  Cotney will serve the remainder of a two-year term that was vacated by former Maryland Commissioner Sarah Bloom Raskin upon her confirmation to the Board of Governors of the Federal Reserve System.  The term is scheduled to expire on April 30, 2012.  Read more.


Around the Agencies 

FDIC:  The Federal Deposit Insurance Corporation selected nine banks to participate in a case study to help identify best practices for banks to offer low-cost transactional and savings account products, particularly for those that are responsive to the needs of underserved consumers.  “Our goal is to highlight accounts that are not only safe and affordable for the over one-quarter of consumers who are not fully utilizing mainstream banks, but also are feasible for banks’ bottom lines,” said FDIC Chairman Sheila Bair.  The selected banks vary in size, location, and business focus and are located in the states of Delaware, Kentucky, Louisiana, Maine, Massachusetts, Nebraska, New York and Tennessee.  Read more 

FRB:  The Federal Reserve Board is seeking comments on the timetable for putting certain investing and activities restriction provisions of the Dodd-Frank Act into effect.  The statute generally provides banking entities with two years to bring their activities and investments into compliance with the so-called Volcker Rule.  The proposal outlines the actions a bank would have to take to apply for an extension.  The plan has a 45-day comment period.  Read more 

FRB:  The Federal Reserve Board issued guidelines for evaluating proposals by large bank holding companies to undertake capital actions in 2011 and will require the firms to submit a capital action plan.  The guidance applies to the 19 BHCs that underwent stress tests.  The Fed said the guidance takes a conservative approach to ensure that BHCs hold adequate capital to maintain ready access to funding, continue operations, and continue to serve as credit intermediaries.  Read more 

FRB:  Federal Reserve Board Governor Sarah Bloom Raskin called the robo-signer controversy just one of many indicators that “serious and sustained reform is needed to address the larger problems in mortgage servicing.”  Speaking before a meeting of the Consumer Law Center, Raskin noted that as Commissioner of Financial Regulation for the State of Maryland, she encountered a number of predatory tactics by mortgage servicers, such as padding fees, misapplication of payments and inappropriate assessment of force-placed insurance.  Raskin said she hopes the multi-state task force working on the robo-signing controversy “will prove to be a vehicle for resolving the underlying problems.”  Read more 

FTC:  The Federal Trade Commission halted a $13 million international robo-call scam that allegedly conned consumers out of $995 each with false promises that it would reduce their credit card interest rates, but provided little or nothing in return.  The FTC charged that the operators, who used at least 10 different company names, defrauded nearly 13,000 consumers by promising victims they would receive refunds if the company failed to save them at least $2,500.  When consumers called to complain, the telemarketers disappeared, the FTC said.  Read more. 

NCUA:  The National Credit Union Administration announced the creation of two new bridge corporate credit unions to assume the operations of Members United Corporate of Warrenville, Ill. and Southwest Corporate of Plano, Texas.  The NCUA chartered the new corporate credit unions to purchase good assets and member share deposits from the conserved corporate credit unions.  Members are expected to develop a long-term plan to transfer a bridge corporate credit union’s operations to a newly chartered corporate credit union, or sell the operation to another entity.  Read more 


Upcoming Events  

Nov. 25-Nov. 26:  CSBS will be closed in observance of Thanksgiving.  The Examiner will not be published next week. 

Dec. 1:  Each year, the Education Foundation of State Bank Supervisors (EFSBS) conducts a competition to award scholarships to three state banking department personnel to attend the graduate school of banking or graduate trust school of their choice.  Each state may submit up to three nominations for graduate banking and/or graduate trust scholarships.  Applications must be postmarked by Wednesday, December 1.  More information about the scholarships


Closing Comment 

“It’s our role.  Capital, capital, more capital.  Once I am gone, who is going to be that voice?  There are so many counter-pressures to not raise capital or to take forever to raise the capital or to fudge a little on the quality of capital.” 

--FDIC Chairman Sheila Bair in an interview with American Banker on her duty to establish strong capital requirements before her term as Chairman expires on June 26, 2011.


Catherine Woody, Editor
Edward Smith, Contributing Editor
Teresa Dean, Contributing Writer

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