Advocacy
Today is the Deadline for Basel III Comments
Today is the last chance for community bankers to submit comment letters to federal regulators on the impact of proposed Basel III regulatory capital guidelines. ICBA is urging community bankers to write a comment letter by close of business today on how the Basel III proposal will affect their risk-based capital ratios.

A calculator released by federal regulators allows every community bank to estimate the impact of the proposed rules released in June. ICBA is encouraging community banks to use the calculator in writing their comment letter.

Guidelines for drafting a comment letter, including a template and insertable 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.
Submit a Comment Letter.



Regulation

ICBA Seeks Corrections to Remittance Rule
ICBA called on the Consumer Financial Protection Bureau to issue an interim final rule to correct remittance requirements that would force many community banks to discontinue or drastically limit the availability of remittance services. In letter from President and CEO Cam Fine and in an industry letter, ICBA wrote that it is deeply concerned about the 1,500-1,800 community banks not covered by a safe harbor for providers that processed 100 or fewer remittance transfers in the previous year.

The final rule would impose liability on financial institutions for incorrect recipient account information provided by consumer senders. Further, it would require providers to know all applicable remittance transfer taxes for every country in which they offer remittance transfers, which is virtually impossible and of little value to consumers. Finally, ICBA wrote that requiring recipient banks to disclose receipt account fees is problematic for community banks because these fees are variable and often confidential.

ICBA strongly encouraged the CFPB to provide relief with respect to these provisions and to issue an interim final rule with a request for comment because the requested corrections represent significant material changes to the final rule.

The CFPB recently released a small-business compliance guide for its remittance rule, which is scheduled to take effect on Feb. 7, 2013.


Advocacy
ICBA Backs CFPB Preemption of Inconsistent Gift Card Laws
ICBA urged the Consumer Financial Protection Bureau to preempt laws in Maine and Tennessee that require gift card issuers to surrender an unclaimed gift card’s underlying funds after two years of inactivity or two years after the date of issuance. As ICBA noted in a letter to the bureau, the Electronic Funds Transfer Act/Regulation E bars gift cards from having a funds expiration date prior to five years from the date of issuance or last load.

The association urged the CFPB to preempt the state laws because they do not provide greater protection to consumers and are inconsistent with Regulation E. Community banks that issue gift cards cannot comply with both sets of laws without increasing risk or taking a loss.



Regulation
OCC Announces New Stress-Testing Guidance and CRE Tool
The Office of the Comptroller of the Currency issued guidance to national community banks and thrifts with assets of $10 billion or less on using stress testing to assess risk in their loan portfolios. The OCC said its guidance provides additional clarity around stress-testing expectations and an example of a simple stress-test framework to consider.

The OCC said it expects all banks to be able to analyze the potential impact of adverse outcomes on their financial condition to establish and support their risk appetite and tolerances, set concentration limits, adjust strategies and appropriately plan for and maintain adequate capital levels. The guidance notes that stress tests do not need to involve sophisticated analysis or third-party consultative support. Effective methods can range from a single spreadsheet analysis to a more sophisticated model, depending on portfolio risk and the complexity of the bank.

In addition, the OCC released via BankNet a new portfolio-level stress-test tool for income-producing commercial real estate loans. The Microsoft Excel–based tool is designed to provide bankers a simple method to perform portfolio stress testing on income-producing CRE loans, particularly in institutions with significant CRE loan concentrations. This optional tool was developed by OCC examiners in response to requests from community bankers for more specific guidance on how to stress test loan portfolios.

The OCC said it plans to host a teleconference for bankers on Dec. 3 to discuss the new guidance. Read the Guidance.



Credit Unions
NCUA Extends Deadlines for Low-Income CU Application
The National Credit Union Administration Board voted unanimously for a proposed rule to extend the deadline for credit unions to accept the low-income designation to 90 days following notification of eligibility by NCUA. In conjunction with the vote, the NCUA announced that 676 federal credit unions have agreed to become low-income credit unions in the past two months.

The acceptances come after the NCUA informed 1,003 federal credit unions of their eligibility to become LICUs. The total number of LICUs is now at 1,874. Under the designation, LICUs can obtain supplemental capital, are exempt from the 12.25 percent statutory cap on member business loans and can accept non-member deposits from any source.

