Fine: Main Street Gets the Shaft on TAG
While Wall Street executives can take billions in taxpayer bailouts and avoid sanctions for their misdeeds, community banks can’t catch a break with the industry-funded Transaction Account Guarantee program, ICBA President and CEO Cam Fine wrote. In his latest Finer Points blog post, Fine wrote that allowing the TAG program to expire while a bevy of new regulations take effect will have a disastrous effect on community banks.

Fine cited Fitch Ratings’ analysis that deposit displacement following the TAG expiration will negatively impact community banks while benefitting financial institutions considered too big to fail.

“With near-zero interest rates through 2015, new tax burdens, Basel III capital guidelines and new mortgage rules going online about the same time as TAG ends, community banks are going to be hammered from multiple directions, which means small-business lending and local financial support for smaller towns, cities and rural America grinds to a halt,” Fine wrote. “And that helps whom? The business case for allowing that to happen is what?”

ICBA continues working with lawmakers to procure an extension of this important deposit coverage. The association encourages community bankers to continue expressing their support for extending the program by calling and writing their members of Congress. Read the Blog Post. Call Congress Today. Write Congress Now.

Hoenig: Expanded Safety Net Has Reduced Stability
Policymakers have excessively expanded the financial safety net to subsidize too-big-to-fail institutions, FDIC Director Thomas Hoenig said. Speaking at the Exchequer Club in Washington, Hoenig outlined his proposal to reintroduce Glass-Steagall restrictions on universal banking and restrict the public safety net to protecting from systemic disruptions the payments and commercial banking systems.

According to Hoenig’s plan, commercial banks would, in exchange for this protection, be restricted from engaging in activities such as trading, creating derivatives and broker-dealer activities.  However, they could continue to provide trust and wealth management and underwrite new issues of stocks and bonds to bring new capital to commercial firms.

Hoenig said the proposal would help rein in the shadow banking system by requiring money market mutual funds to represent themselves as uninsured investments and by subjecting repo lenders that accept mortgage-related collateral to the same bankruptcy laws as other secured creditors.

“The proposal I have put forward serves to reduce what is protected by the safety-net and realigns incentives so that the market has a much greater impact on the outcomes,” Hoenig said. “Confining the safety net to what it was intended to protect by separating banking from broker-dealing will not eliminate crises, but it will contain them and in the end allow for a stronger, more accountable system.”

FDIC Releases New Educational Deposit Resources
The FDIC released two new resources to help bankers and depositors understand FDIC deposit insurance coverage. The FDIC’s new “Deposit Insurance Coverage for Bankers” computer-based training module is now available in an interactive format on the FDIC website. Additionally, the agency’s “Your Insured Deposits” consumer brochure is now available in a large-print version for visually impaired individuals.

FinCEN Announces E-Filing for Large Transactions
The Financial Crimes Enforcement Network announced that a variety of businesses are now able to electronically file their Reports of Cash Payments Over $10,000 Received in a Trade or Business (Form 8300) using the Bank Secrecy Act E-Filing System. Businesses such as car and boat dealers that engage in a business in which they receive more than $10,000 in cash must file Form 8300. E-Filing is a free, Web-based electronic filing system that allows businesses to submit their FinCEN reports through a secure network.

Housing Starts Up, Permits Dip in August
Housing starts rose 2.3 percent to a seasonally adjusted annual rate of 750,000 in August, the Commerce Department reported. Single-family housing starts rose 5.5 percent in August, and total starts were up 29.1 percent from a year ago.

Housing units authorized by building permits declined 1 percent to a seasonally adjusted annual rate of 803,000. Single-family authorizations were up 0.2 percent, and total building permits rose 24.5 percent from a year ago.

Completions rose 0.7 percent in August and were up 11.7 percent from August 2011.

Existing-Home Sales Climb in August
Existing-home sales continued to improve in August and the national median price rose on a year-over-year basis for the sixth straight month, according to the National Association of Realtors. Total existing-home sales rose 7.8 percent to a seasonally adjusted annual rate of 4.82 million in August and were up 9.3 percent from a year ago.

The median existing-home price was $187,400 in August, up 9.5 percent from a year ago. The August increase was the strongest since January 2006.

NAR chief economist Lawrence Yun cited favorable buying conditions. “More buyers are taking advantage of excellent housing affordability conditions,” he said in a news release. “Inventories in many parts of the country are broadly balanced, favoring neither sellers nor buyers.”

Cyber-Attack Exercises Slated for November
The Financial Services Information Sharing and Analysis Center and the Payments Risk Council are conducting the Cyber Attack against Payment Processes (CAPP) Exercise to allow financial institutions to test their emergency response procedures in relation to several different types of simulated cyber-attacks against payments processes. Community banks can participate in the three-day exercise, which will simulate a different attack scenario each day.

The exercises will be held Nov. 7-9 and Nov. 13-15. Participants will receive the scenarios each morning via email, and will have until midnight (Eastern time) each of the three days to complete a brief and confidential online survey regarding their response procedures. There is no charge to take part in the exercise, and participating organizations will receive a report including best practices and mitigation techniques. Learn More and Register.

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