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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...

Advanced Commercial Credit Analysis, 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.

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.

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.

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.

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.

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.

“To shorten winter, borrow some money due in spring.” – W.J.  Vogel 

For months, we clung to the hopeful predictions of the Farmers’ Almanac that this winter would be relatively mild. That venerable institution, after all, has an impressive meteorological track record. But today, with four layers of wooly clothing failing to hold off the chill, we’re inclined to think it might be wise to keep lots of canned food in the pantry along with some warming liquids – and keep the snow shovels ready to hand. And yes, take out a short-term loan to speed the sense of winter’s passing.


Elizabeth Warren Addresses State Supervisors 

Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau, spoke to attendees at the CSBS Supervisors Symposium Wednesday evening.  In her remarks, Warren spoke of the mission of the Consumer Financial Protection Bureau (CFPB), the challenges the agency faces, and of the need for enhanced coordination among state and federal regulators to protect consumers of all financial services products.  She hailed efforts by the states to protect consumers and enhance financial supervision.  Warren also answered questions from state regulators.  She was accompanied by Peggy Twohig, who will lead supervision of non-depository institutions for the CFPB, and by former Massachusetts Commissioner Steve Antonakes, who will lead supervision of depository institutions at the CFPB. 

Pictured below are CSBS Chairman and Iowa Superintendent Tom Gronstal, CSBS Chairman Emeritus and Oklahoma Commissioner Mick Thompson, Elizabeth Warren, and CSBS President and CEO Neil Milner.


Commissioner Joe Smith Has Senate Confirmation Hearing 

North Carolina Commissioner of Banks Joe Smith was the subject of a confirmation hearing before the Senate Banking Committee this week.  Smith has been nominated by President Obama to serve as director of the Federal Housing Finance Agency (FHFA).  The confirmation hearing was brief, but filled with praise from both the incoming and outgoing chairmen.  Senator Tim Johnson (D-SD), the committee’s incoming chairman, said of Smith, “As commissioner of banks, he was responsible for implementing and enforcing North Carolina’s anti-predatory lending laws, overseeing the state’s foreclosure prevention program and serving on the governor’s task force to increase small-business lending—to name a few of his accomplishments—all while regulating small and large financial institutions in the state.”  Current Chairman Chris Dodd (D-CT) said “He is eminently qualified, and has both the experience and expertise necessary to succeed as director.” 

Smith did receive some tough questioning from Ranking Member Richard Shelby (R-AL).  Senator Shelby pressed Smith on his ability to maintain his independence as director of the FHFA and encouraged him not to succumb to pressure by other agencies, specifically the Treasury Department and HUD.  “Given the responsibilities of the Federal Housing Finance Agency, as a conservator of Fannie and Freddie would you resist administration pressure on Fannie and Freddie?” Shelby asked.  “Will you be independent if confirmed?”  “I will,” Smith answered.  “Senator, the Federal Housing Finance Agency is an independent agency.” 

In his testimony, Smith indicated conservatorship of Fannie Mae and Freddie Mac cannot remain a long-term solution, but he also pledged to focus on the health of the Federal Home Loan Banks.  “Community banks are dear to my heart, and you may be assured that the Home Loan banks will receive my full attention, with an eye to strengthening them and the banks they serve,” Smith said. 


Bachus of Alabama Selected Chairman of House Financial Services Committee 

Despite a challenge by Rep. Ed Royce (R-CA), Rep. Spencer Bachus (R-AL) was formally selected by the Republican Steering Committee to chair the House Financial Services Committee in the next Congress.  Bachus first joined the Committee in 1993, and has been the ranking member since 2007.  Bachus outlined his priorities for the coming year, which include reviewing the Dodd-Frank Act to “correct, replace, or repeal the job-killing provisions that unnecessarily punish small business and community banks, ending “too big to fail,” and stopping the bailout of Fannie and Freddie.  Read more  

Bachus also announced the committee’s leadership positions for the upcoming Congress and his plans to modify subcommittee jurisdictions to augment the housing policy related subcommittee to include all insurance issues, formerly under the purview of the Capital Markets and Government Sponsored Enterprises Subcommittee.  The new leaders are: Rep. Jeb Hensarling (TX) as vice chairman; Rep. Judy Biggert (IL) as chair of Insurance, Housing and Community Opportunity Subcommittee; Rep. Shelley Moore Capito (WV) as chair of Financial Institutions Subcommittee; Rep. Scott Garrett (NJ) as chairman of Capital Markets and Government-Sponsored Enterprises Subcommittee; Rep. Ron Paul (TX) as chairman of the Domestic Monetary Policy Subcommittee; Rep. Gary Miller (CA) as chairman of the International Monetary Policy Subcommittee; and Rep. Randy Neugebauer (TX) as chairman of the Oversight and Investigations Subcommittee.  Read more


Around the States 

AL:  Alabama Governor-Elect Robert Bentley has announced that he will retain John D. Harrison as Superintendent of the State Banking Department.  “John Harrison has performed very admirably in his role as superintendent of the State Banking Department, and I want him to continue in that important position,” Bentley said.  “He is highly regarded in financial and banking circles.  In this economic downturn we need someone in this important role who enjoys the confidence of fellow regulators, the financial community, and consumers.”  Read more 

CT:  Connecticut Attorney General Richard Blumenthal requested information about the impact of a proposed merger between NewAlliance Bank and First Niagara on employment and community lending.  Blumenthal also called for state and federal regulators to hold public hearings in New Haven to ensure that local citizens and organizations are provided an opportunity to express concerns and get answers.  Read more

