ICBA News, sponsored by Holtmeyer & Monson—Fine: Wall Street Executives Too Big To Jail?

Advocacy
Fine: Wall Street Executives Too Big To Jail?
A recent broadcast report shines a light on possible reasons why the megabank executives who helped sink the economy and received billions in taxpayer assistance have not been held accountable, ICBA President and CEO Cam Fine writes in his latest blog post. Fine cites the latest episode of “Frontline,” in which a Justice Department official said he lost sleep at night worrying about the economic fallout that a federal prosecution at a large financial institution might create.

“If this isn’t a textbook definition of the problem of too-big-to-fail, I don’t know what is,” Fine wrote in Finer Points. “These financial firms are so large and so interconnected that they not only have access to lower-cost funding and to a seemingly limitless taxpayer backstop, but they are also immune from criminal prosecution.” Read Finer Points. Read ICBA Release.

Regulation
ICBA Issues Statement on Nomination of Richard Cordray
ICBA released a statement congratulating Consumer Financial Protection Bureau Director Richard Cordray for being renominated by President Barack Obama.

“ICBA congratulates Director Cordray for being renominated to lead the CFPB and encourages him to continue to consider the unique role of the nation’s community banks as the bureau further shapes financial regulation,” ICBA said. “ICBA continues to support smart regulations that recognize that community banks are common-sense lenders that did not contribute to the financial crisis and should not face daunting regulatory challenges that inhibit access to credit on Main Street.” Read ICBA Statement.

Legal
Court Ruling on Recess Appointments Could Affect CFPB
Presidential appointments to a federal board made last year without Senate approval are unconstitutional, a federal appeals court ruled. President Barack Obama’s appointments to the National Labor Relations Board, which Obama made after Senate Republicans would not consider nominees, were deemed “constitutionally invalid” because the Senate wasn’t formally in recess.

The ruling could affect the Consumer Financial Protection Bureau, whose director, Richard Cordray, was similarly appointed. The court decision could undo more than 200 NLRB decisions, Bloomberg reported, which raises questions about the impact on CFPB rulemakings issued under Cordray. The CFPB has issued rules on qualified mortgages, loan servicers and originators, remittances, and more since Cordray was appointed in January 2012.

The case is expected to head to the Supreme Court, according to news reports.

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Housing
Eminent Domain Plan Rejected by California County
A California county considering whether to use eminent domain to seize troubled mortgages and write down debt for homeowners has ruled against the idea, according to news reports. The Los Angeles Times wrote that San Bernardino County officials voted against the plan due to lack of public support.

The proposal met swift opposition by regulators, members of Congress and ICBA. The association told the Federal Housing Finance Agency that the effort would help only a relatively small number of borrowers, but would have harmful consequences far beyond the communities using eminent domain.

“In communities where eminent domain is used, credit would be much more expensive and difficult to obtain—if it would be available at all,” ICBA Vice President for Mortgage Finance Policy Ron Haynie wrote in an October 2012 ICBA Independent Banker column. “Further, the cost of mortgage credit is likely to increase for all borrowers if lenders fear a growing, if not arbitrary, use of eminent domain.”

Regulation
GAO Cites Impact of Complex Rules on Meeting Deadlines
The number and complexity of rules mandated by the Dodd-Frank Act has posed challenges to regulators' progress in implementing the act's reforms, the Government Accountability Office reported. According to the GAO report, regulators said that implementing the act's reforms requires coordination at the domestic and international levels, which has increased the time required to finalize rulemakings. Further, regulators said they prioritized developing responsive, appropriate rules over meeting tight statutory deadlines.

The GAO identified 236 provisions of the act that require regulators to issue rulemakings. As of December 2012, regulators had issued final rules for approximately 48 percent of these provisions, though compliance deadlines varied. Regulators had proposed rules for approximately 29 percent of the remaining provisions, and rulemakings had not occurred for approximately 23 percent.

Congress
House Panel Releases Financial Products Tax Reform Draft
House Ways and Means Committee Chairman Dave Camp (R-Mich.) released a discussion draft of legislation to reform taxes and lower rates for financial products. Camp said the draft is designed to provide greater simplicity and uniformity and to modernize tax rules to minimize Wall Street’s ability to disguise potentially significant risks via derivatives and other financial products.

