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News Center - General Banking Issues |
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March 8, 2010
Yingling Reiterates AmBA's Position on Consumer Agency
In a New York Times article Saturday about the debate on the proposed Consumer Financial Protection Agency, AmBA President and CEO Ed Yingling reiterated the association's consistent position that consumer regulation should not be separated from safety and soundness regulation.
"By separating those two functions, literally the bank could be told to do different things that are in conflict," Yingling said. Instead, regular reports to Congress and strong leadership would assure that bank regulators maintain their focus on consumer financial protection, he said.
Senate Banking Committee Chairman Chris Dodd (D-Conn.) emphasized last week that any new consumer agency should have an independent budget and director, and the ability to write rules and enforce them, even if it's housed within another entity. Negotiations are continuing on the overall Senate financial regulatory reform bill, and a draft is expected to be unveiled this week. Read the story.
February 26, 2010
WSJ Editorial Echoes AmBA Opposition to CFPA
AmBA’s consistent message opposing the creation of a Consumer Financial Protection Agency continues to resonate. A Wall Street Journal editorial yesterday expressed concern about the impact a CFPA would have on traditional bankers and their communities.
Echoing arguments AmBA has been making for months, the WSJ said a CFPA would have the power to, among other things, dictate how financial products are structured and sold -- without regard for banks’ safety and soundness. The editorial also noted that the proposal does not affect Wall Street investment banks and therefore they do not oppose it, contrary to what CFPA advocates such as Congressional Oversight Panel Chair Elizabeth Warren have suggested.
“If Senate discussions now yield anything like the planned Obama consumer regulator, the result will be huge new costs for the economy and unknown risks for the taxpayer. Wall Street couldn’t care less, but Main Street will pay the bill for this experiment for many years to come,” the editorial said. Read the editorial (subscription required).
February 24, 2010
Industry Earned $914 Million in Fourth Quarter
Banks and savings institutions earned $914 million in 2009's fourth quarter, nearly $2 billion less than the $2.8 billion profit in the third quarter, but a $38.7 billion improvement over the industry's $37.8 billion net loss in 2008's final quarter, the FDIC said yesterday. For all of 2009, banks reported $12.5 billion in net income, up from $4.5 billion in 2008. Noninterest income growth, lower noninterest expense, lower securities losses and a decrease in loan-loss provisions contributed to the earnings improvement over last year's final quarter, the agency said.
Noninterest income was $21.7 billion higher in the fourth quarter than a year earlier, and noninterest expense declined by $16.2 billion. Losses on securities and other assets were $8.7 billion lower, and net interest income was $1.7 billion higher. Loan-loss provisions totaled $61.1 billion in the quarter, a decline of $10 from 2008's final quarter -- marking the first time since 2006's third quarter that such provisions were below year-earlier levels, the FDIC said.
Asset-quality indicators continued to deteriorate during the fourth quarter, although the deterioration rate slowed for the third straight quarter, the agency said. Charge-offs were $53 billion, up from $38.6 billion a year earlier, and noncurrent loans and leases increased by $24.3 billion to $391.3 billion -- 5.37 percent of the industry's total -- during the fourth quarter.
The problem bank list grew by 150 to 702 -- the largest number since 1993 -- and the Deposit Insurance Fund's reserve ratio dropped from - 0.16 percent to - 0.39 percent of insured deposits, partly due to a 1.8-percent growth in deposits. FDIC officials stressed that the agency had $66 billion to handle future failures. Much of the FDIC's cash resources -- including the industry's $46 billion in prepaid premiums -- are not counted as part of the DIF.
AmBA Chief Economist Jim Chessen emphasized that while the recovery is arduous, the banking industry continues to buttress its financial position to meet the credit needs of local communities. He added that the banking industry continues to fully fund the FDIC, and that banks' recent prepayment of over $46 billion in assessments “gives the FDIC considerable flexibility to deal with any further contingencies over the foreseeable future.” Read more. Read the FDIC Quarterly Banking Profile. Read Chessen's statement.
