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Interesting Timing for BofA to Fire Its GC Last December
Posted on November 20, 2009Coincidence? You be the judge. Bank of America's General Counsel Tmothy Mayopoulos was summarily dismissed "just one day after he learned of bigger than expected at Merrill [Lynch, which was acquired by BofA, which allegedly failed to disclose to BofA...
Fireworks Between Geithner and Representative Brady
Posted on November 19, 2009In today's Joint House and Senate Economic Committee hearing, Republican Representative from Texas Kevin Brady asked Treasury Secretary Timothy Geithner to resign. Geithner responded in the negative, pointing out that President Obama inherited an economy "falling off the cliff...
Geithner Tells Banks They Should Lend More To Small Businesses
Posted on November 18, 2009Bloomberg's Rebecca Christie has an article today discussing Treasury Secretary Timothy Geithner's perspective that bank's are "obligated" to extend more loans to small businesses. The point is that if the economy is to recover, small businesses must have access to...
Determining Who Gets A Bailout
Posted on November 17, 2009Thanks to my Banking Law students for this insight into which financial entities receive government assistance and which do not: Link: http://www.ebaumsworld.com/video/watch/80617042/ (ag) Nov. 17, 2009, in Economy
Government Overpaid for AIG Bailout
Posted on November 16, 2009Special Inspector General for the Troubled Asset Program (SIGTARP) Neil Barovsky has issued a report concluding that negotiations conducted by then-New York Federal Reserve Bank President Timothy Geithner were "bungled." The amount of bailout funds to AIG increased from $85...
CFPA in the Dodd Version of Financial Reform
Posted on November 13, 2009A New York Times analysis of the regulatory reform measure introduced by Senator Chris Dodd concludes that it gives new energy to the likelihood of an independent Consumer Financial Protection Agency. Of course, a committee markup, controversial Senate vote, and...
Veteran's Day Salute
Posted on November 11, 2009Link to Gettysburg Address: http://www.youtube.com/watch?v=V4bM9geY0do
Report on SCAP Institutions Needing More Capital
Posted on November 11, 2009Last Spring, 19 financial holding companies were required to undergo "stress testing" in the Supervisory Capital Assessment Program (SCAP). Ten were determine to need more capital. The Federal Reserve now says that nine of those have met increased capital targets...
International Banking Conference in India
Posted on November 04, 2009Professor Ann Graham will be one of the featured speakers at an international banking law conference on "The Bankrecht -- Emerging Trends in Banking Law." Her presentation addresses the problem of "Too Big to Fail." The conference is sponsored by...
Commenting on Cuomo
Posted on November 04, 2009A post from Charles Carreon, Attorney, in Tucson, AZ: "No federal agency should be allowed to market a charter as a get-away-with-it-free card providing immunity from state consumer protection laws." Well-said! The unity of banking and the federal government is...
Support for the CFPA
Posted on November 03, 2009More than 80 law professors support the proposed new Consumer Financial Protection Agency. Financial industry trade associations oppose it. Will Congress have the backbone to pass this consumer legislation? Link to Editorial: http://www.huffingtonpost...
CFPA Bill Moves Forward
Posted on November 02, 2009Here's what CSBS says about the progress of a bill to create a new Consumer Financial Protection Agency: "The House Energy and Commerce Committee on Thursday passed legislation (H.R. 3126) to create the new Consumer Financial Protection Agency, which was...
Black Tuesday - Oct. 29, 2009
Posted on October 31, 2009For an informative comparison to today's crisis, see this clip of PBS documentary discussing the 1929 Stock Market Crash on Black Tuesday, Oct. 29, 2009 . . . "The Wall Street economy disconnected from the real economy": Link: http://www.youtube.com/watch?v=RJpLMvgUXe8 (ag)...
An Opinion About Giving the Fed Too Much Power
Posted on October 29, 2009In today's Forbes.com commentary, there's an interesting letter from Jagadeesh Gokhale, currently a Senior Fellow at the Cato Institute and formerly a Senior Economic Advisor at the Federal Reserve Bank of Cleveland. Here's part of his message: "In light of...
Will the Bailouts Never End?
Posted on October 28, 2009Bloomberg news reports that GMAC may get a third bailout. They've already received two government bailouts totaling $13.5 billion, and are currently negotiating with the Treasury Department for a possible third capital injection of $2.8 billion to $5...
Bernanke Talks About the Role of the Fed After the Crisis
Posted on October 27, 2009Federal Reserve Board Chairman Ben Bernanke is already looking ahead to the end of the financial crisis and what the role of the Federal Reserve should be then. He spoke at the Federal Reserve Bank of Boston's 54th Economic Conference,...
CFPA Bill Out of Committee - Preemption Provisions
Posted on October 25, 2009The House Financial Services Committee concluded its markup of H.R. 3126 which will create a new Consumer Financial Protection Agency (CFPA). The favorable committee vote was 39-29, A summary of the preemption provisions of the bill follows: Subtitle D ?...
Consumer Credit, Debt and Bankruptcy
Posted on October 21, 2009Consumer Credit, Debt and Bankruptcy: Comparative and International Perspectives Edited by Johanna Niemi, Iain Ramsay and William C Whitford The following is an abstract of an intriguing book of essays: "After a long period of prosperity and steady economic growth,...
E-mails Indicate High Level Finagling in the BofA Acquisition of Merrill
Posted on October 20, 2009Bloomberg reports today that e-mails show "interesting" discussions among Bank of America CEO Ken Lewis, Henry Paulson, Ben Bernanke, Timothy Geithner, and Lawrence Summers. "Merrill, the world?s biggest broker, agreed to be acquired after more than $50 billion of losses...
Bank Executive Bonuses Contrast with Unemployment Figures
Posted on October 19, 2009Bank executives are criticized for excessive bonuses, especially when the profitability of their institutions comes more from government bailouts than from market performance. Unemployment figures in the general economy provide a dismal contrast. The Obama administration is pointing out that...
Accounting Changes and the Future of Securitization
Posted on October 16, 2009Here's a link to a thoughtful analysis of how FASB changes may improve the long-run health of the mortgage securitization market but slow economic recovery in the general economy in the short run. LInk: http://www.stroock.com/SiteFiles/Pub839.pdf (ag) Oct...
Stimulus Report Card Today
Posted on October 15, 2009Today, the government will release reports on how effective the $787 Billion stimulus package has been. Link to story: http://www.washingtonpost.com/wp-dyn/content/article/2009/10/14/AR2009101403760.html?wpisrc=newsletter&wpisrc=newsletter&wpisrc=newsletter (ag) Oct...
Treasury Did Not Understand AIG Bonus Plan???
Posted on October 14, 2009In an excuse comparable to "the dog ate my homework," Treasury Secretary Timothy Geithner explained that when he agreed to bail out AIG, he simply did not understand that AIG executives would receive and retain huge bonuses. Link to story:...
U.S. Supreme Court Will Review Enron CEO's Conviction
Posted on October 13, 2009Former Enron CEO Jeff Skilling will get another day in court. The Supreme Court will hear his appeal from the 5th Circuit's affirmation of his convictions for conspiracy, securities fraud, insider trading, and lying to auditors. At issue is the...
Ohio Attorney General Sues Bank of America
Posted on October 12, 2009Ohio Attorney General Richard Cordray has filed suit against Bank of America in NY District Court on behalf of pension funds in Ohio, Texas, Sweden, and the Netherlands. The alleged basis for the lawsuit is BofA's failure to disclose bonuses...
CFPA Update
Posted on October 09, 2009More than 80 law professors have signed onto the letter to Congress supporting the Obama administration proposal to create an independent Consumer Financial Protection Agency (CFPA). House Financial Services Chairman Barney Frank placed the letter into the record of hearings...
Villanova University Law School Symposium on Financial Regulatory Reform
Posted on October 08, 2009I'm headed to Villanova University School of Law for the Symposium on Financial Regulatory Reform: 2009 Morgan, Lewis & Bockius Symposium on Securities Regulation Financial Regulatory Reform: Genesis, Progress, and Impact Saturday, October 10, 2009 9:15-10:45: Panel 1 Elizabeth F...
W.VA. Attorney General Follows Up on the Cuomo Decision
Posted on October 07, 2009Before the Supreme Court opinion in Cuomo v. Clearing House Association this spring, the West Virginia Attorney General had been enjoined from suing Capitol One Bank for alleged violations of law relating to its credit card operations. In light of...
CFPA - Will it be a toothless tiger?
Posted on October 06, 2009Consumer groups are disappointed in the House Financial Services Committee's plans to weaken the proposed Consumer Financial Protection Agency in response to powerful industry wishes. A recent article from the consumer perspective refers to the new version of CFPA as...
New President for Minneapolis Fed
Posted on October 06, 2009The Federal Reserve Bank of Minneapolis has named a new President to replace Gary Stern, who recently retired. Effective Oct. 8, the new President and CEO is Dr. Narayana Kocherlakota (the website even tells us how to pronouce it: Nair-ah-yah-nah...
Merrill Lynch . . . It's Back!
Posted on October 05, 2009The more things change, the more they don't -- even with a government bailout or maybe especially with a government bailout. Reuters reports that Bank of America is "relaunching" Merrill Lynch's name and bull logo. Of course, Bank of America...
The Minneapolis Fed - Great Source for TBTF Research Papers
Posted on October 05, 2009The Federal Reserve Bank of Minneapolis, under the leadership of recently-retired President Gary Stern, has a long list of papers addressing the issue of "Too Big to Fail." Evolution of Minneapolis Fed Thought: Macrostability Ratings: A Preliminary Proposal, Gary Stern...
Bank Consolidation - Big Fish Gobbling Up Smaller Fish
Posted on October 04, 2009Bank consolidation research led me to the graphical representation of bank consolidations to date which have produced the four largest U.S. banks: Bank of America, JP Morgan Chase, Wells Fargo, and Citibank. Enjoy: http://www.creditloan.com/blog/the-great-bank-consolidation/ (ag) Oct...
G-20 Becomes the Group to Watch
Posted on October 03, 2009The Group of Seven (G-7) comprises the Finance Ministers of the U.S., U.K, France, Germany, Japan, Italy, and Canada. G-8 includes these countries plus Russia. The Group of Twenty (G-20) represents both developed and developing nations, including: Argentina, Australia, Brazil,...
