ICBA News
Senators Seek Basel Exemptions for Community Banks
A bipartisan coalition of 53 senators called on financial regulators to consider the impact new Basel III capital standards would have on community banks. In a coalition letter spearheaded by Sens. Pat Toomey (R-Pa.) and Mark Warner (D-Va.), the lawmakers expressed support for efforts to enhance capital standards for banks but urged regulators to consider the differences between large, complex financial institutions and community banks.

“We understand that capital is an important source of strength in our financial system,” the senators wrote. “However, the complexity of new global rules adds little value to the community institutions which your agencies rigorously regulate and monitor. As you review these proposed rules, we respectfully request you consider these unintended consequences and their effect on the viability of community banks across the country.”

The federal banking agencies recently released a Basel III regulatory capital estimation tool that allows every community bank to estimate the impact of the proposed rules. ICBA is calling on community bankers to complete the calculator and 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.


Interchange
Coalition Report: Merchants, Not Consumers, Reaping Interchange Price-Fixing Windfall

In time for today’s one-year anniversary of congressional price fixing of debit card interchange fees, a Electronic Payments Coalition study shows that consumers are paying 1.5 percent more at the checkout because of the infamous Durbin amendment. Proving out ICBA predictions that only merchants and not consumers would benefit from government-imposed debit interchange fees, the study, mirroring other independent research, finds “overwhelming evidence” that big-box merchants have failed to fulfill their promises to reduce their prices as a result of the $8 billion annual windfall they received because of the Durbin amendment rules.

The Durbin amendment applies to interchange paid to card issuers with $50 billion or more in assets, but ICBA has said market forces will eventually similarly depress community bank debit card interchange revenues. Last month, ICBA and a coalition of other trade groups highlighted a Government Accountability Office study to Congress that found that community banks have experienced a decrease in average interchange fees. In a letter to congressional leaders, the coalition cited the GAO study’s findings that average interchange fees that merchants pay “exempt” community bank issuers to process debit card transactions declined 5 percent since the Durbin Amendment price controls were put in force.

Last October, retailers began paying government-imposed debit transaction fees after the Federal Reserve set debit interchange rates at 21 cents, plus additional changes up to 1 cent for fraud losses. ICBA has vigorously opposed any government pricing fixing of interchange fees, arguing that consumers and, eventually community banks, would be harmed by government intervention in the highly competitive, free-market payments industry.



Economy
OCC: Mortgage Quality Improves in Q2
The overall quality of first-lien mortgages serviced by large national and federal savings banks improved in the second quarter from the same period a year ago, according to the Office of the Comptroller of the Currency. The OCC Mortgage Metrics Report showed the percentage of mortgages that were current and performing at the end of the quarter was 88.7 percent, down slightly from 88.9 percent the previous quarter and up from 88.1 percent a year earlier.

The percentage of mortgages that were 30 to 59 days past due was 2.8 percent, up 12.1 percent from the prior quarter but down 7.5 percent from a year ago. Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 or more days past due—fell to their lowest level in three years. The percentage of mortgages that were seriously delinquent was 4.4 percent, down 0.8 percent from the prior quarter and 9.2 percent from a year earlier.



Economy

Pending Home Sales Down Following July Peak
Pending home sales declined in August after reaching a two-year peak the month before, according to the National Association of Realtors. Sales decreased 2.6 percent in August but were up 10.7 percent from the previous year. Contract activity in July 2012 was at the highest level since April 2010, when buyers were rushing to beat the deadline for the home buyer tax credit.

NAR said that existing-home sales are expected to rise 9 percent this year and gain another 8 percent in 2013. The median existing-home price is projected to rise about 5 percent in both 2012 and 2013, the association said.



Economy
Durable-Goods Orders Post Double-Digit Decline
New orders for manufactured durable goods declined 13.2 percent in August, the Commerce Department reported. The decrease, which followed three consecutive monthly advances, was the largest since January 2009.

The decline was due largely to transportation equipment orders, which were down 34.9 percent. Excluding transportation, new orders decreased 1.6 percent.



Rates
Freddie: Fixed Mortgage Rates Again at New Lows
Freddie Mac said fixed mortgage rates again set record lows last week. Rates on 30-year fixed-rate mortgages averaged 3.40 percent, down from 3.49 percent the previous week and 4.01 percent a year ago. Rates on 15-year FRMs averaged 2.73 percent, down from 2.77 percent the previous week and 3.28 percent last year.



Poll
Take This Week’s Quick Poll
Take this week's poll regarding community banks and violations of the Regulation E ATM disclosure placard requirements, and view results from the previous poll on mobile phone use.



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