News
Fannie Mae and Freddie Mac will start making payments that could total hundreds of millions of dollars annually into a fund for affordable housing. Under the new policy announced by Federal Housing Finance Agency Director Melvin L. Watt, the GSEs will set aside a portion of their revenue for the National Affordable Housing Trust Fund. The fund is the only source of U.S. housing money earmarked for the lowest-income families and has been empty since Congress created it in 2008. Watt’s predecessors said the precarious financial condition of the companies prevented them from making payments. Now, “[c]ircumstances have changed” and the suspension of payments into the fund “is no longer justified,” Watt said.
New CDFI Fund Director Annie Donovan urged further progress in serving distressed communities in her first director's message. "We have built a strong foundation. Yet, despite all that we have accomplished, much more remains to be done," Donovan said. "As those who work in low-income communities every day know all too well, our work will not be complete until economic opportunity is a reality for all. So this is our challenge for the next decade—to create ways not only to protect the precious asset that we have created but also to leverage it for further progress. As the Director of the CDFI Fund, I am committed to doing everything I can to help the CDFI industry progress through the next stage of its evolution."
Two years after the demise of a proposal to speed up U.S. electronic payments, a revised measure now appears likely to be approved by the banking industry. The new proposal was designed to resolve an issue that derailed the 2012 proposal: the fact that banks on the receiving end of transactions will be required to invest in the upgraded ACH network, but won't receive many direct benefits. The revised proposal would require any bank that initiates a same-day payment to pay 8.2 cents per transaction to the bank on the other end, covering the technological investments that banks on the receiving end of the transactions would need to make. Nacha is accepting comments on the proposal, with a deadline Feb. 6.
A working paper by the San Francisco Fed offers best practices for crafting Community Reinvestment Act (CRA) performance context—knowledge about the bank’s local markets, the needs of its community and the opportunities that exist within the local network of resources and organizations. The performance context is as much a self‐assessment as it is a regional assessment, not only identifying the needs in a bank’s assessment areas, but also determining which needs are within a bank’s capacity to address. The paper encourages banks to identify credit needs and opportunities for community involvement using a combination of quantitative measures from sources like the American Community Survey and qualitative accounts from community members and leaders.
In a joint interview, longtime Carver Bancorp CEO Deborah Wright and new president and CEO Michael Pugh discussed the evolution of the bank's role in its communities. "[Michael] is a tremendous talent," Wright said. "We've worked together for a couple of years and, over that time, I became comfortable that he could take the organization to the next level." Pugh intends to expand the bank's customer base with new products. "[T]here is continued opportunity to have feet on the street and grow primary banking relationships," said Pugh. "The next step is a credit solution for middle-income customers who would be interested in banking with Carver if we could offer the same products as the big players."
BankPlus is taking advantage of the University of Mississippi Medical Center’s new corporate telehealth program. The program aims to cut down unnecessary medical visits by allowing real-time, same-day virtual appointments. BankPlus has made the program available to all 725 employees at 60 of its locations. Just four weeks into operation, the program has already treated nearly 50 patients. “Historically, we have always embraced emerging technology, not only in our products and services, but internally as well," said Bill Ray, president and CEO of BankPlus. "Telehealth allows us the opportunity to bring these two passions together, while saving our employees time and money.”
In a new book, the Federal Reserve Bank of San Francisco and the Urban Institute explore data collection trends in the community development field. The book, What Counts, brings together essays on data collection and use from a wide range of authors, including community development practitioners, regulators and academics. Among the recurring themes in the essays are the promise of the massive troves of data now available to the public — and the challenges of harnessing it safely and usefully. Authors describe a trend toward standardization in the collection of community development impact data, balancing nuance with practicality. Authors also expressed optimism for the promise of data sharing via open data policies.
Southern Bancorp is calling foul on a recent move by the Citizens Bank of Batesville, which has hired 10 lenders and support staff away from Southern’s office in Hot Springs, Ark. Citizens CEO Phil Baldwin, who had been CEO at Southern from 2002 until 2011, denied a raid on his former employer and said the hires were instructed not to bring information with them. Nevertheless, Southern Bancorp has notified regulators of their concerns. “We believe that proprietary information may have been misappropriated,” said Southern Bancorp CEO Darrin Williams. Meanwhile, Southern Bancorp Bank is proceeding with plans to expand in Hot Springs and is rapidly moving to hire staff for it and replacements for the bankers who left.
Banks are urging some of their largest customers to take their cash elsewhere or be slapped with fees, citing new regulations that make it onerous for them to hold large deposits in accounts that were previously free. The new measure requires the banks to maintain enough high-quality assets that could be converted into cash during a crisis to cover a projected flight of deposits over 30 days. Because large, uninsured deposits would be expected to leave most quickly, the rule requires that banks maintain reserves that they cannot use for profitable activities like making loans. Some bankers said they are advising corporate clients to break up large deposits across several banks, including smaller ones not affected by all of the new rules.
International regulators are gearing up to make significant changes to capital requirements over the next few years, a shift that some are already referring to as Basel IV. The Financial Stability Board has detailed a slate of likely changes over the next three years, including raising the risk-based capital ratio, revising risk weightings and moving away from model-based assessments as part of a revamp of the capital requirements for operational, market and credit risk. The Basel Committee will likely raise the risk-based capital ratio to 10% from 8%. A key principle of the new guidelines is reducing reliance on internal or external models in favor of tougher capital standards. The overall result would be a shift away from risk-based capital rules and toward simple, hard-line capital ratios.