Point of Personal Privilege -- My Birthday!
Posted on October 02, 2009It's My Party & I'll Cry If I Want To: http://www.youtube.com/watch?v=WRbsz1Ha7Zo
Consumer Financial Protection Agency Legislation
Posted on October 02, 2009Here's what the Conference of State Bank Supervisors (CSBS) reports today about the Consumer Financial Protection Agency (CFPA) debates on the Hill: "Chairman Frank Revises Consumer Protection Bill Prior to Wednesday's hearing to gather additional viewpoints on the proposed Consumer...
Conference on Piercing the Corporate Veil
Posted on October 01, 2009Business lawyers and law professors should consider the "Conference on Corporate Separateness," to be held at Vanderbilt School of Law on November 6, 2009. Presentations include: Alan Dignam, School of Law, Queen May College, University of London Abdicating Risk Allocation:...
Mortgage Electronic Registration System Threatened by Kansas Supreme Court Opinion
Posted on October 01, 2009The Kansas Supreme Court recently found the the Mortgage Electronic Registration System (MERS), which is in the chain of title of approximately 60 Million real estate secured loans could not challenge a foreclosure action by a senior creditor. The Kansas...
Executive Compensation - "Say on Pay"
Posted on September 30, 2009The September issue of CFO Magazine has an article entitled "The Crackdown Continues" by Josh Hyatt. It's referring to "say on pay" legislation that could give shareholders a referendum vote on executive compensation. I'm quoted! Link to article: http://www...
FDIC Proposes Requiring Banks to Prepay Deposit Insurance Premiums through 2012
Posted on September 30, 2009The FDIC Insurance Fund will be insolvent this week -- but Chairman Sheila Bair has a plan: Under the pending proposal, FDIC-insured banks would be required to prepay deposit insurance premiums through 2012. That's enough to wipe out all earnings...
What the IMF Says About the Global Financial System
Posted on September 30, 2009Today, the International Monetary Fund said that "the global economy has turned a corner." But we still need a thorough restructuring of the international financial system. According to the IMF, the bank rescues and the stimulus package are workin. However,...
Consumer and Banking Law Professors Support Consumer Financial Protection Agency
Posted on September 29, 2009On September 30, 2009, the House Financial Services Committee, chaired by Representative Barney Frank, will hold hearings on H. 3126, titled ?the Consumer Financial Protection Act? which would create an independent Consumer Financial Protection Agency...
Systemic Risk Regulation for the EU
Posted on September 28, 2009The European Union is proposing to establish a new European Systemic Risk Board (ESRB), an independent multi-member board to focus specifically on identifying risk to the stability of the EU financial system as a whole. This contrasts with proposals currently...
Lessons in Bank Consolidation Issues
Posted on September 25, 2009From today's CSBS Examiner: "For every problem, there is a solution that is simple, neat -- and wrong." ? H.L. Mencken "Dateline Perth, Australia - This just in. The continent "down under" has seen such consolidation in its 17-bank financial...
Regulatory Turf Wars Impede Comprehensive Financial Reform
Posted on September 24, 2009In the wake of the current financial crisis, the U.S. financial regulatory structure needs dramatic overhaul. Following the Market Crash of 1929, the U.S. adopted many sweeping reforms that worked well for at least half a century. We stand at...
Hot Off the Press: FOMC Statement Today
Posted on September 23, 2009The Federal Reserve's Federal Open Market Committee (FOMC) met today and announced a unanimous vote to keep the target federal funds interest rate where it its: 0% to 1/4%. The FOMC Statement indicated that economic activity has picked up after...
The Bailout Makes a Full Circle? FDIC May Borrow Money from Banks to Stay Afloat
Posted on September 22, 2009Well, if this doesn't beat all as a proposal! FDIC needs to replenish the insurance fund it has drained to deal with bank failures. In the past, FDIC has imposed fees or assessments on the surviving banks in the industry...
Bank Overdraft Charges - Called on the Carpet Again
Posted on September 21, 2009Many banks see overdraft charges as a great souce of fee income now that interest margins are slim. The positive side of overdraft protection for customers is that they don't have to worry about bouncing the mortgage check. Many customers,...
Kudos for a New Approach to Global Economic Development
Posted on September 21, 2009The Washington Post today ran a story about efforts by US AID to promote economic development in Pakistan. Domestically and internationally, we often focus our study and efforts on hard numbers and big business. It's refreshing to be reminded that...
Symposium: Securities Regulation & the Global Economic Crisis
Posted on September 21, 2009The Seton Hall Law Review is hosting a symposium on "Securities Regulation and the Global Economic Crisis: What Does the Future Hold?" on Friday, October 30, 2009, at Seton Hall University School of Law in Newark, NJ. The program features...
The Fed Flexing Its Muscles Over Executive Pay
Posted on September 18, 2009The Federal Reserve is considering a plan to exercise unprecedented power over bank executive compensation. The Wall Street Journal reports that the Federal Reserve claims authority to investigate and veto excessive compensation at financial institutions based on its safety-and-soundness regulatory...
FDIC Completes First Sale of "Legacy Loans" AKA "Toxic Assets"
Posted on September 17, 2009Yesterday, FDIC announced the winning bidder and explained the process for the Pilot sale of "legacy loans." This package of legacy loans involves the unpaid principal balance of $1.3 billion in residential mortgage loans acquired by FDIC through the failure...
Financial Crisis Inquiry Commission Up and Running
Posted on September 17, 2009Today's Forbes.com article by Anne Flaherty, "Panel begins inquiry into financial meltdown," reports that the 10-member Financial Crisis Inquiry Commission is beginning its investigation of large financial firms involved in the crisis, including Lehman Brothers, Bear Stearns, Citigroup, AIG, Freddie...
Status Report on Financial Stabilization
Posted on September 16, 2009The Treasury Department has issued a Status Report on Financial Stabilization Efforts to date. Treasury Secretary Timothy Geithner described the current state of government intervention as having moved "from crisis response to recovery, from rescuing the economy to repairing and...
Recession Over? What Do You Think?
Posted on September 15, 2009Federal Reserve Chairman Ben Bernanke told an audience at the Brookings Institution today that, "From a technical perspective, the recession is very likely over at this point." He did acknowledge near-record high unemployment levels may cause some to differ with...
New North Carolina Legislation to Protect Consumers from Foreclosure
Posted on September 14, 2009On September 9, 2009, North Carolina Governor Bev Pedue signed into law The Consumer Protection Act of 2009. The Clerk of the Court presiding over a foreclosure hearing may continue the hearing for 60 days to allow the borrowers and...
Today's Scary Story Says the Biggest Banks Are Regaining Their Appetite for Risk
Posted on September 13, 2009AP Reporter Stevenson Jacobs' story entitled "Risk Taking Is Back for Banks One Year After Crisis" provides disturbing data on bank investment activities. The conclusion is that significant systemic risk remains unaddressed as yet. LInk: http://news.yahoo...
Higher Fees Proposed for "Systemically Significant" Banks
Posted on September 12, 2009Top White House economic adviser Lawrence Summers supports higher fees for "systemically significant" banks as part of the regulatory reform package sought as a result of the current economic crisis. Higher fees would be an incentive not to grow "too...
FDIC Proposing Orderly Exit from Liquidity Program
Posted on September 10, 2009On Sepember. 9, 2009, FDIC adopted a Notice of Proposed Rulemaking that does not change the October 31, 2009, end of the Temporary Liquidity Guarantee Program (TLGP). It does seek comment on whether to extend another temporary emergency liquidity program...
Overdraft Fees on Debit Cards
Posted on September 09, 2009Consumers are irate about huge overdraft fees on small purchases. Banks claim they need the revenue. Center for Responsible Lending says these fees hit hardest those who can least afford them. The New York Times has a story today. LInk:...
Banking Law Hot Topics
Posted on September 09, 2009My banking law class will be writing papers on the following Hot Topics in Banking Law for 2009: 1. Federal Preemption ? What are the limits to federal preemption? Analyze the U.S. Supreme Court opinions in Watters v. Wachovia, Cuomo...
Federal Reserve and the Discount Rate
Posted on September 08, 2009Today, the Federal Reserve Board posted the minutes of its discount rate meetings from July 6, 2009 through Agu. 10, 2009. Link: http://www.federalreserve.gov/newsevents/press/monetary/20090908b.htm What is the discount rate? "The discount rate is the interest rate charged to commercial banks and...
Post Traumatic Slack Syndrome and the Economic Outlook (with thanks to Finn Kydland, Dolly Parton, and John Kenneth Galbraith)
Posted on September 07, 2009President of the Dallas Federal Reserve Bank, Richard Fisher, is one of the clearest, most informative and entertaining speechmakers on economic issues I've encountered. The caption to this posting is the title of his recent remarks at the Laboratory for...
G-20: Requiring More Capital and Restricting Bank Bonuses
Posted on September 06, 2009G-20 Finance ministers met in London this week and and discussed a plan for reining in bonuses for bank executives. The group of the world's most developed nations agreed that the stimulus needs to remain in place for now to...
Eighth Circuit Recognizes Limits on Federal Preemption
Posted on September 05, 2009The U.S. Court of Appeals for the Eighth Circuit recently ruled that national bank assignees or purchasers of mortgages are not completely shielded from state law violation claims by a blanket claim of federal preemption. The case is Thomas v....
Bringing Securitized Assets Back Onto Bank Balance Sheets
Posted on September 03, 2009The comment period is open for a Joint Federal Banking Agency proposed regulatory capital rule. Beginning in 2010, new accounting rules from the Federal Accounting Standards Board (FASB) will require major changes in the way banks account for currently off-balance...
Second Quarter 2009 Not Pretty for FDIC Insured Institutions Nationwide
Posted on September 03, 2009Although Texas banks may be doing "less bad" than the rest of the country as I've discussed in a previous post, the FDIC's Quarterly Profile based on aggregate second quarter figures for all insured institutions paints a grim picture for...
California Fires Cause Temporary Bank Closings
Posted on September 02, 2009Emergency preparedness and disaster recovery plans are required for every bank. Due to wildfires, some banks are having to exercise those plans, much like banks affected by Hurricane Katrina. On August 31, the Office of the Comptroller of the Currency...
