FHLBank San Francisco Releases November 2018 Cost of Funds Index

SAN FRANCISCO, Dec. 31, 2018 (GLOBE NEWSWIRE) -- The Federal Home Loan Bank of San Francisco (Bank) announced December 31, 2018, that the 11^th District Monthly Weighted Average Cost of Funds Index (“COFI”) for November 2018 is 1.060%. The index for October 2018 was 1.079%.

The COFI is computed from the actual interest expense reported for a given month by the Arizona, California, and Nevada savings institutions members of the Bank that satisfy the Bank’s criteria for inclusion in the COFI (“COFI Reporting Members”). For November 2018, 9 eligible institutions reported COFI data. Changes in interest rates on adjustable rate mortgage loans offered by many financial institutions are tied to changes in the COFI.

Although the Bank makes a good faith effort to be accurate in the calculation and publication of the COFI, the Bank does not warrant, confirm, or guarantee the accuracy of the data it receives from its COFI Reporting Members, the accuracy of the COFI calculation, or the accuracy of the COFI as published. The Bank does not examine the books and records of its COFI Reporting Members for the purpose of confirming the accuracy of the data they deliver to the Bank used to calculate the COFI, and the Bank expressly disclaims all liability that may arise from any use of the COFI or the use of inaccurate data received from its COFI Reporting Members in calculating the COFI. In addition, the Bank expressly disclaims any liability to any person for any inaccuracy in the COFI, regardless of the cause, or for any resulting damages.

The Bank accepts data for the COFI for a given month from the COFI Reporting Members until 12 noon California time on the last business day of the following month and publishes the COFI for that given month based on data received by that time. The Bank will not revise or republish the COFI for a given month based on new or corrected data received after that time and expressly disclaims all liability that may arise as a result. In addition, although the Bank makes a good faith effort to publish the COFI on the last business day of the following month at or after 3 p.m. California time, the Bank does not guarantee that it will always publish the COFI at that date and time, and the Bank expressly disclaims any liability for any delay in publishing the COFI.

Certain corporate activity, such as charter changes or mergers, may cause the Bank to determine that a financial institution no longer qualifies as a COFI Reporting Member and will no longer be included in the COFI. Similarly, if a COFI Reporting Member’s Bank membership is terminated, it will no longer be included in the COFI. The impact of such removals on the COFI will depend entirely on the amount of interest expense and total funds of the entity being removed, and may be significant.

For additional information and disclosures about the calculation of the COFI, removal of a COFI Reporting Member, and other matters concerning the COFI, visit the Bank’s website at www.fhlbsf.com.

3 banks failed to meet some relief tests: monitor

 
WASHINGTON (AP) — Three of the biggest U.S. lenders failed this year to meet some requirements for giving relief to struggling homeowners in a $25 billion settlement over foreclosure abuses, according to an official.

The monitor overseeing the settlement said in a report issued Wednesday that Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. together failed to meet seven of the 29 requirements tested in the first half of the year.

Read more...3 banks failed to meet some relief tests: monitor

U.S. banks cut mortgages by $6.3B in homeowner settlement | The Tennessean | tennessean.com

Less than a year after a landmark foreclosure abuse settlement, five of the nation’s biggest banks have cut struggling homeowner’s mortgages by $6.3 billion, part of a total $26.1 billion in home loan relief the banks agreed to provide.

In Tennessee, roughly $85 million worth of relief has been provided for 2,134 borrowers between March 1 and Sept. 30, according to a report issued Monday by Joseph Smith, monitor of the settlement. Additionally, $51 million in loan modification trials are in progress.

More than $37 million in local relief came in the form of short sales, in which lenders agree to accept less than what the seller owes on the mortgage. About $18 million was provided through refinancing loans.

Read more: U.S. banks cut mortgages by $6.3B in homeowner settlement | The Tennessean | tennessean.com

Arizonans may not feel closure of local banks

Arizona's banking industry, like that of the nation overall, is gradually recovering from the housing collapse, subprime crisis and recession that began roughly five years ago.

But while locally run institutions suffered significantly, banking customers overall might not be much worse off after the experience.

The ordeal that began in the fall of 2007 cut the number of locally based institutions, their employee count and their loans outstanding by more than 40 percent. Fifteen banks headquartered here failed, with most eventually taken over by bigger, stronger rivals based elsewhere.

Arizona's home-grown industry is much smaller and less influential than it was, with consumers and businesses more under the sway of big institutions based in New York, San Francisco and Charlotte, N.C. -- the hometowns of the three largest banks operating here, which hold nearly 70 percent of statewide deposits.

But does it really matter that fewer banks call Arizona home?

Interest rates charged here on mortgages and other loans are comparable to those in other states, and deposit yields just as skimpy. Online bill-paying, mobile-banking and other cutting-edge services are available throughout Arizona, just as they are elsewhere around the nation.

"Does it matter that Wells Fargo is headquartered in San Francisco?" asked Anand Bhattacharya, a professor of finance practice at the W.P. Carey School of Business at Arizona State University. "The average person needs a mortgage, credit card and checking account. The national banks, regardless of whether they are headquartered in Arizona or not, are fully capable of handling that."

Still, shrinkage of the local industry would seem to have some impact in reducing competition and service. It can be handy to have personal contacts at a bank with authority to say yes or no, especially if you're trying to get a loan or handle other sensitive business. Anyone who has applied for a loan lately recognizes that the process has become more onerous. Business owners, in particular, seem to value the personal touch.

"There's no question about it -- there is value to having local decision makers," said Ed Zito, president of Phoenix-based Alliance Bank of Arizona. "We offer speed and access to senior executive management at any moment."

Elden "E.G." Barmore, a retired Arizona banking executive with about four decades of experience, thinks banking has become less responsive to customers, with fewer local decision makers and less flexibility.

"Basically, the staffs (at larger banks) are doing their jobs, hoping to get good reviews and pay increases," he said. "But they have limited authority and don't have a vested interest in the bank or its future."

Barmore also thinks the industry has grown riskier, with derivatives use by banks outpacing the ability of regulators to monitor them. Meanwhile, the government is sending mixed messages to banks, he says -- prodding them to boost lending but warning them not to make any bad loans.

Speaking of loans, smaller banks typically recycle all their deposits within the state where they operate -- a claim large institutions can't all make. Small and midsize banks account for 20 percent of assets but hold 60 percent of small-business loans, reports the Independent Community Bankers of America.

There's plenty of lingering animosity directed at the nation's biggest banks, as the Occupy movement exposed. The anger has been focused much less at small banks and credit unions.

Woody Thomas, an appraiser who lives in Litchfield Park and is critical of the "large industrial banks," said he switched to a credit union for basic banking services and a mortgage.

"The reason I left the banks is that I don't believe they're being honest with people or are trustworthy," he said.

Carol Palmer, a former bank employee who lives in Mesa, believes banking services and products have been in a "steady decline" for more than five years.

"In my opinion, three things are seriously lacking in today's banking world -- service, respect (toward customers) and regulation," she said.

