September 5, 2008

"Frugality is misery in disguise." - Publilius Syrus

We aren’t sure whether to chalk it up to the economic downturn or the green movement, but we think our fellow Americans are becoming less wasteful or at least less consumptive.   Even the most recent Federal Reserve Beige Book said: “Consumer spending was reported to be slow in most Districts, with purchasing concentrated on necessary items and retrenchment in discretionary spending.” More people are using public transportation. We reuse grocery bags.   We bring our lunch.   We buy box wine.   We make our own coffee.   Earmark is now a dirty word.   We feel good about our frugality, even though it’s selective.   We think it’s a healthy trend…to a point.   However, last Friday, we ventured out to a favorite restaurant that is usually jam-packed only to find it half-empty.   Now we’re starting to worry.  Is frugality good or bad?   Is it permanent or temporary?  Whatever it is, let’s hope it moderates soon.

CSBS Announces Mortgage Supervision Accreditation Program

The Conference of State Bank Supervisors announces the launching of an accreditation program through which state banking departments will be tested against the highest standards of mortgage supervision and regulation and certified.

In announcing the program, Neil Milner, president and CEO of the Conference of State Bank Supervisors, said the new accreditation acknowledges the fact that the states are the front-line regulators of mortgage lenders.

“We believe that this new CSBS designation will demonstrate in the most concrete fashion that state banking departments are worthy of the responsibilities placed on them by recently enacted state and federal legislation, including the provisions noted in Title V of the Housing and Economic Recovery Act of 2008,” Milner said.

The goal of the CSBS Mortgage Accreditation program is to encourage state mortgage regulatory agencies to enhance their capability to promote excellence in mortgage regulation with a minimum of regulatory burden and cost, and to assist them in achieving that capability.

Specific goals include: 

• To provide guidance and assistance to state mortgage regulators through self-evaluation and self-improvement.
• To provide independent evidence of the capability of an accredited state mortgage regulator, in view of the interstate mortgage provider environment.
• To assist each agency by providing documentation that may help it to obtain the resources necessary to assure the effectiveness of state mortgage regulation.
• To strengthen the mortgage regulation system by demonstrating to Congress, the federal regulatory agencies, other state regulatory agencies and the public, the high level of capability of each accredited state mortgage regulator.

More details about the new mortgage accreditation program may be found on the CSBS Web site.

Integrity Bank Offices Reopen Under Regions Bank Banner

The Georgia Department of Banking and Finance took possession of Integrity Bank, Alpharetta, Ga., on Aug. 29 with FDIC named as receiver. All depositors of Integrity Bank, including those with deposits in excess of FDIC's insurance limits, automatically became depositors of Regions Bank for the full amount of their deposits. The failed bank's five offices reopened Tuesday as branches of Regions Bank. The bank had $1.1 billion in total assets and $974 million in total deposits as of June 30, 2008. Regions Bank agreed to pay a premium of 1.012 percent for the failed bank's deposits. In addition, Regions Bank will purchase approximately $34.4 million of Integrity Bank's assets, consisting of cash and cash equivalents. FDIC will retain the remaining assets for later disposition. FDIC estimated that the cost to the Deposit Insurance Fund would be between $250 million and $350 million. Georgia Governor Sonny Perdue reassured Georgians that the state’s banking industry remained on solid footings. “Two-thirds of banks in our state have been profitable year to date,” the governor said.  Integrity Bank is the tenth bank to fail this year and the first in Georgia since September 2007.  More Information

$1 Coin Promotions Begin Anew

The U.S. Mint chose four pilot cities to test new efforts to encourage regular use of the $1 coin.  In the cities of Austin, Texas, Grand Rapids, Mich., Portland, Ore., and Charlotte, N.C., the Mint will host a series of events at popular attractions and retailers, as well as television, radio, newspaper and online communications to promote use of the $1 coin. The campaign is now under way. "This is the first program of its kind to inspire shoppers, diners and commuters to use $1 coins in their normal, everyday activities," said Mint Director Ed Moy. "When each of us spends the $1 coin, we make a difference for our country, because the $1 coin is durable and using it saves the nation money. We hope our pilot cities lead the change!" he added. More Information