Mexico's Ano Horrible - Report on Financial Crisis
Posted on September 02, 2009The Dallas Federal Reserve Bank has issued an intriguing report on the impact of the Global Financial Crisis on the Mexican economy and the prospects for recovery. Link: http://dallasfed.org/research/swe/2009/swe0903b.cfm (ag) Sept. 2, 2009, in Economy
Increasing Deposit Insurance Premiums and Report on the Condition of Texas Banks
Posted on September 02, 2009The Federal Reserve Bank of Dallas has published an excellent explanation of the FDIC's assessments on banks to restore losses to the insurance fund incurred by reason of bank failures during this Recession. In addition to an informative discussion of...
B of A - Getting Out of Harm's Way?
Posted on September 01, 2009The Wall Street Journal has an article today about Bank of America seeking to repay part of the Bailout money it received. Of course, the reason for repaying the money is to escape the intensive government scrutiny and restrictions that...
George Soros and the Financial Crisis
Posted on August 31, 2009It's not bedtime reading, but well worth considering: THE CRASH OF 2008 AND WHAT IT MEANS by George Soros. If you aren't already an adherent, you should ponder Soros' theories of "reflexivity" and "radical fallibility." Reflexivity, fully described in his...
Consumer Information about Credit Cards and Mortgages
Posted on August 31, 2009FDIC's Consumer News highlights information for the public about recent changes to credit card rules, prohibitions against abusive lending practices, and revised consumer disclosures. Link: http://www.fdic.gov/news/news/press/2009/pr09158.html (ag) Aug...
Edge Act Jurisdiction
Posted on August 30, 2009Here's a forthcoming article to watch for: "The 'Technicalities' of Edge Act Jurisdiction: Advocating for the Federal Courts' Adoption of and Adherence to a Uniform and Narrow Interpretation of 12 U.S.C. § 632," by Elizabeth Sheyn -- to be published....
Washington Post & Too Big To Fail
Posted on August 29, 2009On Friday, the Washington Post ran a feature on the "too big to fail issue," complete with data to demonstrate that the big have gotten bigger as a result of the bailouts. Will this issue be addressed in the regulatory...
SEC, Bank of America, and Executive Compensation
Posted on August 28, 2009The SEC is now saying that Bank of America acted in good faith but essentially made a careless error by not disclosing to investors its plans to pay bonuses to Merrill Lynch executives. (You won't be surprised to learn that...
Texas Association of Bank Counsel - 33rd Annual Convention
Posted on August 28, 2009The Texas Association of Bank Counsel (TABC) will hold its 33rd Annual Convention in Ft. Worth, TX, on Oct. 8 and 9, 2009. Great topics and a great networking opportunity! Link: http://texasbankers.informz.net/texasbankers/data/images/2009_tabc_conf_bro...
Identity Theft: It Can Happen to Anyone
Posted on August 27, 2009Today's story is that Federal Chairman Ben Bernanke has been a victim of identity theft. His wife's purse was stolen and identity thieves began using the family checkbook. Link: http://news.yahoo.com/s/afp/20090826/pl_afp/uscrimefinancebankbernankenewsweek_20090826232518 Remind banking law students that the Federal Trade Commission (FTC)...
Guaranty Bank - Second Largest Bank Failure for 2009
Posted on August 27, 2009Last Friday, the Office of Thrift Supervision (OTS) closed Guaranty Bank, Austin, TX, and appointed FDIC Receiver. This is the 10th largest failure in U.S. history. Cost to the deposit insurance fund is estimated at $3 Billion. BBVA Compass, headquarted...
The Pathology of Too Big to Fail
Posted on August 26, 2009Chairman of the Dallas Federal Reserve Bank Richard Fisher says that if we don't want to repeat the current unfortunate economic situtation in the future, we must "think long" and "exorcise the notion that an institution is too big to...
Will FDIC Need a Loan from Treasury?
Posted on August 26, 2009AP Business Writer Stevenson Jacobs' article, "Agency That Insures Bank Deposits May Need Help," notes that tomorrow the FDIC will publish the amount of reserves it holds to satisfy deposit insurance claims. Only once before, during the Bank and S&L....
National Economic Update
Posted on August 25, 2009On Monday, the Federal Reserve released its report on the "National Economic Update." Here's the summary: " A New Beginning? Recent data revisions show that output fell much more steeply last year than was first thought. Newly available monthly indicators...
Bernanke Renomination
Posted on August 25, 2009Federal Reserve Chairman Ben Bernanke has been renominated by President Obama for a second term. Senate confirmation is required. Here's a link to Bernanke's nomination acceptance message posted today: Link: http://www.federalreserve.gov/newsevents/press/other/20090825a...
New RESPA FAQs
Posted on August 23, 2009The Department of Housing and Urban Development (HUD) has posted new FAQs for its RESPA (Real Estate Settlement Procedures Act) regulations. Some new requirements were effective January 16, 2009. Other very significant changes involving revised Good Faith Estimates (GFEs) and...
Bernanke Reviews the Past Year of Crisis
Posted on August 21, 2009Federal Reserve Chairman Ben Bernanke spoke today at the Kansas City Federal Reserve Bank's Annual Economic Symposium in Jackson Hole, Wyoming. His review of significant crisis points during the past year as well as the policy responses provides an instructive...
Fiction -- Or Is It?
Posted on August 20, 2009A CONSPIRACY OF PAPER by David Liss is set in early 18th Century London, immediately before the South Sea Bubble burst. The intrigue of "stock jobbers" and the lengths to which companies will go to preserve an image of profitably...
The Federal Reserve's Discount Window
Posted on August 19, 2009The Federal Reserve announced new collateral margin requirements for institutions that borrow at the discount window. The new Collateral Margins Table will be effective October 19, 2009, which allows institutions time to adjust their collateral portfolios...
Squam Lake Working Group on Financial Regulation
Posted on August 18, 2009An excellent resource for current financial topics from pension reform to the optimal financial intitution regulatory structure can be found at the website indicated below. Fifteen academics from different schools and think tanks meet to discuss financial issues and produce...
Comparative Analysis: The Recession in Germany and in the U.S.
Posted on August 17, 2009The Brookings Institution's Douglas J. Elliott provides an interesting comparision of the worldwide recession effects and public opinion in Germany and the U.S. Germany's economy may be harder hit because of its dependence on exports; however, the German public seems...
GAO Suggests More HMDA Reporting Needed
Posted on August 14, 2009The Government Accountability Office (GAO) has submitted a report to Congress entitled "Fair Lending: Data Limitations and the Fragmented U.S. Financial Regulatory Structure Challenge Federal Oversight and Enforcement Efforts." One of the key recommendations is that Congress require financial institutions...
The Time Eater Clock - Fall Semester Approaches
Posted on August 13, 2009This afternoon, I was preparing my Syllabus for Fall 2009 Banking Law and had occasion to consult my "Cambridge in America" wall calendar. The image for the month of August showed an amazing clock installed at Corpus Christi College, Cambridge...
Today's FOMC Statement: The Fed's Interest Rate and Liquidity Plans
Posted on August 12, 2009The Federal Reserve Board's Federal Open Market Committee ("FOMC") issued a statement today announcing that it would keep the target federal funds interest rate range between 0% and 1/4% and that "exceptionally low levels of the federal funds rate for...
Texas Tech Banking School
Posted on August 11, 2009The Rawls College of Business at Texas Tech University sponsors a Banking School every summer. I spoke this afternoon at the 36th Annual Texas Tech Banking School on "Legal Issues for Bankers". We've had an almost unprecedented number of changes...
New Exam Procedures for Consumer Protection Laws & Regs
Posted on August 10, 2009The OCC announced today that it has issued a new electronic version of "Other Protection Laws and Regulations" -- part of the Comptroller's Handbook for examiners. When advising banks, it's always good to know what the examiners will be looking...
New Credit Card Rules Effective August 20, 2009
Posted on August 09, 2009FDIC FIL-44-2009 (Aug. 6, 2009) reviews the Regulation Z (Truth in Lending Act) Open End Credit changes resulting from The Credit Card Accountability Responsibility and Disclosure Act of 2009 (the Credit CARD Act). The Federal Reserve Board has published Interim...
A Dead S&L, the FDIC, and Attorney Client Privilege Issues for a Big Law Firm
Posted on August 08, 2009FDIC has sued the Houston law firm of Baker Botts seeking turnover of an internal investigation of Franklin Bank, a failed savings institution. The accounting firm of Ernst & Young is also a defendant in FDIC v. Baker Botts, 4:09-CV-...
Future Prospects for Our World-Wide Economy
Posted on August 07, 2009Nouriel Roubini has an interesting article entitled "The Road Ahead for the Global Economy," in which he concludes that we narrowly missed what economists call "an L-shaped global near-depression," indicated by falling GDPs and fears of financial institution insolvencies...
Baltimore City's Reverse Redlining Lawsuit Against Wells Fargo
Posted on August 05, 2009In a letter ruling dated July 2, 2009, Chief Judge of the U.S. District Court for the District of Maryland Benson Everett Legg issued an order denying Wells Fargo's motion to dismiss a lawsuit filed by the City of Baltimore....
Speculation - Nothing New!
Posted on August 04, 2009LATHAM SMITH, YE OUTSIDE FOOLS! GLIMPSES INSIDE THE LONDON STOCK EXCHANGE By Erasmus Pinto, Broker (1877) http://www.archive.org/details/yeoutsidefoolsgl00smitrich " Just as in racing, one alone can win, but still all hope to win, and hug the narcotizing hope, so in the...
A Private Bailout for CIT
Posted on August 03, 2009Last month, the government turned down the bailout plea from the nation's largest small business lender, CIT. Pundits said it was not quite too big to fail. Here's a link to Harvard Business Publishing's article describing both FDIC's rejection of...
Economists Discuss Potential for "Double Dip" -- and they're not talking about ice cream!
Posted on August 03, 2009Bloomberg reports that banks like JPMorgan Chase and Deutsche Bank are forecasting U.S. growth in the next few quarters. On the other hand, Nobel Laureate Edmund Phelps says the U.S. economy will have a "long slog" to recovery. Nobel Laureate...