When she worked as a teller decades ago, Palmer said, the president of her bank "stressed that customers could receive the same products at any other bank in town, but what set our bank apart from the others was the service they received."

She also questions the multimillion-dollar compensation packages paid to top banking executives at the big institutions.

"I personally don't think any one person is worth being paid some of the millions they get in bonuses and packages," Palmer said.

Dick Jensen, a business consultant and manager in Scottsdale, is critical of the many fees charged by banks and sees the institutions as difficult to work with.

"If you own a small business, just try to get a working capital loan," he said. "I have a number of clients who have never missed a payment but have had their credit line revoked because they simply were not big enough or created enough yield for the bank." Without lines of credits, he added, small companies often must downsize or struggle to survive.

Limited impact

Most Arizonans weren't directly affected by failures over the past five years. The largest collapse, First National Bank of Arizona, counted just 2 percent of statewide deposits when it went under in 2008, with Mutual of Omaha Bank taking over. Most of the banks that went under during the past five years were small firms serving a small-business clientele through a branch or two.

"They were doing higher-risk real-estate lending, for the most part," said Scott Schaefer, president of Meridian Bank in Phoenix "I think things are just as competitive, if not more so, despite several banks leaving the market."

The biggest banks insist they're ready to lend money and, with greater financial wherewithal than their smaller rivals, are in a better position to do so. Industry profits have come roaring back over the past few years. Led by the giants, the nation's banks earned a combined $120 billion in 2011 and are on pace to top that this year.

"At Chase, we have built our market share in Arizona because of the commitment to being there in the good times and the bad," said Joseph Stewart, Chase's manager of middle-market banking in Phoenix. "Throughout the economic cycle, we have continued to lend."

From 2009 to 2011, Chase's loan growth in Arizona roughly doubled, with further increases this year.

Wells Fargo, Arizona's leader in deposits, also claims leadership in small-business loans, home-equity lending and mortgages. Pamela Conboy, an executive vice president who serves as lead regional president for Arizona, said the company views itself as a community bank and shows that through grass-roots volunteerism, grants to local non-profits and leadership on local boards.

"You may see us as a large bank, but we see ourselves as very locally managed," she said.

Wells Fargo's Arizona employment base of 14,000 has risen by about 500 positions over the past five years, helping it to absorb some of the job losses suffered by small banks. Like Stewart at Chase, Conboy emphasizes that her bank has been on the scene through good times and bad. "We've been there for our customers," she said.

Even some community-bank advocates agree that competition is stiff in Arizona.

"It definitely decreased in 2008, 2009 and part of 2010 because everyone was internally focused," said Zito at Alliance Bank, part of Western Alliance Bancorporation. "But the 800-pound gorillas have awakened and have stepped up their competitiveness dramatically."

Schaefer at Meridian asserts most banks want to make loans because they can earn higher returns on those transactions than by parking the money in short-term government notes.

"When people say banks aren't lending or don't want to lend, I completely disagree," he said.

More shrinkage coming

The pressures that began building around mid-2007 hastened what some see as a long-term consolidation trend that could shut thousands of additional banks.

"There has been consolidation in the banking industry, but we're still overbanked," said Bhattacharya at ASU. "We have way too many banks here compared to other countries."

The national count has dipped from more than 8,500 banks in 2007 to roughly 7,200 today. Zito thinks it could decline to less than 5,000 within a decade.

The costs to establish a new bank are higher and the cycle longer than before, said Schaefer. Regulations are getting tougher, and so are the technology requirements to stay competitive. Bhattacharya cites ongoing and pending new Dodd-Frank federal regulations and a new round of international requirements known as the Basel III standards that will force banks to maintain higher capital levels.

"Smaller banks got a pass on Basel II but won't get it on Basel III," he said. "The regulatory requirement for banks will become more stringent."

Plus, it's just not as profitable to run a small bank, at least currently.

"There is owner fatigue out there and recognition of limited growth potential," said Zito.

Despite more than 440 bank failures and mergers nationally since 2007, there hasn't been a single truly new bank founded -- anywhere in the country -- over the past six quarters, reports the FDIC.

So as banking becomes more commoditized, the question is whether most customers will notice or even care, especially as they conduct more transactions impersonally through the Internet and smart phones, rarely visiting a branch.

"With the local banks, one of the big marketing points is more personal service and an ability to recognize (customers) by name," said Bhattacharya. "But is that an issue for you?"

* * *

Out-of-state influence

The banking crisis and recession led to failures, purchases of struggling local banks and other pressures that have increased the market share of the three biggest institutions operating in Arizona: Wells Fargo, JP Morgan Chase and Bank of America. Here are the percentage of Arizona deposits held by the three giants:

2007: 62.1 percent

2008: 62.6 percent

2009: 63.5 percent

2010: 67.4 percent

2011: 68.9 percent

Source: FDIC

Arizona lags profit recovery

The banking industry is back from the depths, and Arizona-based banks are healing, too. Here are some statistics as of mid-2012: Q OUT/JD

All banks nationally

Percent that are unprofitable: 11 percent

First-half earnings: $69.3 billion

Five-year change in profits: -6 percent

Five-year change in employment: -5 percent

Five-year change in assets: +14 percent

Five-year change in loans: -1 percent

Arizona-based banks

Percent that are unprofitable: 32 percent

First-half earnings: $89 million

Five-year change in profits: -12 percent

Five-year change in employment: - 45 percent

Five-year change in assets: -32 percent

Five-year change in loans: -44 percent

Note: The five-year statistics compare profits, employment, assets and loans for the second quarter of 2012 against those for the second quarter of 2007.

Source: FDIC

by Russ Wiles - Sept. 18, 2012 The Republic | azcentral.com Arizonans may not feel closure of local banks

Split up banks, says builder of Citigroup - USATODAY.com

NEW YORK — NEW YORK Sandy Weill, the dealmaker who built Citigroup on the idea that in banking, bigger is better, said Wednesday that he believes big banks should be broken up.

Speaking on CNBC's "Squawk Box," the 79-year-old Weill appeared to shock the show's anchors when he said that consumer banking units should be split from riskier investment banking units. That would mean dismembering Citigroup as well as other big U.S. banks, like JPMorgan Chase and Bank of America.

It's an ironic twist and it's directly opposed to the stance of the industry's current leaders.

Weill said the radical change is necessary if U.S. banks want to rebuild trust and remain on top of the world's financial system. Weill also criticized banks for taking on too much debt and not providing enough disclosure about what's on their balance sheets.

"Our world hates bankers," he said.

The bad guys

Big banks have been villainized in the financial crisis and its aftermath. Critics blame them for risky trading that created a housing bubble and eventually led to global economic upheaval.

In some circles, there's still resentment that the government used taxpayer money to give bailout loans to the biggest banks, including Citigroup, because regulators believed that the financial system wouldn't be able to handle their failure.

But standalone investment banks, Weill said, wouldn't take deposits, so they wouldn't be bailed out.

Banks that have both investment banking and consumer banking say it's necessary to keep them together because they balance each other, ensuring stability no matter the economy.

