CCH Financial Reform News Center

Bernanke, Duke Urge Banks to Boost Small Business Lending

This story appeared in Bank Digest.

In speeches in Washington, D.C., Fed Chairman Ben Bernanke and Fed Governor Elizabeth Duke addressed the need for banks and regulators to find ways to get more credit to small businesses so they can create jobs. “Making credit accessible to sound small businesses is crucial to our economic recovery and so should be front and center among our current policy challenges,” Bernanke said in prepared remarks to the Fed's forum on restoring credit to small businesses.

Banks Alerted to FHFA Statement on Energy Lending Programs

This story appeared in Bank Digest.

The Federal Deposit Insurance Corp. has issued an alert with regard to a Federal Housing Finance Agency (FHFA) statement concerning certain energy retrofit lending programs. The FDIC warns its insured institutions in the alert to be aware of such programs, as the programs could affect their residential mortgage lending activities and the ability to sell loans to Fannie Mae and Freddie Mac. Among the issues highlighted by the FDIC are that the FHFA statement: advises that certain energy retrofit programs use the municipal tax assessment process to ensure repayment, which results in a priority lien status that supersedes the position of existing properly recorded lien holders; indicates that underwriting and consumer protection standards, as well as energy retrofit standards, are being developed for these programs to ensure borrowers have the ability to repay the new monies in addition to existing obligations and consumers receive appropriate truth-in-lending disclosures; and directs Fannie Mae, Freddie Mac and the Federal Home Loan Banks to take specific actions that protect their operations.

NCUA Reports on Call Report Findings

This story appeared in Bank Digest.

In a release issued by the National Credit Union Administration, first-quarter Call Report data indicate a declining demand for loans. Because share growth significantly outpaced loan growth, credit unions' loan-to-share ratio continues to recede, down to 73.16 percent as of March 31, 2010, from 76.06 percent at year-end 2009, the NCUA has announced. Despite an annualized 1.5 percent rise in first mortgages, the first quarter showed declines in most secured and unsecured loan markets, such as credit cards, new auto and other real estate loans. And even though the industry's delinquency and charge-off ratios edged lower in the aggregate, credit unions in certain markets are confronted with much higher loan losses.

GSEs Launch Efforts to Improve Data Collection and Boost Risk Management

This story appeared in Bank Digest.

The Federal Housing Finance Agency has announced a major new initiative by Freddie Mac and Fannie Mae (the Enterprises) to improve the consistency and quality of data for appraisals and other loan information. The initiative is intended to enhance the depth of collateral, borrower and loan data submitted to the Enterprises. The Uniform Mortgage Data Program is a long-term, joint effort to create improved and uniform data standards and collection processes. The Enterprises worked with industry participants to develop the uniform standards.

Advisory Guidance on Nontraditional and Subprime Mortgage Loans Clarified

This story appeared in Bank Digest.

The Federal Housing Finance Agency has issued a set of questions and answers to clarify guidance offered in Advisory Bulletin 2008-AB-02, “Application of Guidance on Nontraditional and Subprime Residential Mortgage Loans to Specific FHLBank Assets.” That advisory bulletin provided guidance to the Federal Home Loan Banks about how to apply the interagency guidance to mortgages purchased under the Acquired Member Assets programs, investments in private-label mortgage backed securities and collateral securing advances.

April Loan Officer Survey Released

This story appeared in Bank Digest.

The April 2010 Senior Loan Officer Opinion Survey on Bank Lending Practices addressed changes in the supply of, and demand for, bank loans to businesses and households over the past three months. The survey included three sets of special questions: the first asked banks about lending policies regarding business credit card accounts for use by small firms; the second queried banks about the use of loan extensions on commercial real estate loans; and the third asked banks about the effects on their lending standards and terms of the adoption of new accounting standards issued by the Financial Accounting Standards Board. The summary is based on responses from 56 domestic banks and 23 U.S. branches and agencies of foreign banks.

Bair Calls for Regulation of Nonbank Lenders

This story appeared in Bank Digest.

FDIC Chairman Sheila C. Bair said that the lack of rules governing lending practices outside of the banking sector “opened the door for rampant fraud and targeting of low income and minority communities.” In remarks at the Operation HOPE Financial Forum in Atlanta, Ga., on April 7, 2010, Bair said, “When standards are not uniform, and consumers are not well informed, there will always be a race to the bottom. There are no winners in this kind of race. Consumer protections are a fundamental part of our regulatory infrastructure. The market cannot function efficiently without them. We need strong rules that apply—and that are enforced—across the board for banks and nonbanks alike.”

Lower-Cost Capital Program Application Deadline Extended

This story appeared in Bank Digest.

The National Credit Union Administration has informed credit unions that the deadline has been extended on the U.S. Treasury Community Development Capital Initiative to invest lower-cost capital in certain financial institutions, including low-income credit unions (LICUs), to April 30, 2010. The program, designed to expand financial institution lending to small businesses and in low income areas, is open to financial institutions, including LICUs and the equivalent for state-chartered credit unions that are designated as Community Development Financial Institutions.

Bair Urges Spotlight on Bank Lending

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

Public pressure needs to be maintained on the banking industry in order to ensure that loans are being made to creditworthy borrowers, Federal Deposit Insurance Corp. Chairman Sheila Bair said March 8, 2010.

“A light needs to be shined on this and explanations need to be made where credit is not being provided,” Bair said in response to questions following a speech to the National Association for Business Economics. Bair acknowledged that while credit was too freely available prior to the financial crisis, now, “I’m concerned we’re recoiling too far the other way.”

Commercial Real Estate Loans Probably “Biggest Threat” to Smaller Banks: Bernanke

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

Commercial real estate (CRE) loans are probably the “biggest threat” to smaller and regional banks at this time, Federal Reserve Board Chairman Ben Bernanke told Congress February 24, 2010.

Appearing before the House Financial Services Committee, Bernanke told members that CRE “remains probably the biggest credit issue that we still have.” The Fed Chairman said the central bank will be watching small and medium-sized banks “very carefully” in light of their exposure.