The draft also focuses on simplifying business hedging tax rules, eliminating “phantom” tax resulting from debt restructurings, harmonizing the tax treatment of bonds traded at a discount or premium on the secondary market, increasing the accuracy of determining gains and losses on sales of securities, and preventing the harvesting of tax losses on securities.

Regulation
OCC Renews Minority Institution Committee
The Office of the Comptroller of the Currency renewed the charter for the Minority Depository Institutions Advisory Committee and will host its first meeting Tuesday, March 5. The committee will provide advice to the comptroller of the currency about minority depository institutions and will assess the current condition of and regulatory changes affecting these institutions. The agenda for the first meeting includes a discussion of the status of minority depository institutions and current topics of interest to the industry.

Fraud
OCC Warns of Fraudulent Correspondence
The Office of the Comptroller of the Currency warned against fictitious correspondence allegedly issued by the agency regarding funds purportedly under the control of the OCC and other government entities. The correspondence, which may be distributed via e-mail, fax or postal mail, indicate that funds are being held by Bank of America and that the recipient will be required to pay a mandatory express service charge to have the funds released, the agency said. The OCC said consumers should contact the agency before responding to any such request for personal information or account information.

Treasury
Geithner Ends Term at Treasury
Treasury Secretary Timothy Geithner stepped down from the post on Friday. Deputy Treasury Secretary Neal Wolin will replace Geithner on an interim basis. White House Chief of Staff Jacob Lew has been nominated by President Barack Obama for the position and awaits Senate consideration.

Economy
New-Home Sales Decline 7.3 Percent
New-home sales dropped 7.3 percent in December to a seasonally adjusted annual rate of 369,000, the Commerce Department reported. Sales were up 8.8 percent from a year ago. The seasonally adjusted estimate of new houses for sale at the end of December was 151,000, a 4.9-month supply at the current sales rate. An estimated 367,000 new homes were sold in 2012, up 19.9 percent from 2011.

In-Depth
ICBA Ready for 113th Congress
With the 113th Congress underway, a new Web exclusive on the ICBA Independent Banker website identifies the key “players” who will steer financial services policy for the next two years. ICBA Vice President of Congressional Relations and Advocacy Aaron Stetter outlines who will lead the House Financial Services Committee and the new members of Congress joining the panel this year. Read the In-Depth Piece. Read Committee Assignments.

Rates
Fixed Mortgage Rates Move Higher
Freddie Mac said fixed mortgage rates increased last week but remained near all-time lows. Rates on 30-year fixed-rate mortgages averaged 3.42 percent, up from 3.38 percent the previous week and down from 3.98 percent a year ago. Rates on 15-year FRMs averaged 2.71 percent, up from 2.66 percent the previous week and down from 3.24 percent last year.

Poll
This Week’s Quick Poll
Take this week’s Quick Poll on the impact of new mortgage regulations, and review the previous poll on the regulatory environment. View the Archive.

Convention
Early Bird Savings Expire Today
The early bird deadline to save $300 on the 2013 ICBA National Convention and Techworld at the Wynn Las Vegas and Encore is today. Scheduled for March 11-15 in Las Vegas, this year’s convention already has a packed lineup of speakers, workshops and networking opportunities. Register Online.

Education
FDIC Launches Community Affairs Webinar Series
The FDIC said it will host a webinar series on how to promote community development and expand access to the banking system. The first webinar, schedule for 1:30 p.m. (Eastern time) Wednesday, Feb. 6, will cover how financial institutions can promote savings during America Saves Week.

Education
ICBA Stress Testing Webinar Tomorrow
ICBA is hosting a webinar tomorrow to present feedback collected from multiple regulatory agencies on examiners’ expectations regarding stress testing at both the individual and portfolio levels. “Stress Testing for Community Banks,” slated for 11 a.m. (Eastern time), will feature how community bankers can create a safety net that allows them to actively manage and take back control of their financial institution’s lending portfolio.