Investment banking, which offers services like trading stocks and packaging loans into securities, can be spectacularly profitable in the good times and spectacularly unprofitable in the bad. Consumer banking, the plain-vanilla business of making loans and accepting deposits, generally offers a steadier, if slower, way to make profits.

Until the late '90s, federal regulations kept them largely separated.

'Sad what is happening'

In the same interview, Weill showed his fondness for the industry. He credited mega-banks for providing capital markets that helped convert communist countries to capitalism, and moved poor people into the middle class.

"It is really sad what is happening, and it's sad for young people," he said. "This was an industry that attracted a lot of really terrific people."

Weill retired as CEO of Citigroup in 2003 but remained chairman until 2006, building it into a giant that offered both consumer and investment banking.

By Christina Rexrode, Associated Press Jul 26, 2012


Split up banks, says builder of Citigroup - USATODAY.com

Asian stocks soar on joint central bank action | CanadianBusiness.com

BANGKOK (AP) — Asian stock markets soared Thursday after major central banks acted in concert to lower borrowing costs, hoping to prevent a global credit crisis similar to the one that followed the collapse of Lehman Brothers in 2008.

Benchmark oil rose above $100 per barrel and the dollar fell against the euro but rose against the yen.

Japan's Nikkei 225 index jumped 2.4 percent to 8,638.72. South Korea's Kospi surged 4.2 percent to 1,925.17 and Hong Kong's Hang Seng vaulted 5.9 percent to 19,041.36. Benchmarks in Australia, India, Singapore and Taiwan all rose more than 2.5 percent. Mainland Chinese shares on benchmark indexes in Shanghai and Shenzhen rose more than 3 percent.

On Wednesday, the central banks of Europe, the U.S., Britain, Canada, Japan and Switzerland reduced the rates that banks must pay to borrow dollars in order to make loans cheaper so that banks can continue to operate smoothly.

"The moves were cheered by markets as it shows central banks are willing to work together to ease Europe's sovereign debt crisis," Stan Shamu of IG Markets in Melbourne said in a report.

Separately, China's central bank also acted to release money for lending and help shore up slowing growth by lowering bank reserve levels for the first time in three years. The action late Wednesday signaled a key change in monetary policy, analysts said.

"I think the government has the faith now that inflation has peaked, and that now it's time to change the monetary policy from a tight one to a loose one," said Francis Lun, managing director of Lyncean Holdings in Hong Kong.

Chinese banks soared on the news. Hong Kong-listed Industrial & Commercial Bank of China, the world's largest bank by market value, surged 10.4 percent.
By easing reserve requirements, the central bank made available some 350 billion yuan ($55 billion) that otherwise would have been locked up in reserves. Given typical investment trends, much of that money could find its way back into the property sector.

Hong Kong-listed China Resources Land rose 11.6 percent and Poly Real Estate Group added 8.7 percent.

Steel and industrial shares also jumped. Japanese steel producer JFE Holdings shot up 9.6 percent and South Korean steel giant POSCO gained 7.5 percent.
Worries about Europe's financial system — and the reluctance of the European Central Bank to intervene — have caused borrowing rates for European nations to skyrocket. Central banks will now make it cheaper for commercial banks in their countries to borrow dollars, the dominant currency of trade.

But it does little to solve the underlying problem of mountains of government debt. Analysts said that unless there is dramatic action at an upcoming summit of European leaders on the debt crisis, markets are in for further shaky times.

"Until we see some definitely agreed on and, when necessary, legislated initiatives from Europe, optimism can be premature," said Ric Spooner, chief market analyst at CMC Markets in Sydney. "Until we see that sort of thing, there will be a ceiling on the rally."

The central banks' move sent the Dow Jones industrial average soaring 490 points, its biggest gain since March 2009 and the seventh-largest of all time.

The Dow rose 4.2 percent to close at 12,045. The Standard & Poor's 500 closed up 4.3 percent at 1,247. The Nasdaq composite index closed up 4.2 percent at 2,620.

In energy trading, benchmark crude for January delivery was up 39 cents to $100.75 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 57 cents to settle to $100.36 on Wednesday.

In currencies, the euro rose to $1.3463 from $1.3435 late Wednesday in New York. The dollar rose to 77.67 yen from 77.56 yen.

by Associated Press Dec 1, 2011

Asian stocks soar on joint central bank action | CanadianBusiness.com

Banks Revising Foreclosure Procedures

The Office of the Comptroller of the Currency (OCC) has reported that all banks targeted for investigation and review into foreclosure and lending practices have submitted letters detailing their plans for auditing said practices, which the OCC demanded be completed before the beginning of the new year. Bank of America, Citibank, JPMorgan Chase, Citigroup, Wells Fargo and a handful of others have so far entered into OCC compliance, although auditing has yet to be completed. Independent auditing firms involved in the overhaul include Deloitte & Touche, Ernst & Young and PricewaterhouseCoopers. For more on this continue reading the following article from TheStreet.

The Office of the Comptroller of the Currency said on Tuesday that the nation's largest mortgage servicers would "complete much of the work" required to clean up their loan servicing and foreclosure practices by early next year.

The OCC slapped the largest U.S. mortgage loan servicers, including Bank of America (BAC), Citigroup (C) subsidiary Citibank, HSBC (HBC), JPMorgan Chase (JPM), MetLife (MET) unit MetLife Bank, PNC (PNC), U.S. Bancorp (USB) subsidiary U.S. Bank, and Wells Fargo (WFC), with cease and desist orders in April, requiring the group to hire independent consultants to "conduct a multi-faceted independent review of foreclosure activities in 2009 and 2010," and "to correct deficient and unsafe or unsound practices in their mortgage servicing activities," along with beefing-up their oversight of third-party service providers, and their activities related to Mortgage Electronic Registration Systems, or MERS.

The regulator said that, as required, all the servicers had submitted "independent consultant engagement letters and servicer action plans" in July, and that the "OCC closely evaluated and approved consultants to prevent conflicts of interest."

The agency said work was "well under way on the actions necessary to comply with the consent orders," and that efforts "to correct deficiencies in foreclosure processes, management oversight, and internal audit [were] furthest advanced."

In Bank of America's updated engagement letter from Sept. 6, Promontory Financial Group said it would "conduct an independent review of certain residential foreclosure actions regarding individual borrowers with respect to BAC's mortgage servicing portfolio," including Bank of America's foreclosure actions as a lender, servicer, within 423 days.

Promontory Financial Group is also conducting the servicing and foreclosure audits for PNC and Wells Fargo.

Other independent consultants include Deloitte & Touche for JPMorgan, Ernst & Young, for HSBC and MetLife Bank, and PricewaterhouseCoopers, for Citibank and U.S. Bank.

The OCC said that on Nov. 1, "an integrated claims processor began mailing letters to borrowers who were in any stage of foreclosure on their primary residences between January 1, 2009 and December 31, 2010," describing the process "borrowers should follow for requesting reviews of their cases if they believed they suffered financial injury as a result of servicer errors, misrepresentations, or deficiencies in the foreclosure process."

