Banking News

Bankers Can Tweet Lawmakers with New ABA Tool September 15, 2014

ABA today launched its new Twitter map -- an interactive tool to help bankers connect with their members of Congress through Twitter. The map generates ready-to-send advocacy tweets that are specific to each banker’s state, lawmakers and key issues.

Bankers can use the Twitter map to send messages on regulatory burden, data security, the Farm Credit System and credit unions. It is available through Amplify, ABA's free advocacy platform on which all bankers can create an account.

"These issues have taken on critical importance to bankers and taxpayers across the country," said ABA EVP James Ballentine. "This map provides bankers with a quick and easy way to educate members of Congress on the issues their constituents are facing." Access the map (please note you must sign up or sign in to Amplify to view).

Apple Unveils ‘Apple Pay’ Virtual Wallet September 10, 2014

Apple yesterday unveiled its new iPhone 6 and a new virtual wallet app called Apple Pay that will allow iPhone 6 users to make purchases at points of sale with their phones. Apple Pay is leveraged on the 800 million credit cards Apple reportedly has on file in its iTunes store.

To pay, an Apple Pay customer will hold a phone near an encrypted-transmission sensor and press the fingerprint recognition device in the phone’s home button. The payment will be automatically processed from a card stored in the user’s Apple account. The store clerk will not see any card information. To protect users, no card information will be stored on the phone, Apple said; instead, the phone will relay a device number and a dynamic security code.

Apple said it has lined up numerous retailers to accept Apple Pay, including Macys, Walgreens, McDonald’s, Subway and Duane Reed. It has also partnered with Visa, MasterCard and American Express and with the six largest card-issuing U.S. banks. Apple Pay is expected to be available in October.

As payment options such as Apple Pay and other virtual wallets evolve, ABA will continue to emphasize the importance of consumer protection across all electronic payments, high standards to ensure the integrity of the payments system and a level playing field for all payments system participants.

ABA Survey Finds Target Breach Costly to Banks September 8, 2014

The Target consumer data breach last year was costly for banks of all sizes -- and especially for community banks -- according to an ABA survey of more than 500 banks. More than 8 percent of debit cards and nearly 4 percent of credit cards were implicated in the breach, and banks reissued nearly every card so implicated, representing tens of millions of cards reissued in response to a single breach.

Community banks experienced disproportionately higher costs in reissuing cards. Banks with under $1 billion in assets spent just over $11 per debit card and $12.75 per credit card, including mailing, card production and staff time. The largest banks -- those with over $50 billion -- spent under $3 per card. “These costs are deeply troubling for all banks, especially for community banks,” said ABA President and CEO Frank Keating. “As each new retailer breach occurs, these costs will be repeated over and over. Enough is enough.”

Banks also bear the costs of retailer breaches through low reimbursement rates. Although the survey did not cover reimbursement specifically for the Target breach, only one third of banks reported receiving any reimbursement for fraud losses and reissue costs in the previous five years. Of those that did receive reimbursement, 83 percent said they received less than 10 cents on the dollar -- and 46 percent reported receiving not even a penny on the dollar.

“We have engaged for the past year in discussions with the card associations on increasing bank reimbursement levels for data breach costs,” Keating said. “These findings make it clear that banks bear too much of the cost of retailers’ data breaches. We will continue to push to get these reimbursement levels up.” View the survey results. To report more experiences with breaches and reimbursement, email

Change in FHLB Membership Criteria Proposed September 3, 2014

The Federal Housing Finance Agency yesterday proposed several significant changes to eligibility for membership in the Federal Home Loan Bank system. In a new quantitative test that the agency said reflects its statutory mandate, members would be required to hold 1 percent of assets in home mortgage loans. They would also be required to have at least 10 percent of assets in residential mortgage loans on an ongoing basis, not just upon application for membership.

The FHLBs would be required to ensure member compliance with these requirements each year, calculating the relevant ratios based on a three-year rolling average. FHLB members not meeting these requirements would be given one year to return to compliance. The FHFA proposed to expand the list of assets that qualify as “home mortgage loans” for the 1 percent test to include securities fully backed by first mortgages on single- or multifamily properties and by other securities backed by these loans.

The rule would also revise insurance company membership eligibility to exclude captive insurers. In 2011, ABA opposed a similar advance notice of rulemaking on FHLB membership, noting that eligibility should be defined by statute and that the measures envisioned would add unnecessarily to compliance costs. Read the proposed rule here.

HUD Finalizes Changes on FHA-Insured ARMs, Prepayments August 27, 2014

The Department of Housing and Urban Development is finalizing changes in how Federal Housing Administration-insured adjustable-rate mortgages are adjusted and eliminated post-payment interest charges on single-family FHA-insured mortgages. The changes are intended to align the FHA’s lender requirements with Consumer Financial Protection Bureau rules.

The ARM rule requires a 45-day “look-back” period -- that is, the gap between an ARM index calculation and the date the rate adjusts -- up from the current 30-day look-back. It also provides for a 60-120 day notice period prior to ARM adjustments, up from the 25 days FHA currently requires. It takes effect for FHA-insured ARMs originated after Jan. 10, 2015.

The second rule, governing prepayments, would allow lenders to charge interest only through the date a mortgage is paid in any given month. It takes effect on Jan. 21, 2015. In a joint comment letter on the proposal, ABA called for further coordination among the FHA, the CFPB and Ginnie Mae to ensure greater consistency in servicing policy.

Read the ARM Rule here and read the prepayment rule here.

Fannie Mae Survey: Most Lenders Making Only QM Loans August 15, 2014

Eighty percent of lenders said they are making only Qualified Mortgage loans or waiting to see before entering the non-QM market, according to a Fannie Mae survey released yesterday. On balance, lenders expected to tighten credit standards. Thirty-six percent said the QM rule would induce them to tighten, while only 6 percent said they expected to ease standards.

The CFPB’s mortgage rules are also raising costs, the survey showed. Nearly three-quarters of lenders reported higher operational expenses due to the QM rule, and 85 percent said their spending on quality control has risen in the previous year.

Fannie’s survey results correspond to the results of ABA’s Real Estate Lending Survey this spring, which found that more than 80 percent of bankers expect that CFPB’s mortgage rules to constrict mortgage credit and that 64 percent expected to restrict their mortgage lending to QMs or to non-QM loans in targeted markets only. View Fannie Mae's survey results. View ABA's Survey results.

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