Interesting Reading from Andrew Cuomo
Posted on August 01, 2009Link to "No Rhyme or Reason: The 'Heads I Win, Tails You Lose' Bank Bonus Culture": http://www.oag.state.ny.us/media_center/2009/july/pdfs/Bonus%20Report%20Final%207.30.09.pdf (ag) Aug. 1, 2009, in Economy, Executive Compensation
American Express Buys Out the Government
Posted on July 30, 2009American Express repurchased the last of the TARP warrants for $340 Million, yielding a return on taxpayer investment of 26% on an annualized basis. When Goldman Sachs repurchased the last of its TARP warrants, the annualized yield to taxpayers was...
Congress Will Have to Develop a Back Bone to Get Past Turf Wars
Posted on July 30, 2009NPR attributes delays in regulatory reform legislation to turf battles among the Federal Reserve, the OCC, and the FDIC. I'm not surprised about that -- it's business as usual: One part substance, three parts "enlarge and preserve my territory." Can....
Why Unbridled Capitalism Needs Reasonable Restrictions -- And Some Memory Aids
Posted on July 29, 2009How soon they forget! We're still in the middle of a Wall-Street induced recession, yet the hue and cry goes up from the very entities who benefited from bailouts that government should get out of their business. If these were...
Wake Up and Smell the Roses -- or Whatever -- at OCC!
Posted on July 28, 2009I continue to be appalled but not surprised that Comptroller John Dugan can still argue against state consumer protections because the costs "will be ultimately be borne by consumers." As if consumers are not bearing the costs of the OCC's...
Getting Past Too Big To Fail
Posted on July 27, 2009John Kay's July 21, 2009 FT.com article, "Too Big To Fail: Wall Street We Have A Problem," presents the case for making complex systems -- like the U.S. and global financial structures -- robust. He draws on engineering wisdom that...
An Aggressive Timetable for Regulatory Reform
Posted on July 27, 2009Congress is diligently holding hearings and the Treasury Department urges passage of financial regulatory reform by year end. We need reform, no doubt about it. However, there are many plans on the table and no consensus. If Congress acts in...
Bribe 'Em to Save?
Posted on July 26, 2009Good grief! FDIC is having a meeting to discuss how to encourage "prize-linked savings accounts" for underserved and low income consumers. Some of these programs are described as being like a lottery pool, giving savers a "chance" to win big...
No More Too Big To Fail
Posted on July 25, 2009FDIC Chairman Sheila Bair testified Thursday before the Senate Committee on Banking, Housing and Urban Affiars. I could not agree more with her view that "too big to fail" is a concept we need to dispense with. "We must find...
SEC Uses Sarbanes Oxley "Clawback" Provisions
Posted on July 24, 2009Section 304 of the Sarbanes Oxley Act of 2002 (SOX), referred to as the "clawback" provision because it authorizes a company to get back certain executive bonuses and stock profits, states that: "If an issuer is required to prepare an...
Hey Noah, There's a New Q&A on Flood Insurance
Posted on July 24, 2009The federal banking agencies have published a new set of Questions and Answers on Flood Insurance. This may sound mundane in comparison to issues relating to the financial crisis and proposed restructuring of the nation's regulatory framework, but let me...
The U.S. Treasury and Bernie Madoff - Separated at Birth?
Posted on July 22, 2009The U.S. Treasury Department is racking up serious criticism for its administration of the $700 Billion bailout of the financial system. Michael Crittenden's July 21,2009, Wall Street Journal article entitled "U.S. Treasury Criticized Sharply on Watchdog Report," quotes U...
Summer Reading about the Financial Crisis
Posted on July 21, 2009Here's a link to a New York Times book review of IN FED WE TRUST: BEN BERNANKE'S WAR ON THE GREAT PANIC by David Wessel. He's the Wall Street Journal's Economics Editor. I love this quote from the book: "?Every...
Financial Crisis Inquiry Commission
Posted on July 17, 2009Congress has named a 10-member Financial Crisis Inquiry Commission to investigate the domestic and global causes of the financial crisis, including studying financial institutions that failed. A report from the commission is due December 15, 2010. House and Senate Democrats...
Financial Calculators and Other Info from FINRA
Posted on July 16, 2009The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the U.S. This industry self-regulatory body was formed in 2007 through consolidation of NASD (the National Association of Securities Dealers) and the...
Causes and Cures: Why Did the Financial Crisis Develop and How Can We Prevent Future Crises?
Posted on July 15, 2009Donald Kohn, Vice Chairman of the Federal Reserve Board of Governors, gave a speech to the BIS Annual Conference on "Financial System and Macroeconomic Resilience Revisited" in Basel, Switzerland, that is definitely "economist-speak." Nevertheless, if you can slog through it,...
Regulatory Disputes Over Restricting the Size of Our Biggest Financial Institutions
Posted on July 15, 2009Today's Bloomberg news story by Craig Torres and Alison Vekshin, "Bair, Bernanke Want Tougher Curbs on Biggest Banks," highlights the differences of regulatory opinion over future restrictions on the largest financial institutions. FDIC Chairman Sheila Bair and Federal Reserve Chairman...
Alive and well, maybe. . . . . . at FinCEN
Posted on July 15, 2009Just when I was beginning to think the whole agency had gone AWOL, three new items appeared from FinCEN - two not so interesting and one to consider: 1. Director Freis gave a very basic talk to the Association of...
American Banker ViewPoint Articles on Supreme Court Preemption Opinion
Posted on July 14, 2009We'd rather litigate than adopt consumer protections. That's what some of these opinion pieces are saying, including today's American Banker article by Cheyenne Hopkins, "A Preemption of Clarity," a collection of remarks by lawyers. Of course, one or two comments...
FinCEN MIA??
Posted on July 13, 2009If you check the Financial Crimes Enforcement Network (FinCEN) website, you won't find a lot of current substance. There are three links to statements justifying all the paperwork involved in filing Suspicious Activity Reports (SARs): "Bank SARs Lead to Discovery...
Partisan Politics - Fiddling While Rome Burns
Posted on July 13, 2009It's political-grandstanding-as-usual in Washington. My grandmother's phrase for this was "just talking to hear your teeth rattle." When issues facing all of us in this country are so complex, why can't our elected officials work together for positive solutions? That's...
What Happens to Restructured Loans and Bank Capital
Posted on July 12, 2009One-to-four-family mortgage loans usually have a risk-weighting of 50% for purposes of calculating a bank's capital requirements. Once they're restructured, they receive a risk-weighting of 100%. Banks suddenly need a lot more capital to balance these assets that have been...
Reworking Second Mortgages
Posted on July 11, 2009Under the Home Affordable Modification Plan (HAMP), banks may begin working with Treasury to refinance second mortgages, including home equity loans, into a government-subsidized program. This part of the HAMP could get up and running in August. Texas lawyers will...
When Agencies Combine: Lessons from the Federal Housing Finance Agency
Posted on July 09, 2009It's been a year since GSE oversight was reconfigured. Previously, the Department of Housing and Urban Development (HUD) was responsible for affordable housing goals for Fannie Mae and Freddie Mac, while Office of Federal Housing Enterprise Oversight was responsible for...
FASB Combats Disclosure Overload
Posted on July 09, 2009Really. That's what the July 8, 2009, announcement from the Financial Accounting Standards Board (FASB) said. Robert H.Herz, FASB Chairman discussed a new project to make financial statements more effective, coordinated, and less redundant. "Many constituents have expressed concerns about...
SEC, Corporate Governance, and Executive Compensation
Posted on July 08, 2009The Securitis and Exchange Commission voted to propose two new rules relating to Executive Compensation. Each proposed rule has a 60-day Comment Period following publication in the Federal Register. 1. Proposed Rule requiring public companies receiving money from the Troubled...
The Cambridge University Chest - Better Than Keeping Your Money Under the Mattress
Posted on July 07, 2009Having begun my career as a banking lawyer with FDIC's Washington, D.C. office, I have a keen interest in how banks originated and in how they assured the safety of their funds long before deposit insurance. Another part of my...
Clark Abrahams and the Comprehensive Credit Assessment Framework (CCAF)
Posted on July 07, 2009This week, I've been talking by e-mail with Clark Abrahams, long-time financial institutions compliance advisor and author of CREDIT RISK ASSESSMENT: THE NEW LENDING SYSTEM (2009). In his July 2, 2009, blog post, he discusses the proposed Consumer Financial Protection...
Resilience: Points to Ponder for Financial Regulatory Reform
Posted on July 07, 2009In the July issue of the Texas Bar Journal, State Bar President Roland Johnson discusses Jamais Cascio's article, "Resilience: If the Financial Crisis Has Taught Us Anything, It Is That Brittle Systems Can Fail Catastrophically." My comments: Key points in...
Banks and the Right of Setoff - Lehman Brothers Bankruptcy Illustrates a Potential Pitfall
Posted on July 06, 2009Established law says that even after a bankruptcy petition is filed, a bank may have the right to offset amounts in an account owned by the debtor against loans the same debtor owes to the bank -- WITH APPROVAL OF...
Bank of America and Merrill Lynch - How Did a Private Deal Become a Public Bailout?
Posted on July 05, 2009The U.S. House of Representatives Committee on Oversight and Governnment Reform is conducting a series of hearings to examine Bank of America's acquisition of Merrill Lynch, which started as an unasisted purchase, but subsequently required an extra $20 Billion in...
Ideas for Teaching Banking Law When Everything Is Changing
Posted on July 03, 2009Here's a discussion Cassandra Havard, Banking Law Professor at the University of Baltimore School of Law, would like to initiate. She says: "I'm writing to several banking law colleagues to ask how you've changed your syllabus since the financial crisis...
Analyzing the Consumer Financial Protection Agency Act of 2009
Posted on July 02, 2009On June 30, 2009, the administration delivered to Congress legislation which provides details behind the broad Financial Regulatory Reform White Paper. The draft ?Consumer Financial Protection Agency Act of 2009? raises many critical issues, including: ? Mission and Scope of...
What Exactly Is a Dual Banking System?
Posted on July 02, 2009One reader of this blog asks, "What exactly is a dual banking system?" So here's the background: In the U.S. today, we have two types of bank charters: 1. Each State has the authority to charter and supervise banks within...