The reviews of borrower petitions are expected to take several months.

by Philip Van Doorn Nuwire Investor Nov 25, 2011


Banks Revising Foreclosure Procedures

Banks score higher in satisfaction survey

Despite criticism of banks over rising fees, tight-lending policies and more, the industry generally received an improved score in a new satisfaction survey.

Researcher J.D. Power and Associates found that small-business customers gave banks an average score of 717 on a 1,000-point scale, up from 711 in 2010. Results were based on responses from nearly 7,000 decision makers at small companies -- those with annual sales from $100,000 to $10 million.

The survey evaluated 24 larger banks, including eight with notable operations in Arizona. Banks were evaluated on eight criteria, including products, fees, account management and problem resolution. Compared with 2010, customer satisfaction rose in all areas except fees.

"Contrary to popular belief that most customers are unhappy with their bank, small-business banking customers are more satisfied than last year across nearly all aspects of the banking experience," Michael Beird, a J.D. Power director, said in a statement. "In addition, credit availability has increased, indicating greater stability and a return to some degree of normalcy within the small-business banking environment."

M&I Bank got the highest overall score, 768.

"Although M&I Bank has a higher incidence of maintenance fees than other banks ranked in the study, customers clearly perceive value for their money," Beird said. "While much of the negative press surrounding banks focuses on fees, it's more important to focus on what really matters -- providing a highly satisfying banking experience and ensuring that customers are seeing the value in any fees they pay."

Other banks operating in Arizona that beat the average score of 717 included Comerica Bank (745), Bank of the West and U.S. Bank (738 each) and BBVA Compass (728).

The three largest banks operating in Arizona scored below average. Chase received a grade of 711, Wells Fargo was next to last at 683 and Bank of America was last at 669.

The survey by J.D. Power, based in Westlake Village, Calif., was conducted in August and September.

by Russ Wiles The Arizona Republic Oct. 24, 2011 04:26 PM



Banks score higher in satisfaction survey

Europe's big banks under pressure in crisis

BRUSSELS, Belgium - Big banks found themselves under pressure in Europe's debt crisis Saturday, with finance chiefs pushing them to raise billions of euros in capital and accept huge losses on Greek bonds they hold.

The continent's biggest financial institutions were at the center of talks as leaders entered marathon negotiations in Brussels, at the end of which they have promised to present a comprehensive plan to take Europe out of its crippling debt crisis.

"Between now and Wednesday we have to find a solution, a structural solution, an ambitious solution and a definitive solution," French President Nicolas Sarkozy said as he arrived in Brussels. "There's no other choice."

In addition to new financing for Greece, leaders want to make the banking sector fit to sustain worsening market turmoil and turn their bailout fund into a strong safety net that will stop big economies like Italy and Spain from falling into the same debt trap that has already snapped Greece, Ireland and Portugal.

But before the final deadline on Wednesday, they have to overcome many obstacles.

On Saturday, the finance ministers of the 27-country European Union decided to force the bloc's biggest banks to substantially increase their capital buffers - an important move to ensure that they are strong enough to withstand the panic that a steep cut to Greece's debt could trigger on financial markets.

A European official said the new capital rules would force banks to raise just over (euro) 100 billion ($140 billion), but finance ministers did not provide details on their decision. The official was speaking on condition of anonymity because it had been agreed to let leaders unveil the deal at their first summit today.

by Gabriele Steinhauser Associated Press Oct. 23, 2011 12:00 AM



Europe's big banks under pressure in crisis

Perspective: Problem with Housing 2011

A fellow colleague of mine, Logan Mostaghimi at Benzinga.com, had asked me what I thought the problem in housing was and what could be done to fix the housing problem and his query inspired this response:

The biggest problem in housing involves many issues in our economy.

First, banks are not lending and the reason for that is because borrowers are not able to qualify due to tight lending requirements and home equity deteriorating. Banks are also not lending because of the imposed Basel III reserve requirements and the Dodd-Frank Act as this article mentions about the Volcker Rule as part of FinReg: Moody's sees Volcker rule as credit negative for big banks

The banks have to classify their assets and determine if it is better to spin-off some assets to determine whether they have enough to meet these requirements. At this point, it doesn’t seem like the banks are 100% certain that they can meet these requirements which leads to uncertainty and tight lending standards.

Secondly, home prices have to level-off and start appreciating before you will see an easing of lending guidelines. The banks have staved off their foreclosure inventory and many homes are in the short sale or loan modification process that is why foreclosure inventory is down in some states. This should stabilize home values and home values should start appreciating and I have heard both Chase and Bank of America projecting home values to appreciate by the middle of next year. At least that is what they are saying and they have been wrong before so who really knows.

Thirdly, the government has to exit from the mortgage industry and I believe they are implementing their exit strategy by not imposing another QE3 and announcing Operation Twist which will raise the short term bond yields higher. Here is a good article on this topic: The Future of Non GSE Lending Is...

Fourthly, this is going to be a jobless recovery as there is low demand to hire new employees because consumers are not spending due to all the uncertainty in the economy stemming from the upcoming election, ObamaCare, Dodd-Frank, Basel III, the crisis in Europe, and Obama’s Job Bill. It’s a fine line that the Fed has to tread because as the velocity of money starts to increase, there is the fear of increasing inflation and interest rates.

The solution to fix the housing problem is unfortunately going to take time and I firmly believe that Bernanke has a good plan and I am almost positive that the contagion inEuropewas not fully factored into his equation.

And I might even interject the proposition of another first time homebuyer tax credit incentive to spur home buying again during the next year. That seemed to work before. Just like the payroll tax cuts which were about the only thing that was working which was extended again, so, implementing another first time home buyer tax credit is not too far fetched.

And finally, uncertainty will have to be dispelled from people’s minds. Demand for goods and services will have to increase so companies can hire. Banks have to loosen their lending standards and start lending again and somehow get the velocity of money moving again. One of my mottos for 2011 is that once you get money flowing again, life will be flowing again.

by LC Wong Oct 16, 2011

The new normal: Higher bank fees are here to stay

NEW YORK - Higher bank fees are here to stay.

The latest third-quarter earnings reports from this week confirm that banks are struggling to make money the old-fashioned way, by lending money to consumers and businesses. The main reason: interest rates are at historic lows. That makes it harder for banks to charge high rates on loans.

New rules have also curtailed various kinds of traditional fees, costing banks billions in lost income. These fees include overdraft charges on checking accounts and fees for making late payments on credit cards.

So, many of them are making up the difference with fees that aren't covered by the new rules. Bank of America Corp., which reported results Tuesday, has set off a firestorm over its plan to charge customers $5 a month for using their debit cards. Even President Barack Obama has taken the bank to task.

On Tuesday, Consumers Union became the latest to express outrage. The group urged customers to switch to other banks or credit unions if big banks refuse to drop the fees.

"This debit card fee just adds insult to injury," Norma Garcia, director of Consumers Union's financial services program, said. "It's unfair for the banks to stick consumers with a monthly fee just to use their own money."

