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Inside Washington (03/13/2012)

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  • WASHINGTON (3/14/12)--The Department of Housing and Urban Development's inspector general on Tuesday released five reports about foreclosure-handling practices at five major U.S. banks after the banks filed court documents Monday settling allegations they violated state and federal foreclosure laws and overcharged customers (American Banker March 13). The reports were used by federal officials as evidence of violations and served as leverage for the government during the settlement negotiations. The reports revealed that managers at Bank of America Corp. and Wells Fargo & Co. pressured staff to speed up handling of documents used to process foreclosures without a proper review. Citigroup's mortgage unit employees regularly signed foreclosure documents when not in the presence of a notary public, as required by law, according to the reports. An audit of 36 foreclosure cases found four in which JP Morgan Chase & Co. documented the amount owed. In three out of the four cases, the amount was inaccurate. An employee of Ally Financial routinely signed 400 foreclosure disclosure documents per day and 10,000 a month, without reviewing the supporting documentation, the report said …
  • WASHINGTON (3/14/12)--Ally Financial Inc., Citigroup Inc. and SunTrust had insufficient capital ratios under stress test scenarios run by the Federal Reserve to evaluate whether banks have enough reserves to withstand another economic downturn 2008 (MarketWatch March 13). The three banks had less than a 5% stressed ratio of Tier 1 common capital through the fourth quarter of 2013, according to the Fed. A fourth bank also failed to meet required capital levels, but the name of the firm was not released. The results of the stress tests were released Tuesday--two days earlier than previously announced. Reflecting the severity of the stress scenario--which includes a peak unemployment rate of 13%, a 50% drop in equity prices, and a 21% decline in housing prices--losses at the 19 bank holding companies were estimated to total $534 billion during the nine quarters of the hypothetical stress scenario. The aggregate Tier 1 common capital ratio, which compares high-quality capital to risk-weighted assets, fell from 10.1% in the third quarter of 2011 to 6.3% in the fourth quarter of 2013 in the hypothetical stress scenario. That number incorporates the banks' proposals for dividends, share buybacks, and share issuance …

House bill proposes SBA tweaks for CUs

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WASHINGTON (3/14/12)--Legislation that could increase credit union participation in the U.S. Small Business Administration's (SBA) 7(a) lending program by simplifying some aspects of the application process and increasing coordination between the SBA and the National Credit Union Administration has been introduced in the U.S. House.

staff met this week with SBA representatives to discuss the SBA loan programs credit unions are eligible to participate in, and how CUNA and the SBA can best ensure that credit inions are aware of those options.

The SBA backed $30.5 billion in loans to small businesses and start-ups in fiscal 2011, setting a yearly record. Eligible credit unions are currently able to participate in the SBAs Small Loan Advantage and Community Advantage programs, which are aimed at increasing the number of lower-dollar SBA 7(a) loans going to small businesses and entrepreneurs in underserved communities.

The guaranteed portion of SBA loans does not count toward the credit union member business lending (MBL) cap.

The MBL cap is currently 12.25% of a credit union's total assets, but legislation that would increase this cap to 27.5% of assets is active in both the House and Senate.

CUNA and credit union efforts are focused on adding the Senate version of that legislation, S. 509, to a Senate jobs bill. CUNA and credit union leagues have encouraged supporters to contact their legislators through a credit union action call, notes Ryan Donovan, CUNA senior vice president of legislative affairs.

CUNA has estimated that increasing the MBL cap to 27.5% of assets would inject $13 billion in new funds into the economy, creating as many as 140,000 new jobs, at no cost to taxpayers.

CFPB extends reg streamlining comment deadline

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WASHINGTON (3/14/12)--The Consumer Financial Protection Bureau (CFPB) has extended its deadline to June 4 for comment replies to first-round comments on its regulatory streamlining project.

The CFPB last year announced it would accept public comment on how best to streamline the 14 rules that it inherited from the National Credit Union Administration, the Federal Reserve, the Department of Housing and Urban Development, the Federal Deposit Insurance Corporation, the Federal Trade Commission, the Office of Comptroller of the Currency and the Office of Thrift Supervision.

The revisions are meant "to make it easier for banks, credit unions and others to follow the rules" and ensure that regulations work better for consumers and the firms that serve them.

Initial comments on the revisions were due March 5, and the CFPB planned to allow public responses to those initial comments to be filed for a 30-day period ending April 3. It is that deadline that has been extended.

The extension, the CFPB explained, is due to the anticipated number and complexity of the comments submitted in the first round of public comment gathering. The extension will also allow interested parties more time to consider and craft their responses.

The Credit Union National Association (CUNA) recently commented to the CFPB on this issue, urging the agency not to contribute to credit union's regulatory burdens and instead, to help minimize them.

CUNA also urged the agency to consider how it can exempt credit unions from future regulatory requirements, and said the CFPB should focus on examining how the mortgage lending process could be improved for consumers and lenders alike.

The CFPB should conduct similar regulatory streamlining reviews on an annual basis, publishing a list of rules it plans to review before the start of each year, CUNA said. If the agency decides to review rules on an individual basis, the Truth-in-Lending and Real Estate Settlement Procedure Acts "should be at the top of the list for review and improvements," CUNA added.