Arthur Wilmarth Interview on Cuomo Decision
Posted on June 30, 2009National Public Radio talked with George Washington University Law Professor Arthur Wilmarth yesterday. He is a highly regarded proponent of the dual banking system and an opponent of aggressive federal preemption in the financial institutions arena, as well as a...
Analysis of the Cuomo Opinion
Posted on June 29, 2009Today, the U.S. Supreme Court delivered its opinion in Cuomo v. Clearing House Association, upholding the power of States to enforce their own non-preempted consumer protection laws by bringing suit against national banks and their affiliates. This opinion was one...
Supreme Court Overturns OCC's Preemptive Regulation in Cuomo v. Clearing House Association
Posted on June 29, 2009The U.S. Supreme Court released its opinion in Cuomo v. Clearing House Association this morning. The good news for States and for consumer protection is that the decision invalidates an Office of the Comptroller of the Currency ("OCC") regulation to....
Extending Full FDIC Coverage for Payroll Accounts
Posted on June 28, 2009FDIC is proposing two alternatives for phasing out the Transaction Account Guarantee Program, originally set to expire December 31, 2009. Option One: The program, which provided full FDIC coverage of non-interest-bearing accounts such as payroll accounts (which often exceed insured...
Proposed Amendments to CRA Rules - The Comment Period is Open
Posted on June 28, 2009The federal banking agencies (OCC, FRB, OTS, and FDIC) are proposing amendments to their Community Reinvestment Act regulations. The comment period will extend for 30 days after publication in the Federal Register. Changes incorporate a statutory requirement that the banking...
Madoff Sentencing Tomorrow
Posted on June 28, 2009Bernie Madoff appears for sentencing on Monday and is expected to receive a life sentence. This guy goes down in the annals of white collar crime and SEC oversight failures as the mastermind of one of the most spectacular Ponzi...
State Officials Testify About Obama Plan and State Consumer Protection
Posted on June 27, 2009The House Financial Services Committee held its first hearing on President Obama's Plan for the Restructuring of the American Financial Regulatory System. As expected, the proposed independent Consumer Protection Agency is garnering attention -- pro and con...
Bank Compliance Officer Gallows Humor
Posted on June 27, 2009Check out the compliance officer's viewpoint on financial institution-related regulatory changes, courtesy of the West Texas Compliance Officers' Association: Link: Download Compliance Officer - Run Over by Regulations
The Supreme Court on Age Discrimination
Posted on June 26, 2009The Supreme Court says that the plaintiff in an Age Discrimination in Employment Act (ADEA) "disparate treatment" lawsuit must prove, by a preponderance of the evidence, that age was the ?but-for? cause of the challenged adverse employment action. The burden...
Credit Cards: Getting Hurt When It's Not Your Fault
Posted on June 25, 2009Credit card companies have a new business practice that damages credit ratings for customers who have done nothing wrong. Many cardholders with excellent credit ratings and no late payments are receiving notices that their credit limits are being reduced...
Federal Open Market Committee Statement Today
Posted on June 24, 2009The Federal Open Market Committee (FOMC) of the Federal Reserve, the group responsible for setting target federal funds interest rates issued a statement today, announcing that the target interest rate would remain unchanged -- between 0 and 1/4 %. Rates...
Judge Sotomayor: Pro-Banking or Anti-Banking?
Posted on June 23, 2009Confirmation hearings begin July 13, 2009, for President Obama's nominee to the U.S. Supreme Court, Second Circuit Court of Appeals Judge Sonia Sotomayor. Two significant cases give some insight: A. In re Visa Check/MasterMoney Antitrust Litigation, 280 F...
New Rules for Information Your Bank Furnishes to Credit Reporting Agencies
Posted on June 22, 2009The Federal Banking Agencies (OCC, FDIC, OTS, FRB, NCUA) and the Federal Trade Commission will publish in the Federal Register Joint Final Rules concerning the accuracy and integrity of consumer financial information banks and other businesses furnish to credit reporting...
Federal Reserve Posts Annual Report for 2008
Posted on June 21, 2009The Federal Reserve Board's 95th Annual Report (2008) is now available on the agency's website. This will be worth spending some time with to review the unprecented steps taken to address the economic crisis. Link: http://www.federalreserve.gov/boarddocs/rptcongress/annual08/default...
Banks Just Keep Failing
Posted on June 21, 2009Friday, three banks failed: First National Bank of Anthony, Anthony, Kansas - Deposits: $142.5M Cooperative Bank, Wilmington, North Carolina - Deposits $774M Southern Community Bank, Fayetteville, Georgia - Deposits $307M Each of these was resolved by a Purchase and Assumption...
What's on FDIC's Agenda?
Posted on June 21, 2009FDIC's Board of Directors meets on Tuesday next week and here are some items they will cover IInteragency Interim Rule on Capital Maintenance: Residential Mortgage Loans Modified Pursuant to the Making Home Affordable Program of the U.S. Department of Treasury...
"Financial Regulatory Reform" - A White House White Paper
Posted on June 17, 2009President Obama announced his administration's plan to overhaul U.S. financial regulation today at 1 p.m. EDT. Here's a link to his statement: http://www.whitehouse.gov/the_press_office/Remarks-of-the-President-on-Regulatory-Reform/ The White Paper "Financial Regulatory Reform - A New Foundation: Rebuilding Financial Supervision and Regulation" outlines the...
Gloom and Doom: Accurate Forecast or Attention Getter?
Posted on June 16, 2009Analyst Robert Prechter did make good on his prediction of the 1987 stock market crash, but will his current gloomy forecasts come true? Only time will tell. Prechter opines that the U.S. will lose its AAA credit rating by the...
Obama's Plan for Regulatory Restructure . . . to be announced tomorrow; My words of caution today
Posted on June 16, 2009Advance reports about the Obama Administration's plan for Regulatory Restructure have been appearing all week -- but tomorrow we get to hear the real deal. I'll post my analysis promptly. Of course, the plan as announced won't be the end...
FDIC's Supervisory Insights
Posted on June 16, 2009FDIC's Summer 2009 "Supervisory Insights" Bulletin, released today, reviews a year of crisis and highlights areas of supervisory focus going forward. FDIC's Director of Supervision and Consumer Protection Sandra Thompson recognizes the impact of increasing mortgage foreclosures and emphasizes new...
AIG, Greenberg & Murky Financial Dealings in Litigation
Posted on June 15, 2009Here's a lawsuit worth watching: Starr International Co. v. American International Group Inc., 05-cv-06283, U.S. District Court, Southern District of New York (Manhattan). AIG and Maurice Greenberg, the 84-year-old former head of AIG, are fighting over $4...
The World Economy According to the G-8
Posted on June 14, 2009At the conclusion of their two-day meeting in Italy, the Finance Ministers of the Group of Eight Industrialized Nations ("G-8", which includes the U.S., Germany, France, Italy, Canada, U.K., Russia, and Japan) released a Statement, emphasizing the following points: Although...
The New West Side Story
Posted on June 14, 2009An amusing weekend comment on our economy! Link: http://www.newsday.com/media/flash/2009-04/46217527.swf
More Concern About Regulatory Reform Proposals
Posted on June 13, 2009The Conference of State Bank Supervisors (CSBS) discussed both the anticipated Obama administration plan for reorganizing the regulatory structure for financial institutions and a GOP plan in its weekly bulletin released today. Here's what CSBS Executive Vice President John Ryan...
Executive Compensation, Systemic Risk, and Reforming Financial Institution Regulation
Posted on June 11, 2009BNA's Daily Report for Executives yesterday reported on comments from U.S. Congressman Michael E. McMahon (D-NY) and Congressman Jim Hines (D-Conn) concerning the Obama administration plan for comprehensive financial services industry regulatory reform...
Who's Paying Back TARP Money and Who Isn't?
Posted on June 10, 2009Ten banks, including JP Morgan Chase, Morgan Stanley, American Express, Bank of New York Mellon, BB&T Corp, Capital One, Northern Trust, State Street, U.S. Bancorp and Goldman Sachs, received approval to buy back $68 Billion worth of shares owned by....
Geithner on Compensation
Posted on June 10, 2009Treasury Secretary Timothy Geithner today released a statement on compensation in the financial services industry. The administration intends to support "say on pay" legislation, giving shareholders a voice on executive compensation, as well as legislation giving the SEC power to...
President Obama Asks Agencies To Review Preemption Actions
Posted on June 09, 2009Although he stopped short of requiring federal agencies to repeal overly aggressive preemption regulations and letter rulings issued during the previous administration, President Obama did ask the agencies to review their preemption actions in light of the important role the...
Compliance Officer Alert: New Reg Z Disclosures
Posted on June 08, 2009Changes to Regulation Z (Truth in Lending Act or TILA) Disclosures mandated by the Mortgage Disclosure Improvement Act (MDIA) become effective July 30, 2009, and will apply to all closed end loans secured by consumer dwelling received on or after...
Ohio Court Says Securitizing Subprime Mortgages Is Not Public Nuisance
Posted on June 08, 2009The City of Cleveland advanced a novel legal theory when it sued a host of lenders, including Ameriquest, Bank of America, Bear Stearns, Citigroup, Countrywide, Credit Suisse, Deutsche Bank, JP Morgan Chase, and others. The U.S. District Court for the...
Another Take on Causes of the Financial Crisis
Posted on June 07, 2009Here's another version of what caused the current financial crisis. With all due respect to the Federal Reserve's eminently qualified research staff, this 2007 spoof is quite informative. Link: http://brasschecktv.com/page/187.html (ag) June 6, 2009, in Economy
Connecting the Dots
Posted on June 05, 2009The Federal Reserve Bank of Dallas has compiled a readable analysis of the roots of the current economic situation in its 2008 Annual Report, "The Financial Crisis: Connecting the Dots." Among the causes of the crisis, the report lists: Speculation...
Citigroup and Executive Compensation
Posted on June 05, 2009"Excessive" executive compensation, however we define it, is a hot topic when most of the rest of the country is feeling the pain of recession. Public outrage is heightened to an even greater degree when the company paying out big...