Making money in the traditional way is becoming tougher for banks. In an effort to make up lost revenue, banks are rolling out new fees across the board:

- Citi will charge $20 a month starting in December to some customers who don't keep a balance of $15,000 or more in their combined checking, savings and investment accounts or loan balances

- Wells Fargo & Co. started testing a $3 monthly fee for debit cards Friday in New Mexico, Nevada, Oregon, Washington and Georgia

- JPMorgan Chase & Co. tested a $3 monthly debit card fee in February in Wisconsin and Georgia

- SunTrust Banks Inc. of Georgia introduced a $5 debit card fee for customers with basic checking accounts in June, and

- Regions Financial Corp. of Alabama introduced a $4 fee for debit cards in October.

The fees have become a flashpoint of anger and frustration among the growing numbers of anti-Wall Street protestors. They come in the midst of a tough economic climate where millions of people are unemployed. Some say the fees are a callous response by banks that were bailed out during the financial crisis.

On Monday, activists gathered in Burnside Park in downtown Providence, R.I. called on residents to close their accounts at Bank of America. They accused the bank of "immoral" banking practices.

"They're cheating the American people," said Patricia Phelan, 28, of Providence, who closed her two Bank of America accounts. "They're sneaking fees in."

Banks say the latest round of fees was triggered by a new federal law championed by Senator Dick Durbin of Illinois. The law caps the amount banks can charge merchants for debit card usage at about 24 cents per transaction, down from an average of 44 cents.

The rule went into effect Oct. 1 and will whittle down revenue even further starting in the fourth quarter of this year. JPMorgan said it would lose $300 million each quarter in income, Wells Fargo warned it would lose $250 million a quarter.

"It's a significant loss in revenue and income and banks have to recoup that somewhere," said Ron Shevlin, senior analyst at research firm Aite Group.

The results this week also reflect the strain of operating under the new rules in a slowing economic environment. On Tuesday, Bank of America's $6.2 billion earnings in the third quarter came from accounting gains and the sale of a stake in a Chinese bank, but its revenue and income was lower in almost all its business lines - credit cards, real estate and investment banking businesses.

On Monday Wells Fargo said its income from fees and charges plunged 7 percent in the third quarter, largely due to new regulations that limit overdraft fees and make it harder to raise interest rates on credit cards. Citigroup Inc.'s revenue dropped 9 percent from its North American consumer business because of fee curbs from new regulations.

"It's a tough, tough environment to turn a profit," said Paul Miller, bank analyst at FBR Capital Markets.

Nancy Bush, banking analyst at NAB Research, says the fees may have gone too far and are hurting the banks' public image. After all, most large banks have already eliminated free checking accounts and instituted fees for everything from bank statements to using tellers.

"Banks have been bludgeoning their customers in the past year with fee after fee, only adding to a tough environment," said Bush, who is also a contributing editor at SNL Financial. "It's time for banks to reward customers a little bit and send a message that they realize times are tough."

by Pallavi Gogoi Associated Press Oct. 18, 2011 05:27 PM



The new normal: Higher bank fees are here to stay

Think before switching banks

Associated Press Protesters with the "Occupy Seattle" movement burn a Bank of America debit card as they protest in downtown Seattle.


Many consumers stay with their banks for the same reason couples remain in unhappy marriages: It's a hassle to leave.

Lately, though, new fees for debit cards and other services have galvanized bank customers. Like spouses who discover their partner has joined an online dating service, they've had it and they want out.

The Occupy Wall Street movement has picked up on the general discontent. Organizers have designated Nov. 5 as "Bank Transfer Day" and are encouraging customers to move their money into small banks or credit unions, which often have lower fees. The disgruntlement was triggered by Bank of America's announcement that it will charge debit card users a $5 monthly fee. SunTrust and Regions Financial have also added debit card fees, and Wells Fargo and JPMorgan Chase are testing them in some markets.


But switching bank accounts isn't easy, particularly if you have direct deposit, online bill payment, and a lot of checks floating around. Factors to consider before you file for divorce from your bank:

-There's no guarantee your new bank or credit union won't raise fees, too. The new fees charged by BofA and others were triggered by a new regulation that cut in half the fees financial institutions can charge retailers when customers use debit cards for purchases.

The regulation exempted banks and credit unions with assets of less than $10 billion. Still, trade groups representing those institutions opposed the rule, arguing that the carve-out wouldn't work. Those concerns haven't disappeared, says Camden Fine, CEO of the Independent Community Bankers of America. He adds, though, that community banks are usually reluctant to raise fees because they serve smaller markets and rely on relationships with customers to stay in business.

A Credit Union National Association survey in January found 91% said they expected to make some change in their rates, fees or services because of the legislation cutting debit card fees. Still, credit unions view raising fees as a last resort, and in light of the outcry against BofA's move, "Credit unions are doing all they can to hold the line on fees," says the CUNA's Mark Wolff.

- Bank-hopping can get expensive. Some banks and credit unions charge a fee for closing your account that typically kicks in within 90 days to six months after you open your account. This won't affect you if you close an account you've had for several years. But if you open an account with a new institution and get hit with new fees a few weeks later, you may have to pay to leave.

- You won't necessarily pay higher ATM fees if you join a small bank or credit union. Big banks have thousands of their own ATMs, which means you don't have to worry about out-of-network costs.

However, many credit unions and small banks belong to networks that offer thousands of surcharge-free ATMs. Some small banks and credit unions waive fees for using an out-of-network ATM. You may still be required to pay a fee to the bank that owns the ATM, but some institutions will reimburse you for that cost.

- You can save a lot of money if you don't need a branch. Some of the lowest-cost checking accounts are available from online-only banks, such as Ally Bank, ING Direct and Bank of Internet USA. Some also pay above-average interest on their checking accounts, offer rewards for using your debit card, and will reimburse you for the cost of using another bank's ATM.

The downside? These banks may not be a good choice for people who need to deposit a lot of checks. In most cases, you'll either have to mail in your check or pay for a wire transfer. Ally Bank recently launched a service that allows customers to deposit electronically with a scanner.

- You may not have to leave to avoid fees. Many banks will waive monthly checking account fees for customers who maintain a minimum balance, use direct deposit or pay their bills online. You can avoid debit card fees by using cash, a credit card or a check, although the last option won't win you a lot of love in the checkout line.

by Sandra Block USA Today Oct. 18, 2011 08:44 AM



Think before switching banks

Fed: Crisis alters central-bank focus

WASHINGTON - Federal Reserve Chairman Ben Bernanke said Tuesday that he is more open to using the Fed's interest-rate policies to combat financial bubbles, arguing that in the wake of the economic crisis, central bankers must rethink their assumptions.

Before the economic upheaval, Bernanke acknowledged, central banks viewed financial stability as a "junior partner" to the task of tweaking interest rates to try to boost growth. But both stability and monetary policy are of vital importance to the U.S. economy, he said.

