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Inside Washington (05/04/2011)
* WASHINGTON (5/5/11)--Narrowing the scope of commercial banking would help offset risk in the financial system, Thomas Hoenig, the president of the Federal Reserve Bank of Kansas City, said Tuesday (American Banker May 4). Hoenig acknowledged it would be nearly impossible to eliminating all risk in the banking system. Hoenig, speaking at the Independent Community Bankers Association conference, said regional and community banks were just as important to the financial systems as the big banks. Limiting the breadth of activities banks could perform would help level the playing field between large and small institutions, Hoenig said. He noted that credit default swaps or structured investment vehicles were generated by commercial banking industry and created more leverage in financial system … * WASHINGTON (5/5/11)--A House Financial Services subcommittee on Tuesday approved a bill to create a market covered bonds in the U.S. The bill, approved by a voice vote of the capital markets dubcommittee, was reintroduced by Rep. Scott Garrett (R-N.J.), who said the legislation will generate increased liquidity and help U.S. financial institutions better compete against their overseas competitors. “With our economy still recovering from the financial crisis and the need to unlock credit at an all-time high, facilitating the development of a covered bond market in the U.S. makes perfect sense,” Garrett said. Covered bonds have been used in Europe for centuries to help provide additional funding options for the issuing institutions and are a major source of liquidity for many European nations’ mortgage markets. The purpose of the U.S. Covered Bond Act of 2011 is to create a legislative framework for the development of a covered bond market in the U.S., he said in a news release … * WASHINGTON (5/5/11)--The Federal Deposit Insurance Corp. (FDIC) on Tuesday closed on a sale of securities as part of a securitization backed by about $394.3 million of performing commercial and multi-family mortgages from 13 failed banks. The securities were purchased by an affiliate of LNR Partners LLC. The FDIC described the sale as a pilot transaction, which marked the first time the agency has sold commercial mortgage loans in a securitization since the beginning of the recent financial crisis. The sale consisted of three securities. The highest-quality, or senior, securities included 80% of the assets, and were at a fixed rate of 1.84%. They are expected to have an average life of 2.6 years. Mezzanine certificates totaled $39.4 million, about 10% of the capital structure, sold at a fixed-rate coupon of 5% and are expected to have an average life of 6.5 years. The subordinate class also totaled $39.4 million and represented the most junior 10% of the capital structure. They sold at a fixed-rate coupon of 5% and are expected to have an average life of 7.1 years. The mezzanine and subordinate certificates are not guaranteed by the FDIC … * WASHINGTON (5/5/11)--The Special Foreclosure Edition of Supervisory Insights, released Wednesday by the Federal Deposit Insurance Corp. (FDIC), highlights lessons learned from an interagency horizontal review of the 14 largest residential mortgage servicers. This review resulted in consent orders for all entities reviewed. FDIC reviews of state nonmember banks have not identified instances of “robo-signing” or other serious deficiencies in mortgage servicing operations. The special edition provides examples, derived from the lessons learned, of effective residential mortgage servicing practices. Supervisory Insights provides a forum for discussing how bank regulation and policy are put into practice in the field, sharing best practices, and communicating about the emerging issues that bank supervisors face. The journal is available on the FDIC’s web site … * WASHINGTON (5/4/11)--The Office of the Comptroller of the Currency (OCC) announced Wednesday that David K. Wilson will become Senior Deputy Comptroller for Bank Supervision Policy and Chief National Bank Examiner on July 1, succeeding retiring Tim Long. In this post Wilson will chair the OCC’s Committee on Bank Supervision, direct the formulation of policies and procedures for supervision and examination of national banks, and serve as member of the agency’s Executive Committee …


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