Geithner Can't Sell His House Either
Posted on June 04, 2009It's tough all over. With a 41% drop in housing prices in Westchester County, New York, Treasury Secretary Timothy Geithner has had to rent out the home he has not been able to sell. Link: http://www.bloomberg.com/apps/news?pid=20601093&sid=aJb6RpM.jY...
Let's Not Do This Again!
Posted on June 04, 2009Here's an interesting comment on my item discussing Richard Fisher's talk to bankers this week: "Our government and constitution were constructed around sentiments very similar to McKay's. But in this last economic boom cycle, the conditions that played into it...
Richard Fisher Talks About Texas Banks
Posted on June 03, 2009Yesterday, I attended a luncheon meeting for West Texas bankers hosted by Dallas Reserve Bank President Richard Fisher. He reported that Texas banks are healthier as a group than are banks in many other parts of the country because, he...
The Dallas Fed's Collection of "Chairman Bernanke on the Record"
Posted on June 03, 2009The Federal Reserve Bank of Dallas has collected various quotes from speeches by Federal Reserve Chairman Ben Bernanke over the past few years, including: June 3, 2009 - "Prompt attention to questions of fiscal sustainability is particularly critical because of...
The SAR Activity Report - May 2009
Posted on June 02, 2009Advising clients about Bank Secrecy Act compliance? Check out Issue 15 of "The SAR Activity Report: Trends, Tips, and Issues," published by the Financial Crimes Enforcement Network (FinCEN). This issue focuses on the Securities and Futures Industries...
Community Banking - "The Lifeblood of Our Nation's Financial System"
Posted on June 02, 2009FDIC's Board of Directors announces the formation of a new Advisory Committee on Community Banking. The Committee will advise on issues facing community banks and the communities they serve, with a special concern for rural areas. Link: http://www.fdic...
Proposed Rule for Mortgage Originator Registration
Posted on June 01, 2009Today, the federal financial institution regulatory agencies jointly proposed a regulation implementing the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. This proposal will be published in the Federal Register soon and a public comment period will be...
GAO Looking Over the Fed's Shoulder
Posted on June 01, 2009Under a new law signed into effect May 20, the GAO's first investigation may be into the Federal Reserve's role in the AIG bailout. Congress wants to know about the Fed's expansion of lending to nonbank financial companies during the...
Saturday Night Live's Version of Bank Stress Testing
Posted on May 31, 2009SNL's humor is so close to the truth it hurts. My teenage son decided to help me out with this post. The link is to SNL's version of "Timothy Geithner" reporting on a written examination supposedly administered to the CEO's...
Making It Tougher for Troubled Banks to Buy Deposits
Posted on May 30, 2009FDIC published a new final rule yesterday to further restrict "less than well-capitalized banks" from paying an interest rate that exceeds the national average to acquire deposits. The new rule becomes effective January 1, 2010. It closes a loophole in...
FDIC's Quarterly Banking Profile
Posted on May 29, 2009FDIC's Quarterly Banking Profile for the first quarter 2009, released May 27, 2009, summarizes insured institution performance as follows: Net income for the first quarter of 2009 was lower than that posted for the first quarter of 2008 but significantly...
Where's the Economy Headed?
Posted on May 29, 2009National economic forecasts abound but oneof the most concise reports can be found on the Dallas Fed's website. Calling this the 17th month of recession, the report notes that the pace of contraction seems to be slowing. Credit markets are...
Abnormal Monetary Policy for Abnormal Times
Posted on May 27, 2009Federal Reserve Board Vice President Donald Kohn talks about "Interactions between Monetary and Fiscal Policy in the Current Situation" in a May 23, 2009, speech at Princeton University for the Conference on Monetary-Fiscal Policy Interactions, Expectations, and Dynamics in the...
A Comment on the "Sound Bite" Approach to Dealing with Crisis
Posted on May 27, 2009Here's a comment I want to highlight from Roger Hood: "Your point is well-taken, especially with "toxic assets" - which sounds like what an errant banker would try to sell to the regulator ("Gee, I tried to do good, but...
What Bankers Are Worried About
Posted on May 26, 2009The Federal Reserve Survey of Senior Loan Officers gives us a gloomy picture of the future. Link to Story: http://blogs.wsj.com/economics/2009/05/05/bankers-worry-worst-is-yet-to-come/ (ag) May 26, 2009 In Economy
More About Banking Law
Posted on May 26, 2009Check out Bank Lawyer?s Blog: http://www.banklawyersblog.com/ This informed commentary about banking issues by a colleague and friend is a blog with a bite. (ag) May 26, 2009
Bank Failure Basics for Borrowers
Posted on May 25, 2009The FDIC has a new ?Borrower?s Guide to an FDIC Insured Bank Failure,? which provides information about: · Bank Failure generally · FDIC?s policy to return assets (loans are bank assets) to the private sector as quickly as possible ·...
What Bankers Are Complaining About
Posted on May 25, 2009The FDIC has posted its Ombudsman's Report: http://www.fdic.gov/regulations/resources/ombudsman/feedback/message0409.html (ag) May 25, 2009 in Federal Banking Agencies/FDIC
Maximum Deference
Posted on May 24, 2009When I recently presented some of my research ideas on ?Updating the Chevron Doctrine and Judicial Deference to Agency Action? to a group of the Texas Tech University Law School faculty, my colleague Professor Arnold Loewy reminded me to take...
Not Enough Competition in Public Equity Markets
Posted on May 23, 2009The Committee on Capital Markets Regulation concludes that ?continued erosion in competitiveness of U.S. public equity markets was among the few clear trends during 2008 market chaos.? Link: http://www.capmktsreg.org/pdfs/09-Mar-24_CCMR_Q4_2008_competitiveness_update...
Another Gripe: ?Toxic Assets? and ?Legacy Loans?
Posted on May 22, 2009Why don?t we just call these balance sheet items what they are: ?Mortgage loans and Mortgage-related securities that have lost value? and ?Delinquent mortgage loans?? The catchy phrases we have substituted obscure the true nature of what we are dealing...
No Magic Kingdom In This Economy
Posted on May 22, 2009Even The Walt Disney Company?s profits were way down for the second quarter of 2009. Link to 10-Q: http://www.sec.gov/Archives/edgar/data/1001039/000119312509100081/d10q.htm (ag) May 22, 2009 In ?Economy?
Bored on the Trading Floor
Posted on May 21, 2009You?re not going to believe this ? or maybe you will. The Wall Street Journal reports that NYSE traders have so little to do these days that they are watching movies and playing gin rummy. Two questions: Who is paying...
U.S. Now on the Receiving End of Economic Advice
Posted on May 21, 2009The U.S. has long dispensed economic advice to other countries. Japan is now returning the favor. And it?s just what your depression-era grandparents had to say. The U.S. must reduce household debt. Link to story: http://www.telegraph.co.uk/finance/economics/5212044/Bank-of-Japan-governor-says-US-must-tackle-household-debt...
Economy Joke
Posted on May 21, 2009Recognizing that the title of this post is redundant, I?m sharing the following: Friend One: You are a walking economy. Friend Two: What do you mean by that? Friend One: Your hair line is in recession, your waistline is in...
?Assessing the G-20 Stimulus Plans?
Posted on May 20, 2009The Brookings Institution has posted an informative report, ?Assessing the G-20 Stimulus Plans: A Deeper Look.? Our integrated world economy demands a global address to current economic problems. Link: http://www.brookings.edu/articles/2009/03_g20_stimulus_prasad...
British Report on Reforming International Financial Regulation
Posted on May 20, 2009Highlights of the 120-page Report include proposals to: ? Reform Bank Capital and Liquidity Requirements ? Establish Counter-Cyclical Capital Buffers ? Build Capital in Good Economic Times ? Regulate ?Shadowbanking? Activities and Hedge Funds ? Regulate Credit Rating Agencies ?...
Fallout from Swine Flu
Posted on May 20, 2009My plans to teach ??Global Issues in Financial Institution Regulation? in Texas Tech?s Summer Law Institute in Guanajuato, Mexico, have been postponed until next summer. Between now and then, the course content may change radically ? for the better, we...
Conducting Islamic Banking ? A Note to Banking Law Professors
Posted on May 19, 2009One of the tiny sidelights of a Banking Law course is mention of ?lending? products that comply with Islamic Law. Here?s some interesting information on that topic: http://www.bernama.com/bernama/v5/newsworld.php?id=409514 (ag) May 19, 2009
An Update on Iceland?s Economy
Posted on May 19, 2009Last winter, the talk was all about Iceland?s economic crisis, its banking collapse, and government disaster. The IMF now says Iceland?s general economic outlook is ?good.? Link: http://icelandreview.com/icelandreview/daily_news/?cat_id=16567&ew_0_a_id=323095 (ag) May 19, 2009 In ?Economy?
FTC , the Financial Crisis, and Consumer Protection
Posted on May 18, 2009Lest you think that the Federal Trade Commission has no opinion on the current economic crisis and its effect on consumer protection, check out recent Congressional testimony: ? May 6 ? On ?Foreclosure Rescue and Loan Modification Scams? ? March...
CRA in Hard Times
Posted on May 17, 2009Just a question: Now that the economy is making finances tough all over, what's the effect on Community Reinvestment Act activities by banks? (ag) May 17, 2009 in CRA
Warren Buffet Speaks
Posted on May 16, 2009Now that the hoopla over the Annual Berkshire Hathaway Shareholders' Weekend has subsided, don't forget to review Warren Buffet's most recent "Letter to Shareholders." One interesting point for MBAs and wannabes is criticism of the Black-Scholes option pricing model...
Why Federal Regulation Should Not Be "The Answer"
Posted on May 15, 2009I admit it: I?m a proponent of the Dual Banking System. We can all see flaws in the U.S. financial institution regulatory structure that contributed to the current economic crisis. I am deeply concerned, however, that many reform proposals suggest...
Knowingly Eating a Cheese Sandwich ? The Limits of Identity Theft
Posted on May 15, 2009The U.S. Supreme Court ruled last week in Flores-Figueroa v. U.S. (May 4, 2009) that the crime of identity theft is limited to those who knew they were using another actual person's social security number. Justice Stephen Breyer wrote: "If...