The NCUA board also received a briefing on the financial condition of the National Credit Union Share Insurance Fund and the Temporary Corporate Credit Union Stabilization Fund. The NCUA said total assets in CAMEL code 3, 4 and 5 credit unions fell by $10.7 billion during the third quarter while the NCUSIF equity ratio rose to 1.32 percent as of Sept. 30, above the normal operating level of 1.3 percent set by the board. The Stabilization Fund’s total liabilities and net position rose by $800 million to $1.7 billion during the quarter.

Finally, NCUA Board Chairman Debbie Matz announced the selection of Mark Treichel as the agency’s next executive director, the agency’s most senior career position. The executive director is responsible for overseeing NCUA’s daily operations. Treichel will assume his new role Dec. 30, 2012, and replace David Marquis, who retires at the end of the year.


Regulation
Fed Announces 2013 Community Advisory Council Members
The Federal Reserve Board announced the members of its Community Depository Institutions Advisory Council and the president and vice president of the council for 2013. Charles H. Majors, executive chairman of American National Bank and Trust Co. in Danville, Va., will serve as president in 2013. Drake Mills, president and chief executive officer of Community Trust Bank in Ruston, La., will serve as vice president.

The CDIAC meets twice a year with the Federal Reserve Board in Washington to advise the board on the economy, lending conditions and other issues. Members are selected from representatives of commercial banks, thrift institutions and credit unions serving on local advisory councils at the 12 Federal Reserve Banks.


Bank Failures
Regulators Close Three Banks
Regulators closed three banks Friday, bringing the 2012 total to 46. Simmons First National Bank in Pine Bluff, Ark., assumed the deposits of $200.6 million-asset  Excel Bank in Sedalia, Mo. Stearns Bank N.A. in St. Cloud, Minn., assumed the deposits of $67.2 million-asset First East Side Savings Bank in Tamarac, Fla. SmartBank in Pigeon Forge, Tenn., assumed the deposits of $159.1 million-asset GulfSouth Private Bank in Destin, Fla. Read More from FDIC.


Student Loans
CFPB Reports on Servicemember Student Loan Challenges
The Consumer Financial Protection Bureau released a report outlining the unique servicing obstacles reported by servicemembers seeking to pay off student loan debt. The report describes servicemember complaints regarding the difficulties they have accessing the protections granted to them under federal rules.

Specifically, servicemembers said that they receive incomplete or inaccurate information, have difficulty navigating the system of benefits and face roadblocks when they try to get their benefits. To educate military consumers and advisers, the CFPB released a guide for servicemembers with student loans with information on the various student loan repayment options.


Economy
Existing-Home Sales Dip in September
Existing-home sales declined modestly in September while inventory continued to tighten, according to the National Association of Realtors. Total existing-home sales fell 1.7 percent to a seasonally adjusted annual rate of 4.75 million in September from an upwardly revised 4.83 million in August. Sales remain up 11.0 percent from a year ago.

The national median existing-home price was $183,900 in September, up 11.3 percent from a year ago. The last time there were seven consecutive monthly year-over-year increases was from November 2005 to May 2006.


Economy
Rural Economic Index Soars in October
Creighton University’s index of rural economic conditions soared higher in October following negative fallout from drought conditions over the past three months. The Rural Mainstreet Index rose above growth-neutral to 56.6 from 48.3 in September.

Creighton University economist Ernie Goss said the negative effects of the drought are more than offset by high agriculture and energy prices. The farmland-price index rose significantly and was above growth-neutral for the 33rd consecutive month. Nearly 70 percent of bankers indicated that 2012 yields will be lower than in 2011.

After expanding for seven straight months, loan demand unexpectedly plummeted for the month. The loan-volume index sank to 44.2 from 70.2 in September. October’s hiring index remained above growth-neutral at 51.5 while the confidence index rose above 50.7 from 43 in September.


Rates
Freddie: FRM Rates Edge Down Last Week
Freddie Mac said fixed mortgage rates edged slightly lower last week and were near or below their all-time lows. Rates on 30-year fixed-rate mortgages averaged 3.37 percent, down from 3.39 percent last week just above its all-time low of 3.36 percent. Rates on the 30-year fixed averaged 4.11 percent a year ago. Rates on 15-year FRMs last week averaged 2.66 percent, down from 2.70 percent the previous week and 3.38 percent a year ago.


Poll
Take This Week’s Quick Poll
Take this week’s Quick Poll on compliance-audit committees, and view the results from the previous poll on Basel III comment letters. View the Archive.



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