"In the decades prior to the crisis, monetary policy had come to be viewed as the principal function of central banks," Bernanke said at a conference sponsored by the Federal Reserve Bank of Boston, according to a prepared text. "Their role in preserving financial stability was not ignored, but it was downplayed to some extent. The financial crisis has changed all that. Policies to enhance financial stability and monetary policy are now seen as coequal responsibilities of central banks."

During the late-1990s stock-market boom and then the housing-price boom in the early 2000s, the Fed largely avoided using its power to control interest rates and the supply of money as a way to fight off what were in hindsight dangerous bubbles. The argument at the time was that monetary policy is too blunt an instrument to address out-of-whack prices in an individual marketplace. For example, raising interest rates in 2003 to combat rising home prices might have risked dragging the entire economy into recession.

Bernanke was not repudiating that line of thought entirely, arguing in Tuesday's speech that regulation is the best tool to rein in financial excesses. But he appeared open to using monetary policy to keep those excesses in check as well.

"The possibility that monetary policy could be used directly to support financial-stability goals, at least on the margin, should not be ruled out," Bernanke said.

The Fed chief spoke approvingly of a wide range of regulatory tools that central banks around the world are using to ward off financial bubbles that could wreak severe damage on their economies.

In particular, he noted policies aimed at forcing banks to behave more cautiously during good times so that they will be less prone to crisis in bad times. In Korea and Hong Kong, for example, central banks require different loan-to-value ratios on mortgages depending on the economic cycle.

Bernanke did not specifically discuss the outlook for U.S. monetary policy, except to say that the Fed's policy committee "continues to explore ways to further increase transparency about its forecasts and policy plans." At its last meeting, the Federal Open Market Committee considered whether to begin announcing the specific economic indicators, such as the unemployment rate and the inflation level, that might prompt it to back away from its low-interest-rate policies.

But there was no resolution of the issue, and Bernanke's comments merely confirm that it will be an ongoing discussion.

Charles Evans, the president of the Federal Reserve Bank of Chicago, argued in a speech Monday that the Fed should pledge to keep easy-money policies in place until the unemployment rate falls below 7 percent or projected inflation rises above 3 percent.

But others on the Fed policy committee are uncomfortable with anything that could push inflation above the 2 percent or so that the Fed prefers.

by Neil Irwin Washington Post Oct. 18, 2011 06:02 PM



Fed: Crisis alters central-bank focus

EU exec, France want voluntary bank deal on Greece

BRUSSELS - The European Commission and France want a deal in which private creditors take losses on Greek bonds to remain voluntary to avoid triggering big payouts on bond insurance, officials said Thursday. That clashes with several other countries' push for steeper writedowns.

On July 21, European leaders agreed that as part of a second bailout for Greece, banks and other private investors would voluntarily swap or roll over their existing Greek government bonds for ones with easier repayment terms, such as lower interest rates, longer maturities or a lower face value. Banks said that that would result in writedowns of some 21 percent of their Greek debt holdings.

The deal was widely criticized as too soft on banks and since then several eurozone states, including Germany and the Netherlands, have been pushing for much steeper losses on the bond holdings to make sure Greece is actually able to repay its debt in the long run.

A European Union official said Thursday that because market conditions have changed since July 21, the agreement had become more expensive for Greece and the rest of the eurozone.

As a result, some aspects of the deal would have to be renegotiated, said the official, who declined to be named in line with the EU's policy on technical briefings.

The official declined to comment on whether the re-negotiated deal would lead to bigger writedowns but implied it should remain voluntary and not impose losses unilaterally on banks.

He stressed a new deal would be "in the spirit of the 21st of July" agreement - which was voluntary - and would not lead to a credit event. A credit event - which happens when a country defaults on its debts and forces losses on bond holders - would trigger payouts on credit default swaps on Greek bonds, a form of insurance for bond holdings that many investors purchase.

Eurozone leaders this summer tried very hard to avoid such a payout.

The position of the Commission, which is the EU's executive, was supported by France. "What we reject is a credit event," said a French Finance Ministry official, who spoke on condition of anonymity to speak more frankly about delicate negotiations.

The EU official acknowledged, however, that the July 21 agreement did little to lower Greece's overall debt, since its main effect was to push bond repayments further into the future. He added that since the summer, concerns over Greece's debt sustainability had increased, and that there were discussions to "rebalance" the July agreement.

The Commission's position was discussed with eurozone finance ministers at a meeting last week and was "jointly held," the official said. That statement contrasts with comments from several politicians from Germany and other countries in recent weeks, who appeared to continue to push for a more radical solution for Greece's debt problems.

The Institute of International Finance, the big bank lobbying group that has taken the lead on the Greek bond deal, has recommenced negotiations on the issue. Charles Dallara, the IIF's managing director, is currently in Europe for talks on the deal with Greek bondholders and European officials, said spokesman Frank Vogl, without giving further details.

The European Central Bank issued a sharp warning against forcing contributions from bondholders, saying the resulting bank losses "could trigger a need for large-scale bank recapitalization" at governments' expense. That could lower government credit ratings, which could weaken prospects for the banking system and increase the need for recapitalizations in a vicious circle. It said it "strongly advised against all concepts that are not strictly voluntary."

The negotiations on writedowns on Greek banks are central to a broader push within the eurozone to find a solution to its escalating debt crisis. They go hand in hand with plans to force big banks in Europe to add to their financial cushions so they are able to absorb potential losses on bonds and sustain wider market turmoil.

The European Banking Authority is due to spell out new, much higher capital requirements for the continent's biggest banks ahead of a crucial summit of EU leaders on Oct. 23. Banks may be required to raise the new capital within three to six months, a second EU official said Thursday, adding that the EBA would set a clear timeframe over the next week or so.

The head of Germany's largest commercial bank on Thursday warned that forcing losses on banks and requiring them to devote more money to their capital cushions could backfire by making them restrict credit to the rest of the economy.

Josef Ackermann, CEO of Deutsche Bank, said officials must ask whether banks "will not be practically forced into (credit) restrictions through possible debt reduction in the eurozone and the new regulatory conditions."

"The bank's capital levels are not the problem, but the fact that government bonds have lost their status as risk-free assets," he told a conference in Berlin.

by GABRIELE STEINHAUSER and DAVID Mchugh Associated Press Oct. 13, 2011 04:21 PM



EU exec, France want voluntary bank deal on Greece

FDIC backs ban on banks trading for own profit

WASHINGTON - Banks would be barred from trading for their own profit instead of their clients under a rule federal regulators proposed Tuesday.

The Federal Deposit Insurance Corp. backed the draft rule on a 3-0 vote. The ban on so-called proprietary trading was required under the financial overhaul law.

For years, banks had bet on risky investments with their own money. But when those bets go bad and banks fail, taxpayers could be forced to bail them out. That's what happened during the 2008 financial crisis.

The Federal Reserve has also approved a draft of the so-called Volcker Rule, named after former Fed Chairman Paul Volcker.

The Securities and Exchange Commission must still vote on it, and then the public has until Jan. 13 to comment. The rule is expected to take effect next year after a final vote by all three regulators.