Open Meetings
Posted on May 14, 2009The Fifth Circuit says elected officials have free speech rights. As General Counsel to a bank regulatory agency, the question of what constitutes an ?open meeting? is a matter of debate and consternation among non-lawyer members of a multi-member board...
Bankers Say They've Learned Their Lessons
Posted on May 14, 2009In testimony before the U.S. House of Representatives Financial Services Committee, an American Bankers Association representative testified that bank lending practices are trending away from risky lending and back toward conservative underwriting. (Let?s hope so!) Bankers are asking Congress not...
Bank Failure Count
Posted on May 13, 2009The troubled economy has made this a busy year for FDIC. So how many failures have there been so far this year? FDIC's Failed Bank List says 33 to date. Link to list and info: http://www.fdic.gov/bank/individual/failed/banklist.html (ag) May 13, 2009,...
Headed to Turkey for Research
Posted on May 13, 2009I?m leaving today for a research trip to Turkey and Eastern Europe. I?ll continue to post from hotels and Internet cafes, so stay tuned. Here?s my research proposal: Draft Proposal: ?Towards an Efficient and Effective Financial Regulatory Structure: the U...
What Is Stress Testing Anyway?
Posted on May 12, 2009For a simplified, very readable explanation of "stress testing" (AKA The Supervisory Capital Assessment Program or SCAP), see Federal Reserve Chairman Ben Bernanke's May 11th speech to the Federal Reserve Bank of Atlanta's 2009 Financial Markets Conference...
Apples to Apples
Posted on May 12, 2009FDIC has standardized and modernized the rules for how the 160 largest insured depository institutions calculate and report information about deposits. These rules were effective in 2008, but FDIC's staff has now compiled FAQs about compliance with the "Large Bank...
FDIC Asleep at the Switch?
Posted on May 11, 2009FDIC?s inspector general criticized the agency for failing to take timely and effective action in connection with Alpha Bank and Trust, Alpharetta, Georgia. The bank failed on October 24, 2008, 29 months after receiving a charter and federal deposit insurance...
China and the EU
Posted on May 11, 2009Getting Together in Crisis: China and the European Union are in talks regarding closer cooperation to combat the current economic crisis. Link to story: http://news.xinhuanet.com/english/2009-05/07/content_11328764.htm (ag) May 11, 2009, in Economy
Extensive Introspection at the Fed
Posted on May 09, 2009According to Ben Bernanke, the current economic crisis has generated "extensive introspection" at the Federal Reserve, which concludes that there is a need for "heightened vigilance and forcefulness" on the part of bank regulators. Link to WSJ story: http://www...
Official Stress Test Results
Posted on May 08, 2009The offficial announcement is posted on the Federal Reserve website. There have been many advance leaks and general misunderstanding about what the stress test results mean, so please refer to the Statement released at 5 p.m. today by Secretary of...
More Stress (Testing)
Posted on May 08, 2009Here's a comment from the Conference of State Bank Supervisor's Newsletter: Closing Comment "If we want to heal our financial system so it can resume the business of financing the economy, the Treasury and the White House need to get...
Interest Rate Cutting in Europe
Posted on May 08, 2009The European Central Bank reduced its main interest rate yesterday by one-quarter percent to one percent, the fourth reduction this year ? and quite possibly not the last cut. The global recession continues. Link: http://www.dw-world.de/dw/article/0,,4233955,00...
What FDIC Will Do and How They'll Do It
Posted on May 07, 2009FDIC's recently released Performance Plan for 2009 sets out goals in three areas: Insurance, Supervision, and Receivership Management. The report also provides a brief recap of 2008 from FDIC's perspective. In the alphabet soup world of financial crisis programs, FDIC's...
FDIC's New General Counsel
Posted on May 07, 2009FDIC has a new General Counsel, appointed this week fully six months after Sara Kelsey's retirement on October 31, 2008. New GC Michael Bradfield brings Washington regulatory experience from the last big banking downturn which may stand him and the...
Bank Stress Test Results Tomorrow
Posted on May 06, 2009Watch this space for the Federal Reserve's Stress Test Results for the 19 largest banks, expected to be released tomorrow!
Mortgage Metrics
Posted on May 06, 2009The OTS and the OCC have jointly published a "Mortgage Metric Report" with data from the fourth quarter of 2008 and for the full year 2008. See what national banks and thrifts were doing in graphic format. The Report includes...
Foreclosure Rescue Scams
Posted on May 06, 2009Not surprisingly, scammers are taking advantage of the current economic crisis to bilk the unsuspecting. Have they no shame? Apparently not! The Financial Crimes Enforcement Network (FinCEN) is instructing banks to file Suspicious Activity Reports (SARs) about any such activity...
How to Get Out of TARP
Posted on May 06, 2009It's not just a matter of giving back funds received from the Troubled Asset Relief Program (TARP), banks that want to exit the TARP program must also demonstrate ability to raise private funds without a guarantee from the FDIC. The...
Whither Preemption?
Posted on April 29, 2009On April 28, the U.S. Supreme Court heard oral argument in Cuomo v. Clearing House Association, an appeal from the Second Circuit decision barring the New York Attorney General's investigation into apparent racial discrimination in lending decisions by national banks...
Attorney to Banker Conference on the Financial Situation
Posted on March 26, 2009Check out this May 4, 2009 conference in Washington, DC conference: "Guiding Financial Institutions Through the Crisis." Speakers include some heavy hitters in the world of bank lawyers: Jack Murphy, former FDIC General Counsel, now with Cleary Gottlieb; Bob Clarke,...
Bank Bailout, Executive Bonuses and Bank of America
Posted on January 29, 2009University of Chicago Law Faculty Blogger Bernard Harcourt says Bank of America should immediately write the U.S. Treasury a check for $4 Billion -- the amount Merrill Lynch (acquired by Bank of America) paid out in year-end 2008 executive bonuses...
Eric Holder and Attorney Client Privilege
Posted on January 29, 2009Now that it seems assured that Eric Holder will be Attorney General, I reflect back on DOJ's use of privilege waiver as an indicator of cooperation with government investigations that may be a mitigating factor under Principles of Federal Prosecution...
Committee on Capital Markets: How to Reorganize the U.S. Financial Regulatory Structure
Posted on January 28, 2009The Committee on Capital Markets Regulation has released its "Recommendations for Reorganizing the U.S. Financial Regulatory Structure." The key point is that there should be only two (or at most three) independent regulators for the U.S. financial system: 1...
Fannie & Freddie in Conservatorship - Another Sunday Announcement Intended to Stabilize the U.S. Housing Mortgage Market and Reassure U.S. & Global Financial Markets
Posted on September 07, 2008The Perils of Fannie and Freddie (playing out somewhat like that old cliff-hanger series, "The Perils of Pauline") have kept financial commentators on the edge of their seats all summer. Today, regulators made another Sunday announcement of actions taken to...
New Federal Reserve Governor Sworn In Today
Posted on August 05, 2008Elizabeth Duke joins the Board of Governors of the Federal Reserve System today, beginning a term that lasts until Jan. 31, 2012. Ms. Duke is a career banker, having worked for both a community bank in Virginia (Towne Bank) and...
Federal Reserve Extends Extraodinary Liquidity Measures
Posted on August 05, 2008As we all know, this economic "downturn" is not over. The Federal Reserve has been very innovative in developing new tools to enhance liquidity in the U.S. financial system. Check out the Fed's recent press release which lists and explains...
Oxford Roundtable Working Paper: NAFTA, 9/11, and the Subprime Mortgage Meltdown-A Disastrous Combination from a Human Rights Perspective
Posted on August 04, 2008My powerpoint and working paper as presented to Oxford Roundtable, Aug. 3-8, 2008. Link to powerpoint: Download OxfordRoundtable.ppt Link to working paper: Download oxford_roundtable_working_paper.doc
CRA: It's Not Just for Low to Moderate Income Anymore
Posted on July 31, 2008Comptroller of the Currency John Dugan emphasized the new housing legislation's expansion of focus, encouraging national banks to lend to middle income areas in addition to low and moderate income. Link: http://www.occ.gov/ftp/release/2008-92.htm (ag) July 31, 2008, in CRA/Lending Issues
Asking for Mortgage Foreclosure Forbearance Until Oct. 1
Posted on July 31, 2008The Hope for Homeowners Act portion of the comprehensive Mortgage Reform Bill will go into effect on Oct. 1, 2008, and House Financial Services Committee Chairman Barney Frank is asking lenders to delay taking action on mortgage foreclosures until Oct...
Capital Adquacy in a Time of Bank Failures - Basel II, Pillar Two
Posted on July 29, 2008As the probability of increasing bank failures looms large in the public consciousness, more attention will appropriately focus on capital adequacy. How Basel II implementation will square with the need for an adequate capital buffer against hard times is an...
One Step Closer to a "Mortgage Rescue Bill"
Posted on July 23, 2008Today, the U.S. House of Representatives passed H.R.322, the American Housing Rescue and Foreclosure Prevention Act of 2008, by a vote of 272 to 152. Now the bill goes back to the Senate, where it is expected to pass quickly...
Covered Bonds - A New Solution or an Old Danger?
Posted on July 23, 2008In response to the liquidity crisis, particularly with regard to home mortgages, the FDIC last week announced new guidance for covered bonds. So what are covered bonds? Here's how the FDIC describes covered bonds: "Covered bonds are general, non-deposit obligation...
IndyMac - Second Largest Failure in FDIC History
Posted on July 14, 2008Subprime lender IndyMac was closed by FDIC on Friday. Check out my comments before and after the closing as quoted in Reuters News Service articles: News story on July 9, 2008: "IndyMac's Fate Could Test Banking Regulators" http://uk.reuters.com/article/ousiv/idUKN0932999520080710 News story...
Fannie, Freddie, & the Fed - A Sunday Announcement
Posted on July 13, 2008Two of the biggest participants in the U.S. secondary mortgage market, Fannie Mae and Freddie Mac, are experiencing serious repurcussions from the subprime mortgage debacle -- and their problems spill over into financial market drops and general mortgage lending liquidity...
BBA Announces Libor Reforms - What's the Impact?
Posted on June 11, 2008Today, the British Bankers Association (BBA) announced two measures to strengthen Libor as well as calling for comment on several other possible changes. Libor (the London Interbank Offered Rate) is the most widely referenced interest rate index in the world,...
