News
The FDIC, OCC and Federal Reserve are hosting the Interagency Minority Depository Institution and CDFI Bank Conference to help preserve and promote the missions of minority depository institutions and CDFI banks. The conference focuses on the unique positioning of these institutions to make positive change in their communities. Senior officials including FDIC Chairman Martin Gruenberg, Federal Reserve Board Governor Jerome Powell and Comptroller of the Currency Thomas Curry will be featured speakers. The conference will take place at the OCC Conference Center in Washington, D.C. July 13-15. Registration is open to board members and staff of minority depository institutions and CDFI banks.
M&F Bancorp of North Carolina, one of the nation’s oldest black-owned banks, is launching an effort to revamp its business model to counter the challenges MDIs are facing. With about 60% of its customers over 60 years old, M&F is rebranding and working to reach new customers in order to serve a wider community base. "I just don't think we're going to have more African-American banks open," Sills said. "I think it is incumbent on the ones that are remaining to make sure they're relevant and they're trying to reach out to as many groups or market segments in their various communities to make sure their bank is around for the next 15 or 20 years. I just don't think you can rely totally on one segment of the community."
Amidst growing pressure towards more robust risk-management procedures, many community banks are facing difficult decisions when it comes to choosing when to use outsourced labor and when to increase their own staff to handle risk-management tasks. Outsourcing risk-management tasks such as cybersecurity can be tempting for small banks because of the expenses associated with hiring experts. But outsourcing can also carry risks related to managing the vendor relationship and monitoring the quality of work. Regulators have also been paying close attention to banks' oversight of vendor relationships. Federal Reserve Board Gov. Daniel Tarullo cautioned in a recent speech that outsourcing to vendors can increase risk by removing functions from the bank’s control.
Secretary of Education Arne Duncan announced on Monday that the Education Department would forgive the loans of tens of thousands of students who attended Corinthian Colleges. The for-profit college company closed and filed for bankruptcy last month amid charges of fraud. The company has been accused of falsifying placement rates, publicizing deceptive marketing and engaging in predatory recruiting by targeting the most vulnerable low-income students. For-profit colleges get the majority of their revenue from federal student loans -- and account for nearly half of the defaults on these loans. If all 350,000 Corinthian students over the last five years applied for and received the debt relief, the cost could be as high as $3.5 billion.
The American Bankers Association has issued a call for entries for its Community Commitment Awards, which recognize and promote the ways banks of all sizes contribute to economic growth, community development and enhancing customers' quality of life. Winners will be announced during ABA’s Annual Convention, held Nov. 8-10 in Los Angeles. Winners will receive a complimentary registration to the convention and will be presented with an award at the ceremony. Awards will be made in seven categories covering a range of community development activities including affordable housing, financial education and more. Banks can submit entries in multiple categories. All applications must be submitted by July 1, 2015.
The Consumer Financial Protection Bureau is leaning against subjecting banks to new rules that would cap the size and frequency of overdraft charges, according to sources briefed on the agency’s work. Instead, the CFPB is likely to limit its action to barring lenders from reordering transactions, a practice in which the order of transactions is manipulated to maximize the number of overdrafts applied to an account. The CFPB may also require better disclosure of overdraft policies to consumers to help them avoid these fees. The CFPB hopes to balance its new consumer protection measures with the concerns of banks who assert that some consumers rely on the flexibility overdrawing their accounts provides.
BankFirst Capital Corporation will merge with Newton County Bancorporation, Inc. under a plan approved by the boards of both companies. BankFirst will acquire all six of Newton County Bank's branches, giving it total assets in excess of $875 million. It will now run 18 branches across 10 Mississippi counties, making it the 11th largest Mississippi-based banking institution. "This transaction attractively expands our footprint in central Mississippi and provides additional operating scale across our bank," said Moak Griffin, BankFirst's President and CEO. "We are excited about continuing to offer high-touch, community banking service to Newton County Bank's customers while introducing a broader product offering to better meet their banking needs."
A new report from the Filene Research Institute finds that Hispanics -- even those with a greater degree of formal education -- continue to face significant financial challenges. The report surveyed Hispanics who have received at least some college education. Of this group, 40 percent can be classified as “financially fragile,” meaning that they could not come up with $2,000 if the need arose within the next month. Half of credit cardholders in the group reported behaviors that could damage their credit scores and increase interest rates, such as paying only the minimum payment and paying late. The report also found a lack of financial literacy within the group, which was 20 percentage points less likely than comparably educated whites to answer questions on basic financial literacy correctly.
Democrats in the House and Senate have banded together around a regulatory relief bill for community banks. Democrats hope their bill will present a viable alternative to the broader Dodd-Frank reform bill proposed by Republicans -- legislation President Obama has already signaled he would veto. The Democrats’ package includes provisions to remove annual privacy notice requirements except when bank disclosures change and to extend the annual exam schedule to 18 months for healthy institutions under $1 billion in assets. The Republican bill, which passed the Senate Banking committee last month, would include many more regulatory relief provisions for small and regional banks including raising a key $50 billion Dodd-Frank threshold for enhanced prudential standards and mandating reforms to the insurance industry, the Fed and the FSOC.
Acting Assistant Secretary for Financial Stability Timothy Bowler will be leaving the Treasury Department in mid-June after leading the department’s wind-down of the Troubled Asset Relief Program (TARP). The TARP Capital Purchase Program currently has 30 banks remaining, down from 700 in 2008. Of these, two are CDFI banks. The CDCI portfolio contains 69 CDFIs, 29 of which are CDFI banks. Bowler assumed his role managing the portfolio after Timothy Massad left to be chairman of the Commodity Futures Trading Commission. Bowler has not yet confirmed any future career plans.