A ban on proprietary trading could help President Barack Obama in next year's election by showing he has adopted tough rules to rein in risky trading on Wall Street.

A harder line with bankers might also help Obama win over protesters on Wall Street. Many believe Obama was too lenient on the banks because he continued the bailouts that had begun under President George W. Bush.

Congress and Obama had hoped the Volcker Rule would blunt such criticism. But they left most of the details for regulators to sort out. It's unclear how strictly the ban will be enforced.

Under the draft, banks must hold investments for more than 60 days. Regulators determined that was enough time to limit speculative trading.

Senior and midlevel managers would be required to make sure bank employees comply with the restrictions. But the rule doesn't say what happens if they don't.

Traders should not be paid in a manner that encourages risk-taking, but the rule doesn't outline what that entails.

Critics contend that the rule as written is too vague and its effect on risk-taking will be limited. Banks have a history of working around rules and exploiting loopholes. In this case, banks can make most trades simply by arguing that the trade offsets another risk that the bank bet on.

The draft rule "draws too few bright lines to make clear what banks can and cannot do," said Bartlett Naylor, financial-policy advocate at the liberal group Public Citizen. "The regulators are proposing that they will detect the difference between various trades by fishing through complex data provided by the banks after the fact. This is an invitation for evasion."

The rule was proposed by the Fed. Some critics argue the Fed often capitulates when bankers complain that regulations make it harder for them to do business.

Wall Street banks say the ban on proprietary trading could prevent them from buying and selling investments that their customers might want.

The banking industry said Tuesday the rule is too complex to work and will put U.S. financial firms at a competitive disadvantage to those in other countries.

"How can banks comply with a rule that complicated, and how can regulators effectively administer it in a way that doesn't make it harder for banks to serve their customers and further weaken the broader economy?" Frank Keating, head of the American Bankers Association, said in a statement.

At the same time, several big U.S. banks have already shut down their proprietary trading operations in response to the financial overhaul. Critics say they have merely spread those traders across other desks without ending their risky practices.

The rule also would limit banks' investments in hedge funds and private-equity funds, which are lightly regulated investment pools. Banks wouldn't be allowed to own more than 3 percent of such a fund. In addition, a bank's investments in such a fund couldn't exceed 3 percent of its capital.

Before Congress passed the financial regulatory overhaul, banks had no limit on how much of those funds they could own. Still, typically on Wall Street, such investments already fall below the 3 percent threshold.

Banks could still put their clients' money into those funds. They will still be able to manage such funds, and collect fees and a percentage of trading profits.

by Marcy Gordon Associated Press Oct. 11, 2011 04:34 PM



FDIC backs ban on banks trading for own profit

China investment arm buys bank shares to support market | Sympatico.ca News

The announcement by Central Huijin Investment Ltd., an arm of the sovereign wealth fund China Investment Corp., came after the benchmark Shanghai Composite Index closed at its lowest level in more than two years, losing 0.6 per cent to 2,344.79.

Share prices have languished despite China's still robust growth, weighed down by worries over Europe and tightening liquidity.

The market dropped Monday following reports that housing prices fell in September, prompting a sell-off of property stocks. Poly Real Estate Group lost 3.5 per cent and China Vanke, the industry leader, shed 3.3 per cent.

Central Huijin is the major shareholder in China's big state-run banks. The company said in a brief announcement on its website that it bought shares in the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank and that it would continue its market-support operations. It gave no details about the amount of shares purchased.

The central bank has ordered China's banks to hold record levels of reserves as it has sought to sponge excess liquidity out of the economy and counter inflation.

Monday's close was the Shanghai benchmark's lowest since April 2009. The index has dropped more than 16 per cent so far this year.

The banks' shares showed modest gains. ICBC rose 0.3 per cent; Agricultural Bank was up 0.4 per cent; Bank of China rose 0.7 per cent and China Construction Bank added 0.2 per cent.

by Associated Press Oct 10, 2011


China investment arm buys bank shares to support market | Sympatico.ca News

Moody's sees Volcker rule as credit negative for big banks « HousingWire

A leaked copy of the final Volcker Rule shows regulators going in a direction that will put the big banks in a credit negative position, according to Moody's Investors Service.

The Volcker Rule was included in the sweeping financial reforms of the Dodd-Frank Act to prohibit banks from risking their own capital by engaging in the proprietary trading of securities, derivatives or high-risk financial instruments associated with private equity and hedge funds.

A leaked copy of the final rule hit the marketplace last week, prompting Moody's analyst Peter Nerby to forecast a few negative consequences for the bondholders of Bank of America (BAC: 6.1815 +4.77%), Citigroup (C: 26.201 +6.38%), Goldman Sachs [[GS, JPMorgan Chase (JPM: 32.19 +4.85%) and Morgan Stanley (MS: 15.27 +7.23%).

One of those consequences is that most market-making revenues at firms "can be viewed as customer-driven proprietary trading." Restricting these activities on market-making and hedging will put bondholders in a credit negative position, Nerby said.

"While we see the Volcker Rule's restrictions on true proprietary trading, hedge fund and private equity investing as positive for bank bondholders, we see the Volcker Rule's complex restrictions on market-making and hedging as credit negative for bank bondholders," Nerby said.

"The rule disadvantages the important core market-making franchises of the big U.S. banks and creates opportunities for unregulated competitors, such as high-frequency trading firms, and the non-U.S. operations of foreign banks," he said.

Moody's criticized the rule for outlining a few principles while failing to implement "hard and fast guidelines."

Based on the guidelines included in the leaked rule, financial firms with gross trading assets and liabilities higher than $5 billion will be forced to provide somewhere between 17 to 22 separate data metrics to regulators each month.

by Kerry Panchuk HousingWire Oct 10, 2011



Moody's sees Volcker rule as credit negative for big banks « HousingWire

Full FHFA Statement Disclosing Suits Against 17 Banks (Including Such Dead Man Walking As SocGen)

FHFA goes hog wild and potentially full retard in suing everyone, or specifically 17 global banks, up to an including such dead men walking as Barclays, RBS and SocGen. Oddly such crony capitalist favorites as Wells Fargo are suspiciously absent: we wonder what the cost of that particular Eureka moment was to the interested party. Either way, come Monday, this will get interesting when already scarce liquidity goes... poof. Full statement is below, while the link to all the individual law suits is here.


FHFA

by Tyler Durden ZeroHedge Sept 2, 2011

Fight on debit-card fees a test for Senate

WASHINGTON - In a heavily lobbied fight pitting financial institutions against merchants, supporters of the nation's banks pushed Tuesday toward a Senate vote aimed at blocking a government plan to cap the fees that stores must pay banks whenever a customer swipes a debit card.

Both sides claimed to represent consumer interests in the battle over the $16 billion yearly that the Federal Reserve says stores give banks in those fees. Merchants say the fees force them to charge higher prices and thwart their efforts to grow and add jobs.

Banks say the fees are too low because they don't consider all their costs in administering debit-card programs. They also say they'd have to raise other charges, such as for checking accounts, if the swipe fees are reduced.

