Banking News

Agencies Finalize Risk Retention Rule Aligning QRM with QM October 23, 2014

Federal regulators have finalized the Dodd-Frank Act’s mortgage risk retention rule, aligning the qualified residential mortgage, or QRM, standard with the Consumer Financial Protection Bureau’s Qualified Mortgage rule. The original QRM proposal would have included a more restrictive down payment requirement, but aggressive advocacy by AmBA and others - with comments from more than 10,000 institutions or individuals — persuaded the regulators to re-propose the rule last year.

The agencies said that QM loans satisfy the low default risk required of QRMs by the Dodd-Frank Act. A QM has no down payment requirement and caps the debt-to-income ratio at 43 percent, with some exceptions. Instead, lenders and investors will maintain underwriting criteria that will likely address down payments and other prudential standards. The final rule applies 5 percent risk retention requirements only for non-QM mortgages. All mortgages that qualify for sale to Fannie Mae and Freddie Mac will be exempt from risk retention as long as the GSEs are under federal conservatorship.

The final rule allows any combination of vertical and horizontal integration of first-loss interests among market participants that adds up to 5 percent risk retention. The agencies made several small changes to the final rule by removing cash flow restrictions on horizontal residual interest, not requiring fair value calculations of eligible vertical interest and adjusting risk retention options for specific asset classes.

The rule was issued after a 4-1 vote by the FDIC board. Other agencies issuing the rule were the Federal Reserve, OCC, SEC, Federal Housing Finance Agency and HUD; the Fed board and SEC also voted to approve the rule on Wednesday. The rule takes effect one year after publication in the Federal Register. Click here to read the final rule.

 

Apple Pay to Launch Monday with 500 New Banks October 17, 2014

Apple Pay will launch on Monday, Oct. 20, according to Apple CEO Tim Cook. He stated that Apple Pay has signed up 500 new banks in addition to the six largest card-issuing U.S. banks that were included in the original announcement of Apple Pay in September.

Apple Pay will be available Monday with the iOS 8.1 software update for the iPhone 6. The new iPhone is equipped with near field communication technology that allows a user to make payments at participating merchants using the existing card network system.

To increase security, Apple Pay uses tokens that create one-time card numbers for each transaction and requires a biometric fingerprint scan to complete the payment. Even if card transaction data were breached at a point of sale, the card issuer would not need to reissue the card.

AmBA has issued a staff analysis to update bankers on the new payment platform, including cost considerations, revenue projections, security enhancements, customer demand and next steps. Click here to read the analysis.

 

USDA Guaranteed Farm Loan Scandal Triggers Banker Worries October 17, 2014

Alleged fraud on the part of a nonbank U.S. Department of Agriculture guaranteed farm loan originator has raised concerns that community banks that invest in USDA-guaranteed loans may be on the hook for losses.

The scandal, detailed in the October 16 issue of The American Banker newspaper, involved allegedly fabricated loan guarantee forms issued by a USDA-approved originator and purchased by an investment company in which banks invest. At least one bank has disclosed that it may face fraud losses nearly equivalent to its equity capital, the newspaper reported.

Concerned bankers holding USDA-guaranteed loans are encouraged to contact the entity from which they were purchased, as well as the local USDA office that issued the guarantee, to verify that the loans they hold are genuine.

 

Keating Discusses Reg Burden, Housing Market on Bloomberg October 2, 2014

The consolidation of community banks is due to excessive regulatory costs, ABA President and CEO Frank Keating said in an appearance on Bloomberg’s “Bottom Line” program yesterday.

Noting that we have lost, on average, one bank per weekday since 2008, he emphasized that “many of them were merged or sold because of the regulatory burden -- 15 to 20 percent of your operating income going to compliance. That’s silly, and I hope the regulators would recognize that to stifle a vital part of the financial services marketplace is not in the country’s best interests.”

Keating also discussed the housing market. He observed that sluggish wage and job growth, as well as student debt, are inhibiting the market, but he also fingered the Dodd-Frank mortgage rules, which he called “pretty strict” in their check-the-box limitations. Watch the video.

 

ABA, Other Financial Trade Groups to Operate .bank Domain September 30, 2014

ICANN, the international body that governs Internet domains, yesterday authorized fTLD Registry Services to operate the newly created top-level domain “.bank.” fTLD -- founded and operated by ABA, the Financial Services Roundtable and other industry organizations -- expects .bank to be available in 2015 for registration exclusively by verified banking industry participants.

“Our organizations took the lead on this to ensure that the banking industry -- not outsiders -- would operate .bank, and that only legitimate members of the banking community could have a .bank site,” said ABA President and CEO Frank Keating. “We took this on in order to protect the interests of our industry and preserve customers’ trust in banking.”

ABA and FSR established fTLD in 2012 when ICANN signaled that it would accept applicants to operate .bank and an array of new top-level domains being created to join the more familiar .com, .org and .net. fTLD will employ strict standards for registration and security. The new domain, for example, will help prevent users from being redirected to fake bank websites, help make it more difficult for criminals to create spoofed emails from a .bank website and provide a higher level of encryption.

More information is available at aba.com/dotbank. Once the .bank domain is available for registration, fTLD will have a website where banks will be guided through the registration process. Read ABA's FAQs on .bank.

.ffiec.gov/press/PDF/FFIEC_JointStatement_BASH_Shellshock_Vulnerability.pdf" target="_blank">FFIEC advisory information here.

 

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2015 NCCB Conference

The 2015 National Conference for Community Bankers will be held February 8-11, 2015, in Boca Raton, FL.

 This event will include sessions and speakers on topics such as interest rate risk, cybersecurity, non-interest income, industry issues and trends, legislative and regulatory updates, management strategies, the economy and more.

Click here for details.

According to a Norton Cybercrime Report, 378 million adults worldwide were victims of cybercrime in 2013.

October is National Cyber Security Awareness Month, and the Arkansas Bankers Association and American Bankers Association is offering tips to help consumers stay safe and secure online:

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