Two Recent Supreme Court Cases on Money Laundering Issues
Posted on June 10, 2008Karen Neeley, one of Texas' best banking lawyers, recently called my attention to two recent U.S. Supreme Court cases. Here's what she has to say: "The Supreme Court decided two money-laundering cases on June 2, 2008. These cases do not...
Call for Papers - Treasury's Blueprint for a Modernized financial Regulatory Structure
Posted on May 23, 2008Download u_of_m_call_for_papers.doc The University of Memphis Cecil C. Humphreys School of Law announces a call for papers relating to the Treasury's Blueprint for a Modernized Financial Regulatory Structure. This is a very timely opportunity! (ag) May 23, 2008, in Federal...
Another Rate Cut & More Liquidity Issues
Posted on May 02, 2008The Federal Open Market Committee (FOMC) reduced the target federal funds rate another 25 basis points to 2% on Wednesday. Dallas Federal Reserve Bank President Richard Fisher and Philadelphia Federal Reserve Bank Charles Prosser opposed this rate cut...
Thank You for Expressions of Condolence
Posted on May 02, 2008Thank you for your understanding and concern during the last illness and passing of my mother on Friday, April 25. --Ann
Suspicious Activity Report News
Posted on April 22, 2008FDIC Financial Institution Letter FIL-32-2008 (April 10, 2008) notifies banks that they can access the Financial Crimes Enforcement Network (FinCEN) publication "The SAR Activity Report by the Numbers." Highlights of the report include the following: 1...
LIBOR - Is It Reliable & What Does It Say About the Current Financial Crisis?
Posted on April 22, 2008A disturbing article in the WSJ last week suggested that the London inter-bank offered rate (Libor) may be less than fully reliable because some troubled banks may not be reporting the high interest rates they must pay to secure loans...
Hedge Funds Driving Up the Price of Gasoline & Other Commodities
Posted on April 16, 2008My Corporate Governance class at the Texas Tech University School of Law was discussing Institutional Investors, including hedge funds, as a potential monitor for the boards of directors of publicly traded companies. In the course of the discussion, we also...
Texas Steps Out with a NEW ID THEFT MEASURE
Posted on April 15, 2008The 2007 Texas Legislature passed a bill establishing a new Closed Account Notification System ("CANS") -- the first example of this type of anti-ID theft measure in the U.S. The Texas Department of Banking administers CANS, which launched on March...
Fish Don't Know They Are Wet
Posted on April 14, 2008Federal Reserve Governor Kevin Warsh delivered a speech entitled "Financial Market Turmoil and the Federal Reserve: The Plot Thickens" to the New York University School of Law Global Economic Policy Forum today. Warsh identifies excessive liquidity as the root cause...
IRS Stats
Posted on April 14, 2008Today's WSJ carries an article worth noting on Page B3: "IRS Corporate Tax Audits Fall," by Jesse Drucker. Surprisingly, the rate at which the IRS audits large corporations hit a 20-year low in 2007. The audit rate for small businesses,...
Economic News - Bad to Worse
Posted on April 14, 2008Thanks to Sally Thompson for this intriguing look at the question, "Are Bernanke's Hands Tied? -- Eight Reasons Why the U.S. May Be in Worse Trouble Than You Think." Link: http://www.currencytrading.net/2008/are-bernankes-hands-tied-8-reasons-the-us-may-be-in-worse-trouble-than-you-think/ (ag) April 14, 2008, in Economy
Excessive Executive Compensation
Posted on April 09, 2008All the scoop on current issues in Executive Compensation: http://www.nytimes.com/2008/04/06/business/06comp.html?_r=1&scp=2&sq=executive+compensation&st=nyt&oref=slogin (ag) April 9, 2008, in Economy
OCC's Views on FHA Housing Stabilization & Homeownership Retention Act of 2008
Posted on April 09, 2008Comptroller John Dugan presented the agency's views on the FHA Housing Stabilization and Homeownership Act of 2008 before Congress today. This is basically a voluntary loan workout program with the lender taking a write-down and the borrower getting a refinanced...
Housing Bubble? What Bubble?
Posted on April 07, 2008Alan Greenspan denies all. He claims that "the U.S. bubble was close to median world experience and the evidence that monetary policy added to the bubble is statistically very fragile." He makes this disclaimer with a straight face, although under...
Credit Default Swaps -- and other issues relating to the Subprime Mortgage Collapse Explained
Posted on April 04, 2008Yesterday, NPR interviewed Law Professor Michael Greenberger, who provided an explanation of the complex derivatives, such as credit default swaps, which are not transparent and, as a result, create a "shadow" economic impact which we still can't fully evaluate...
When the U.S. Sneezes - Effect of U.S. Financial Markets Problems in Latin America
Posted on April 04, 2008Federal Reserve Governor Randall Krozner delivered a speech today highlighting an aspect of global economic issues we don't often see reported these days because we're so focused on our own U.S. troubles. Link to speech to the Annual Meeting of...
Warren Buffett Comments on the Subprime Mortgage Lending Crisis
Posted on April 03, 2008Excerpt from Warren Buffett's current Letter to Berkshire Hathaway Shareholders: "Some major financial institutions have, however, experienced staggering problems because they engaged in the ?weakened lending practices? I described in last year?s letter...
The "R" Word
Posted on April 03, 2008Federal Reserve Chairman Ben Bernanke finally said it. He is quoted in today's WSJ as testifying before Congress' Joint Economic Committee on Wednesday that, "A recession is possible." Of course, a rose by any other name would smell . ....
Revamping the US Financial Institution Regulatory System
Posted on April 03, 2008Everyone's in the midst of reviewing the Paulson Report but here's a viewpoint we don't see adequately expressed in that report: How does federal agency dependence on charter revenue and the power that flows from number and asset size of...
Enron & Jeff Skilling - Still in the News
Posted on April 02, 2008Today's Wall Street Journal has a short "Today's Agenda" item at the bottom of page one, letting us know that: "A court will weigh overturning the conviction of Jeffrey Skilling, the government's only unalloyed courtroom victory in its Enron probe."....
Alphonso Jackson - Fraud Fallout at a Bad Time
Posted on April 01, 2008Just when plates are full-to-overflowing with housing-related issues, the Secretary of Housing and Urban Development Alphonso Jackson announced his resignation yesterday so that he can "attend more diligently to personal and family matters." His euphemistic resignation statement, naturally, makes no...
Treasury's Blueprint for Regulatory Reform
Posted on March 31, 2008Today, Treasury Secretary Henry Paulson announced the much anticipated "Blueprint for Regulatory Reform." Good news: Secretary Paulson recognized that "Our first and most urgent priority is working through this capital market turmoil and housing downturn, and that will be our...
Let's Not Be Hasty
Posted on March 27, 2008An interesting article in the American Banker for April 26, 2008, is entitled "Financial Execs Urge Rapid Regulatory Reform." Well, let's see what this is about! Representatives of the Financial Services Roundtable (with membership comprising the 100 largest integrated U...
Reviewing the Fed's Interest Rate Cuts
Posted on March 26, 2008Are the interest rate cuts by Federal Reserve Board's Federal Open Market Committee (FOMC) producing the intended results? You be the judge. Members of the FOMC for 2008 Ben S. Bernanke, Board of Governors, Chairman Timothy F. Geithner, New York,...
Commercial Real Estate Concentrations - The Next Problem Loan Category?
Posted on March 25, 2008FDIC has issued a Financial Institution Letter (FIL 22-208, March 17, 2008) reemphasizing the importance of risk management strategies and strong capital to back Commercial Real Estate and Construction & Development concentrations. As our economy edges toward recession, losses in...
Points to Ponder Regarding the Subprime Mortgage Market Collapse
Posted on March 25, 2008My conclusions: 1. There?s blame enough to go around. 2. Those who do not remember the past are condemned to repeat it. 3. If it sounds too good to be true, it probably is. 4. If you don?t understand it,...
It's Not Sexy But It's Still an Examination Concern
Posted on March 24, 2008Flood Insurance continues to be a bank examination issue. It may not have the pizzazz of complex financial issues, but for those banks doing a traditional lending business and for borrowers seeking plain vanilla home mortgages, it's still important. The...
FACTA and ID Theft
Posted on March 24, 2008"FACTA and Identity Theft" is the topic I'm currently working on. I speak at the Texas Bankers Association Legal Conference on Friday this week, so expect a posting of my paper next Monday. Here's a link to a shorter piece...
Fed's New Approach - Shades of FSLIC in the 1980's?
Posted on March 24, 2008Mergers of underwater thrifts with slightly stronger ones postponed the S&L crisis of the 1980s --- but only for a time; meanwhile, ultimate losses had increased. Could this be deja vu? Last week, the Fed & Treasury encouraged or arranged...
The Fed Tries New Tricks
Posted on March 11, 2008You really have to give Federal Reserve Chairman Ben Bernanke an A+ for effort. As the financial markets continue to struggle, the Federal Reserve is inventing new tools to inject liquidity into the market and calm investor fears. Today, the...
Two Major Concerns for Bankers
Posted on March 10, 2008FDIC posted its Ombudsman's Report for the last six months of 2007, indicating that bankers are concerned about two main issues: 1. The Subprime Mortgage Crisis & FDIC's proposals for dealing with it; and 2. Bank Secrecy Act (BSA) -...
Not a Pretty Picture for Banks
Posted on March 05, 2008FDIC's Quarterly Banking Profile for the Fourth Quarter 2007 is a bit grim. Quarterly net income for FDIC-insured institutions declined to a 16-year low. Record high loan loss provisions, record losses in trading activities, and good will impairment expenses were...
Shot in the Arm or Shot in the Head? The President's Stimulus Proposal and the Fed's Dramatic Interest Rate Cut
Posted on January 22, 2008Comparing U.S. Interest Rate Adjustment Policies with those in the U.K. and the E.U.
Posted on January 14, 2008The Federal Reserve Board & the Mortgage Crisis: Using All the Tools in the Box
Posted on December 17, 2007Third Quarter News for Banks is Gloomy as a Result of Mortgage Market Woes
Posted on December 04, 2007
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