February 18, 2010
More Than 4,000 Participate in Telephone Briefings on Reg Reform
More than 4,000 bankers yesterday participated in a series of three, half-hour regional telephone briefings on the financial regulatory reform bill that the Senate Banking Committee is likely to act on in the next few weeks. AmBA Chairman-Elect Steve Wilson -- chairman and CEO of LCNB National Bank, Lebanon, Ohio -- and association President and CEO Ed Yingling explained that AmBA’s approach to financial regulatory reform legislation for more than a year has involved four keys: a consistent message on reform issues; close coordination with the state associations; tremendous bankers’ grassroots support; and the differentiation of traditional banks from Wall Street banks.
The consistent message on reg reform issues, for example, has constantly stressed the need for a strong resolution mechanism that would end “too-big-to-fail,” and AmBA’s strenuous opposition to the Consumer Financial Protection Agency, Yingling said. “I truly think [the CFPA] would be the most powerful agency ever created. It literally could regulate our products, mandate product design [and] regulate how products are sold …,” he said.
Yingling also noted that even under the CFPA examination and enforcement exemption for community banks under $10 billion in assets in the House-passed regulatory reform bill, the consumer agency would still write the consumer rules for all banks. The CFPA also would still have the authority to examine institutions under $10 billion if the agency deemed it necessary, he said.
The second key to AmBA’s approach -- the close coordination with the state associations -- has involved weekly conference calls and full discussions with the states on legislative strategy, Yingling explained. The regulatory reform legislation “has been very complicated to deal with, with many amendments offered or considered, and that consistency and unity with the states has been very, very important,” he said.
Yingling emphasized that the third key -- banker grassroots -- is perhaps the most important and, among other things, has generated more than 300,000 letters to Congress in the past year. He thanked bankers for their overwhelming support, and said that a high-ranking Treasury official told him a couple of months ago that “We are amazed at the grassroots output poring forth from around the country on [opposing] the CFPA.”
The fourth key -- differentiating traditional banks from Wall Street banks in the media -- has been frustrating because the term “banker” is still being used so broadly, Yingling admitted. “But the messaging has been strong from us and the state associations, differentiating traditional banks from Wall Street, and talking about the impact of the CFPA and other issues on community banks,” he said.
An audio file of the telephone briefing is expected to be available Friday.
February 16, 2010
FDIC Responds to 'Blatantly False' Video on OneWestBank
The FDIC on Friday strongly rebutted as "blatantly false" an Internet video alleging, among other things, that the agency's loss-sharing agreement with OneWest Bank -- formerly the failed IndyMac Bank -- allows its owners to profit from short sales and foreclosures, and thereby discourages loan modifications. The video, which Fairfield, Calif.-based Thinkbigworksmall.com is circulating, claims the owners are profiting from the agreement because loss-share claims are based on the original worth of a loan, not what they paid for it.
"OneWest has not been paid one penny by the FDIC in loss-share claims. The loss-share agreement is limited to 7 percent of the total assets that [it] services, and OneWest must first take more than $2.5 billion in losses before it can make a loss-share claim on owned assets," FDIC spokesman Andrew Gray said. "In order to be paid through loss-share, OneWest must have adhered to the Home Affordable Modification Program."
"This video has no credibility," Gray added. "Regardless of the personal or professional motivations behind its production, there is always a responsibility to be factually correct and transparent." Read the FDIC's statement. Read the FDIC's fact sheet. For more information, contact AmBA's Jim Chessen.
February 10, 2010
Yingling to Washington Post: CU Biz Lending Powers Not Needed
There is no reason for the government to subsidize business lending by credit unions, AmBA President and CEO Ed Yingling told The Washington Post in a story yesterday about large credit unions’ bid to expand their business lending powers. “It’s not needed, and history has shown that [the loans] are not just limited to the classic small business. They make these loans for huge condo projects, for hotels, for strip malls,” Yingling told the Post. “Should those kinds of institutions be getting taxpayer-subsidized loans?”
The story reviews the credit union industry’s campaign to more than double the cap on credit union business lending, which is currently limited to 12.25 percent of assets. Legislation lifting the cap has been introduced in the House and Senate, and credit unions hope it will be attached to a jobs bill the Senate is considering. AmBA, which has long been the leader in opposing tax-subsidized credit union expansion, strenuously opposes such legislation and last week launched a grassroots effort to defeat it. Read the story.
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