 IL:  Illinois Governor Patrick Quinn’s Mortgage Relief Project will take aim at reducing the number of foreclosures in Chicago and Cook County on Dec. 11 through free workshops.  The workshops offer property owners free on-site assistance to rework their mortgages and prevent foreclosures.  The state has held 16 workshops since 2009.  Read more 

MI:  The Michigan Office of Financial and Insurance Regulation published its annual list of the top investment frauds.  “Doing a little homework—before you invest—can pay big returns,” said OFIR Commissioner Ken Ross.  He urged consumers to call OFIR to verify the license of a firm and check if any complaints have been filed by other consumers.  The top investment scams identified by the department are affinity fraud, Ponzi schemes, gold and precious metals, oil and gas schemes, real estate investment schemes, senior citizen investment fraud, fraudulent promissory notes, entertainment investments, off-the-books deals, and unsuitable investments.  Read more 

NJ:  New Jersey Governor Chris Christie discussed the economic climate in the state and his ongoing plan for business growth at a symposium sponsored by the New Jersey Department of Banking and Insurance and CSBS.  More than 200 industry leaders attended the event.  “It is the banking and insurance industries that serve as a great indicator for the health of our business environment.  They will serve as a barometer as we continue our progress,” said Governor Christie.  Commissioner Tom Considine emphasized the importance of the regulator and bank relationship and the need to lend more and grow the economy.  “Pro-business does not mean anti-consumer,” Considine said.  CSBS Executive Vice President John Ryan discussed the implications of the Dodd-Frank Act and its effects on community banks.  Read more 

TN:  Tennessee Governor-Elect Bill Haslam announced he will retain Greg Gonzales as Commissioner of Financial Institutions, a post he has held since 2007.  “We discovered very quickly during the transition that Greg has incredible support across the state,” Haslam said.  “He’s gained the respect of Tennesseans and the state’s financial institutions, and I know he’ll keep up his good work and maintain his strong commitment to serving all Tennesseans.”  Read more


Around the Agencies 

Fed:  The Federal Reserve will soon issue a proposal to put into effect provisions of the Dodd-Frank Act that require standards for debit card interchange fees and the routing of debit card transactions, said Federal Reserve Governor Elizabeth Duke.  Speaking before a payment card conference sponsored by the Philadelphia Federal Reserve Bank, Duke predicted that new regulations affecting debit card overdrafts and interchange fees are likely to result in some changes in deposit product pricing and design.

Fed:  More than three-quarters of all U.S. noncash payments were made electronically in 2009, according to a payment study released by the Federal Reserve.  “The results of the study clearly underscore this nation’s efforts to move toward a more efficient electronic clearing system for all types of retail payments,” noted Richard Oliver, executive vice president of the Federal Reserve Bank of Atlanta.  Read more  

FinCEN:  The Financial Crimes Enforcement Network issued a proposal to require nonbank residential mortgage lenders and originators to establish anti-money laundering (AML) programs and comply with suspicious activity report (SAR) requirements.  FinCEN said the plan would close a regulatory gap between depository institutions and non-depositories.  Currently, the only mortgage originators that are required to file SARs are banks, thrifts and credit unions.  FinCEN said that its analysis of mortgage fraud reports found that non-bank mortgage lenders and originators initiated many of the mortgages that were associated with SAR filings.  The proposal has a 30-day comment period.  Read more  

FTC:  The Federal Trade Commission was able to shut down two groups of Florida-based telemarketers that allegedly pitched false promises to reduce credit card interest rates.  The FTC said JPM Accelerated Services made thousands of illegal pre-recorded robocalls to consumers, identifying themselves only as “card services” and offering lower credit card interest rates.  The FTC alleged that the telemarketers charged an up-front fee typically ranging from $495 to $995, did not provide the interest rate reductions and routinely refused to honor the money-back guarantee.  Read more 

HUD:  The Department of Housing and Urban Development launched multiple investigations into the practices of certain mortgage lenders to determine if their lending policies illegally deny qualified African American and Latino borrowers access to credit.  The investigations are in response to 22 complaints filed by the National Community Reinvestment Coalition.  Read more 

SEC and CFTC:  The Securities Exchange Commission and the Commodity Futures Trading Commission proposed joint rules to define certain terms in the security-based swaps market.  The plan is a first step in fulfilling the Dodd-Frank Act’s framework for regulating the over-the-counter swaps market.  The proposal covers such issues as establishing the criteria for qualifying for the exemption from the rules for those security-based swap dealers who engage in a de minimis quantity of security-based swap dealing.  The plan also would create tests for determining a major participant that is systemically important or can significantly impact the financial system in the U.S.  The proposal has a 60-day comment period.  Read more


Upcoming Events 

Dec. 14:  The FDIC is holding a Board Meeting at 10:00 am to discuss its target for the Deposit Insurance Fund, two items related to Basel capital standards and the agency’s 2011 operating budget.  Read more 

Dec. 14:  At 12:00 pm, New York Superintendent of Banks Richard Neiman will address Women in Housing and Finance during their public monthly policy luncheon.  He will discuss the early challenges of implementing the Dodd-Frank Act.  Read more 

Dec. 16:  The Federal Reserve Board is holding an open meeting at 2:30 pm to discuss proposed rules governing debit card interchange fees and routing.  In addition, for the first time ever, the Fed will make a live webcast of the meeting available.  Read more


Closing Comment 

“Stay tuned to this channel—I think you will see a lot more activity in the coming weeks and months.  We are committed to getting restitution, full restitution, to all the municipalities that were victims of this scheme.” 

--Christine Varney, head of the Justice Department’s Antitrust Division on Bank of America’s agreement to pay $137 million in restitution for taking part in a nationwide bid-rigging conspiracy for municipal-investment contracts.


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

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