A showdown vote was set for today. If successful, the provision would block a Fed proposal that would cap the so-called interchange fees at 12 cents per swipe. That's down from the current average of 44 cents, the result of fees that average 1 to 2 percent per transaction.

Last year's financial-overhaul legislation ordered the Fed to issue a proposal and for a final rule to take effect on July 21. The proposal debated by the Senate would delay the regulations for a year and order the Fed and three other federal agencies to study whether the proposal is fair and rewrite it if at least two agencies decide it is not.

With merchants and bankers important constituencies and contributors to both Democrats and Republicans, lawmakers' views on the effort cross party lines.

Sen. Jon Tester, D-Mont., a first-term lawmaker facing re-election in a GOP-leaning state next year, is a leader of the effort to block the cap on fees, while Sen. Richard Durbin of Illinois, the Senate's No. 2 Democratic leader, is its leading foe.

Durbin, author of the provision in last year's law that paved the way for the Fed's plan, said the fight offers senators a clear choice.

"They're either going to be on the side of the banks and credit-card companies, or be on the side of consumers and businesses across the America to give them a fighting chance," Durbin said.

Tester said he is not fighting for the nation's largest banks, saying, "They have plenty of sources of revenue."

Rather, he said, he is on the side of small financial institutions that dot his rural state, which he said would be in danger of disappearing if their revenues collapsed.

"Fewer banking options in rural America is a death knell for rural America," Tester said. "But that is where we are headed."

Using Senate procedures, Durbin was forcing Tester to win votes from 60 of the 100 senators to prevail.

Both sides conceded that Tester could be close to a victory, though it could be difficult for him to overcome the experienced and powerful Durbin in the behind-the-scenes struggle for the decisive votes.

Tester and Sen. Bob Corker, R-Tenn., another leader in the effort to block the Fed, said their proposal is a compromise.

Initially they sought a two-year delay, and their new plan has a shorter window. They conceded that debit-card fees will be regulated - it is just a matter of when and how.

Durbin said the effort is not a compromise because he and the merchants he is backing opposed it and had no input. Recalling the 2008 taxpayer bailout of faltering financial institutions, he said, "Are we going to be shaken down a second time? That's what this debate is all about."

The swipe-fee fight is an issue that many lawmakers would prefer to not have to vote on because it forces them to choose between two groups that few members of Congress are eager to provoke - especially with a third of the Senate and the entire House up for re-election next year.

Underscoring the unlikely coalitions the battle is spawning, Tester's proposal is backed by the conservative Americans for Tax Reform on the ground that the Fed plan would impose price controls.

Supporting Durbin is the Armed Forces Marketing Council, whose members operate exchanges on military bases and which argue that the fees hurt military families.

by Alan Fram Associated Press Jun. 8, 2011 12:00 AM



Fight on debit-card fees a test for Senate

US Real Estate: Realtors Face Off Against Mortgage Bankers — CNBC Realty Check Blog - CNBC

Yesterday I had the great opportunity to moderate a symposium on mortgage liquidity with a pretty heavy panel of mortgage bankers and industry executives.

I knew they would be guarded in their answers, as I asked about the new world of underwriting, the wind down of Fannie Mae and Freddie Mac, the tighter more expensive FHA, new federal regulation in the industry and a controversial new appraisal process.

And they were guarded, until I opened up the floor to the Realtors, who hammered them hard on foreclosures, short sales, and mortgage credit for independent contractors like themselves.

A Realtor from Wilmington, NC asked what are the plans for companies to put the shadow (foreclosed) inventory onto the market? Most agents believe banks are holding on to these properties to somehow game the market, but the bankers were firm in their rebuttal:

Cara Heiden/Wells Fargo [WFC 28.59 0.73 (+2.62%) ]: "With respect to shadow inventory, we are not holding on to properties. On average we do hold the REO about 160-70 days, but once they're listed they're sold in 90 days and the reason that we hold them for a period of time prior to listing is so that we can get them in better shape for sale and uphold, to the extent that we can, market values. So we're not holding other than for the purpose of getting that property to a level that does help maintain market values whenever possible."

Doug Jones/Bank of America [BAC 11.868 0.008 (+0.07%) ]: "We too don't hold to have any market placement or timing. We need to clear inventory, so as soon as we go through that process, the property is marketed as an REO and we move it out."

...but when the President of the National Association of Realtors, Ron Phipps, pushed the bankers on short sales, that is selling a property for less than the value of the mortgage, it got a bit trickier....

Cara Heiden: "When we get the offer in and the paperwork is ready to go, our goal is 5-15 days ... "

[the crowd of over 1000 broke out into a huge wave of laughter at this because they don't buy that for a second]

...subject to our investors and what we're authorized to do.

Ron Phipps: "In the field our experience is we don't get responses in a timely fashion."

Cara Heiden: "I'll just say short sales are frustrating for you and they're frustrating for us."

She went on to defend that they are adding staff, training staff, working to improve, etc. But there was no winning that one.

A Realtor from Midland, TX asked why banks aren't giving incentives to investors to buy up REO (bank owned foreclosures) properties.

Mike Williams, the CEO of Fannie Mae, which currently holds over 153,000 REOs on its books, took the question: "Our first priority is to make sure we preserve the value of the property for the company and secondly for the community."

Williams then said they give occupants the first option and then go to the public entities, like the cities.

Once that's done, he added, "I can tell you that investors play a crucial role in our ability to market and sell our properties."

Williams noted that Fannie Mae will offer loans to investors for a maximum of ten investor properties, but couldn't go much beyond that.

A Realtor from Philadelphia, PA then told a story of one of her clients, a young couple who had bought condo in 2006 and then had a baby. They want to move out to the suburbs, but are underwater on their mortgage. They are employed and have excellent credit but are upset that a short sale would ruin their credit, making it impossible to get a mortgage for their next home.

Dave Stevens, former FHA commissioner and now president of the Mortgage Bankers Association: "The first concern on negative equity is people in distress. This is a tough example and I think there's a lot of silence on this panel because at some point someone would have to pay the loss on that write down and the question is, who do you want to pay? do you want the taxpayers to pay it? Do you want the banks to pay it? Or is there something that would say if you pay it can the banks also get a share of any upside that occurs in any future appreciation because it isn't a one way option when you make and investment decision."

I agree with him, and I couldn't help but add my own rant on borrowers trying to game the housing crash.

But things really got uncomfortable when a Realtor from Colorado, a single mother who is current on mortgages on her home and a few investment properties, but is struggling due to loss of income, begged the bankers to take her on; she claims she can't get help because she's self-employed, an independent contractor with a 1099.

"Come on guys, I am the perfect save right here," she said to much applause.

Doug Jones/Bank of America: "The industry and investors require documentation, our balance sheet requires documentation. It's a problem, I respect your situation, it's very very challenging. I am not going to say today or tomorrow we have a solution where we can't document income. We don't have a solution for that."

by Diana Olick CNBC May 11, 2011


US Real Estate: Realtors Face Off Against Mortgage Bankers — CNBC Realty Check Blog - CNBC