IMF: Basel Proposals May Drive Consolidation
Basel III proposed regulatory capital standards might allow large banking organizations to become even more prominent and further concentrate the banking sector, the International Monetary Fund wrote in a new report.

The latest update to the IMF’s Global Financial Stability Report finds that large banks with advantages of scale may be better able to absorb the costs of the regulations, which would apply to all U.S. banks unless changed by policymakers. The IMF also wrote that the new banking standards might encourage certain financial activities to move to the nonbank sector.

The federal banking agencies recently released a Basel III a regulatory capital estimation tool that allows every community bank to estimate the impact of the proposed rules. The new calculator has been pre-populated with bank data from the June 30 call reports.

Once community bankers complete the calculator, ICBA strongly urges them to write a comment letter by the Oct. 22 comment deadline describing how the Basel III proposal will affect their risk-based capital ratios. Guidelines for drafting a comment letter, including a template and talking points, can be found on the ICBA website. ICBA also continues to call on community bankers to sign its petition calling on regulators to exempt community banks from the Basel III proposals.

Access the Calculator.
Sign ICBA’s Basel III Petition.
Learn More About the Proposal.

CFPB: Credit Scores Vary Among Consumers, Creditors
A Consumer Financial Protection Bureau study comparing credit scores sold to creditors and consumers found that approximately one in five consumers would likely receive a meaningfully different score than would a lender. The bureau said that these consumers would likely qualify for different credit offers than they would expect to get based on the score they purchased.

Score discrepancies may generate consumer harm, the CFPB reported. It said that when discrepancies exist between the scores consumers purchase and the scores used by lenders, consumers may take actions that do not benefit them, such as accepting an offer that is worse than what they should expect.

The CFPB also said that there is no way for consumers to know how the score they receive will compare to the score a creditor uses in making a lending decision. It recommended that consumers shop around for credit and check their credit report for accuracy.

The study analyzed credit scores from 200,000 credit files from TransUnion, Equifax and Experian.

FDIC Revises Violation Classifications
The FDIC Division of Depositor and Consumer Protection revised the classification system for citing violations identified during compliance examinations. The change is designed to better communicate to institutions the severity of violations and to provide more consistency in the classification of violations cited in examination reports, the agency said.

The FDIC said violations identified during an examination will be assigned to one of three levels based primarily on the impact to consumers. This is intended to help focus the institution's attention on the most significant issues identified during the examination and place more technical violations in the appropriate perspective.

The new system replaces the current two-level system and will be used in examinations started on or after Oct. 1.

Regulators Update Income Data for CRA Evaluations
Regulators released updated estimates of median family incomes to determine income levels of geographies in Community Reinvestment Act performance evaluations. The Federal Financial Institutions Examination Council estimates median family incomes for metropolitan statistical areas, metropolitan divisions and nonmetropolitan portions of each state. The 2012 update is based on the U.S. Census Bureau’s American Community Survey.

Home Prices Up Sharply: Case-Shiller
Home prices rose sharply in July, according to the S&P/Case-Shiller home price indexes. The 10-city and 20-city indexes rose 1.5 percent and 1.6 percent, respectively, from the previous month. The indexes were up 0.6 percent and 1.2 percent, respectively, from a year ago.

All 20 cities included in the index and both composites rose on a monthly basis for the third consecutive month. Additionally, prices in 16 of the 20 cities were up from a year ago.

“The news on home prices in this report confirm recent good news about housing,” Index Committee Chairman David Blitzer said in a news release. “Single family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing. All in all, we are more optimistic about housing.”

Consumers More Optimistic in September
Consumer confidence improved in September following a decline in August, according to the Conference Board. The Consumer Confidence Index rose from 61.3 to 70.3, and the indexes on consumer expectations and present conditions also rose.

More consumers said business conditions are good, and their assessment of the labor market was more upbeat. Consumers also were more optimistic about the short-term outlook, with more expecting improved business conditions over the next six months.

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