Around The Agencies

FDIC: FDIC has published best practices that were discussed at its forum on mortgage lending for low- and moderate-income households in July. The best practices are not supervisory guidance, but are being provided to banks for informational purposes as a summary of issues discussed at the forum. The forum explored a framework for low- and moderate-income mortgage lending in light of current problems in the mortgage market. It also covered profitable, responsible and sustainable mortgage lending to lower-income households and strategies to rejuvenate the secondary market for these loans. Some of the practices suggested included: using 30-year, fixed-rate mortgages; ensuring that all parties to mortgage transactions have a long-term stake in the outcome of the transactions; improving transparency throughout the mortgage process to revive the secondary market; adopting innovations, such as creating insurance products to address temporary income disruptions; and forming partnerships with community organizations, nonprofit corporations, banks, borrowers, local government and others for credit enhancements and home ownership counseling.   More Information

Federal Reserve: The Federal Reserve on Aug. 28 launched an online resource to help consumers make informed choices when refinancing a home loan.  The publication -- "A Consumer’s Guide to Mortgage Refinancing" -- is available on the agency’s Web site. It contains useful tips and answers to frequently asked questions about the refinancing process. The information covers when refinancing makes sense; what a refinancing will cost; and whether it is advisable to switch into a different type of mortgage. The Web site also provides mortgage shopping worksheets, a glossary of mortgage terms, a link to an online refinancing calculator and links to the Fed’s other consumer education resources on mortgages. The agency also updated its publication on home equity lines of credit to cover credit freezes or reductions in lines of credit.  Lenders may use the earlier version of the publication until existing supplies are exhausted. More Information

HUD: Housing and Urban Development Secretary Steve Preston announced on Thursday a 90-day moratorium on foreclosures of mortgages insured by the Federal Housing Administration in certain counties that sustained damages due to Hurricane Gustav. The foreclosure relief will apply to families whose damaged homes are insured through FHA who are living in presidentially declared disaster areas. HUD also is strongly recommending that loan servicers take such actions as special forbearance, loan modification, refinancing and waiver of late charges. As President Bush declares certain counties disaster areas, HUD will offer states the ability to re-allocate existing federal resources toward disaster relief; offer FHA insurance to disaster victims who have lost their homes and must rebuild or buy another home; and offer state and local governments federally guaranteed loans for housing rehabilitation, economic development and repair of public infrastructure. More Information

NCUA: The California Division of Financial Institutions appointed the National Credit Union Administration as the conservator of Valley Credit Union in San Jose, Calif., on Tuesday. NCUA will operate the credit union with a goal of continuing credit union service to the members and to ensure safe and sound credit union operations. The credit union was placed in conservatorship because of its declining financial condition. Valley Credit Union was originally chartered in 1953 and serves Alameda, Contra Costa and Santa Clara Counties. The credit union has $257 million in assets and nearly 26,900 members. More Information

Upcoming Events

September 6: The House Financial Services Committee will hold a field hearing on California's Central Valley and the foreclosure crisis. - 12 noon, Stockton Arena, Stockton, CA.

September 7-9: The Conference of State Bank Supervisors and the Graduate School of Banking at Colorado host a bank directors seminar in Coeur d’Alene, ID.

September 8: Congress returns from August recess.

September 15-17: The National Association of State Securities Administrators holds its fall conference in Las Vegas, NV.

September 17: The House Financial Services Committee will hold a hearing on mortgage industry compliance to delay home foreclosures. - 10 a.m., 2128 Rayburn House Office Building.

Closing Comments

"We felt it was important to assume both insured and uninsured deposits, and we believe it is our responsibility as a leading national institution to work with and support the FDIC in providing safe harbors for depositors in this challenging time," said Regions Chairman and Chief Executive Dowd Ritter in a statement, as reported Tuesday in an Associated Press story on Region’s role in the resolution of Georgia-based Integrity Bank.

CSBS EXAMINER
Mary White, Editor
Teresa Dean, Contributing Writer