The Treasury Department and financial crime-fighting agency Financial Crimes Enforcement Network sought to assuage critics who say their blunt enforcement actions against money laundering have caused banks to cut ties with entire business sectors, such as check cashers. The regulators said banks should evaluate the risks associated with opening their doors to money service businesses on a case-by-case basis. Critics say the money-laundering enforcement, along with the so-called "Operation Chokepoint" fraud crackdown, have fueled the "de-risking" trend. Treasury has promised a deeper level of engagement with the banking industry on the enforcement actions, including a Jan. 13 public forum on money services businesses and banking access.
Mark Ricca, President and CEO of First American International Bank, has announced the appointment of new CFO Neil Hecht. "[Neil] brings over 30 years of banking experience to First American International Bank, with proven skills in strategic business planning, financial management and investments. Prior to joining First American International, Neil worked at First National Bank of Santa Fe as CFO, Treasurer and Chief Investment Officer where he led all aspects of the bank’s financial management and investments... Previously, Neil worked with CIT, Inc. as CFO of its Energy Group, and at SMBC Leasing and Finance, Inc. as Chief Investment Officer and Treasurer. We are very pleased and excited to have Neil as part of our team."
Urban Partnership Bank, launched in 2010 to take over the assets of ShoreBank after its failure, suffered a $28 million loss through the first nine months of 2014. The primary reason: a $24 million writedown this year on the value of the bank's 10-year agreement with the FDIC to share losses on bad ShoreBank loans. Despite the losses, the bank has maintained sensitivity to its community as it works through ShoreBank's bad loans. That has meant restructuring loans that in other circumstances might have been resolved more quickly with seizure of collateral. The bank has also expanded its new lending program, committing about $200 million to new borrowers since 2010.
OneUnited Bank CEO Kevin Cohee has urged regulators to take a more nuanced approach to evaluating minority-owned banks in the wake of the bank's recently announced “Needs to Improve” Community Reinvestment Act rating. In its report, the FDIC knocked OneUnited, which operates in Boston, Miami and Los Angeles, for insufficient lending in its Boston and Miami markets. Cohee argued that minority-owned banks should not be measured the same way a large bank is judged on community lending. “We do not think the report is fair or accurate,’’ Cohee said. Loans in low income areas, “while appropriate to support the economic development of these communities... have unique, riskier profiles.”
Fannie Mae CEO Timothy Mayopoulos has provided new details on regulators’ plans to boost mortgage lending, expanding on Federal Housing Finance Agency Director Melvin Watt’s comments that Fannie and Freddie would back loans with down payments as low as 3 percent of the home's value. Mayopoulos expects Fannie’s low-down-payment mortgages to cost the borrower less than Federal Housing Administration loans. But he also said Fannie’s loans would require private mortgage insurance on top of the down payment, which could limit the size of the program. It is not clear whether private mortgage insurers will want to take on the riskier loans. The program could also introduce higher default rates, since the 20 percent down payment has previously acted to filter applicants who were likely to default.
Boyd “Bo” Megginson has been named the new Vice President for Business Lending Services at United Bank. Megginson will drive business development efforts for the bank with an emphasis on small business lending. He brings more than 20 years of business consulting experience to the position. “[Megginson] understands the challenges businesses face when getting started and when looking to expand... our clients will appreciate the consultative approach he brings to business development," said United Bank President and CEO Robert Jones.
Carver Bancorp, Inc., the holding company for Carver Federal Savings Bank, has announced that the OCC has lifted a cease and desist order issued by the Office of Thrift Supervision. The OCC also no longer holds the bank in “troubled condition." “We are extremely pleased with the OCC’s decision to lift the cease and desist order," said Deborah C. Wright, Carver’s Chairman and CEO. "This action reflects the effectiveness of our board and management team’s extensive effort to restore the bank to financial health... Since our $55 million capital raise in 2011, our management team has worked tirelessly to reduce problem assets and enhance bank operations. As a result, our credit ratios are now approaching industry norms.”
A new working paper on CDFI job metrics from CDFI network OFN recommends increased rigor and standardization of collection practices. The report includes findings from Create Jobs for USA, an initiative by OFN and Starbucks to support CDFIs' job creation activity. The authors hope the report will be a step forward in building a consensus among CDFIs about how job metrics ought to be collected, processed and reported. Among the report's recommendations are formalizing data collection policies and data point definitions, including quality control measures. The report also encourages clear, detailed and timely data collection forms for borrowers and proposes standardized definitions of job metric terminology and measures.
Treasurers for state and local governments are expanding their roles in experimental policies aimed at helping low- and moderate-income families. San Francisco treasurer Jose Cisneros' Bank On initiative gives poor people low-cost bank accounts and has been replicated in more than 100 cities, helping people on the financial fringes access financial services and develop credit histories. In 2010, Cisneros also started Kindergarten to College, an initiative that automatically opened a bank account with $50 for every kindergartner in public schools, a program later emulated in Nevada by Treasurer Kate Marshall. The city pays for the administration and initial deposits, while corporate, foundation and private donations provide matching money to encourage saving.
The CFPB is facing a balancing act as it attempts to expand the massive Home Mortgage Disclosure Act (HMDA) mortgage database. The Dodd-Frank Act requires the CFPB to expand data requirements, but the agency went beyond what was suggested by the law, proposing to add fields for home equity lines of credit, reverse mortgages and multi-family properties. Now, lenders are protesting that the CFPB went too far, while consumer advocates argue it hasn't gone far enough. The proposal was designed to make lenders provide more details on why a loan was accepted or rejected and disclose more information on the loan, including the age and credit score of homebuyers, the property value and details on the interest rate.