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Professor Counters Senators Seeking to Limit Too-Big-To-Fail Study

ICBA NewsWatch Today 04/23/2014

Too-Big-To-FailProfessor Counters Senators Seeking to Limit Too-Big-To-Fail StudyA Boston University expert on too-big-to-fail is taking issue with a recent letter from two U.S. senators on the Government Accountability Office’s study of the megabank funding advantage. Professor Cornelius Hurley wrote that a recent letter from Sens. Thomas Carper (D-Del.) and Mark Kirk (R-Ill.) is designed to interfere with the GAO’s study of the too-big-to-fail subsidy. The senators’ letter asks the GAO to limit its investigation to the eight U.S. banks identified as systemically important financial institutions, to consider whether the largest banks compete with community banks to determine the impact of any funding advantage, and to incorporate post-2009 data and the impact of Wall Street financial reforms. Hurley, who is director of his university’s Center for Finance, Law & Policy, wrote in a separate letter to the GAO that the Carper-Kirk letter is designed to alter the scope and methodology of the GAO study. “I am confident that you will view their letter for the smokescreen that it is,” he wrote. Hurley noted that recent International Monetary Fund and Federal Reserve Bank of New York studies have quantified the too-big-to-fail subsidy. He encouraged the GAO to continue its efforts to study funding advantages for the largest banks caused by their implied government support. RegulationCFPB Finds Private Student Loan Borrowers Face “Auto-Defaults”The Consumer Financial Protection Bureau Student Loan Ombudsman released a report highlighting complaints of “auto-defaults” in private student lending. According to the report, borrowers said some lenders demand immediate full repayment upon the death or bankruptcy of their loan co-signer, even when the loan is current and being paid on time. The report also found that borrowers describe facing bureaucratic barriers to releasing co-signers from their loans. The CFPB issued a consumer advisory and sample letters that consumers can send to their loan servicer to help borrowers overcome obstacles to co-signer releases. Social MediaICBA Hosting Community Banking Month Twitter ChatICBA is hosting a Community Banking Month Twitter chat next week on what’s next in community banking. The chat will feature a variety of guest tweeters on topics such as emerging leaders and technologies, marketing across generations, and more. Twitter chats are public forums where consumers, influencers and stakeholders can convene on Twitter to discuss certain topics. ICBA encourages community bankers to join the chat and tweet their insights and questions. To participate, get on Twitter at 2 p.m. (Eastern time) Monday, April 28, and follow the #BankLocally hashtag. More information is on ICBA’s Twitter Chat webpage and in the association’s Twitter Chats 101 and Tweeting for Community Bankers resources. ICBA NewsWatch Today is sponsored by NACHA:With nearly 1,200 members listening to what’s being said about them on social media, ICBA announced the expansion of its premier social media monitoring tool—the ICBA Social Media Monitor, sponsored by NACHA. Participating community bankers can now search up to five keywords, allowing ICBA member banks to find even more mentions of their banks from consumers, media and policymakers!  Current participants interested in adding or changing keywords can email Please include your bank name, email contact info, and list of new keywords and phrases to monitor. New participants can set up their preferences at or read frequently asked questions about the program.SBASBA Implements Revised 7(a), 504 Program RulesThe Small Business Administration this week implemented a final rule that eliminates or revises several requirements for its two main loan programs, 7(a) and 504. The rule is designed to expand eligibility, make it easier for small businesses to secure SBA-backed financing, and encourage job creation. The rule eliminates a personal resource test and revises collateral and corporate governance requirements.Regional NewsOCC Southern District Reports Increased Loan GrowthThe average loan growth rate at community banks and thrifts in the Office of the Comptroller of the Currency’s Southern District doubled to 4 percent from 2012 to 2013. Loan growth reached as high as 11 percent in areas of Texas and Oklahoma and 7 percent in areas of Florida. The OCC cited oil and gas industry activity in Texas and Oklahoma as well as retiree migration, good weather, low taxes and higher employment in hospitality and retail trade in Florida. The district also includes Alabama, Arkansas, Georgia, Louisiana, Mississippi and Tennessee. RegulationFDIC Economic Inclusion Panel Meeting TomorrowThe FDIC Advisory Committee on Economic Inclusion is scheduled to meet tomorrow to discuss Safe Accounts, mobile financial services, financial education opportunities and consumer demand for small-dollar loans. The meeting is scheduled for 9 a.m. to 3:15 p.m. (Eastern time) at FDIC headquarters is will be webcast live.EconomyExisting-Home sales Dip in MarchExisting-home sales declined 0.2 percent in March and were down 7.5 percent from a year ago, the National Association of Realtors said. Sales gains in the Northeast and Midwest were offset by declines in the West and South. The NAR said it expected stronger sales given population growth, though price growth is rising faster than historical norms because of inventory shortages.PollTake This Week’s Quick PollTake this week’s Quick Poll on Community Banking Month activities, and view results from the previous poll on community bank congressional open houses. View the Archive.EducationICBA Audio Conference: Current Issues in BSA/AMLDon’t fall asleep at the BSA/AML wheel! Based on industry observation, community banks are experiencing more stringent BSA/AML exams as of late. Join ICBA at 11 a.m. (Eastern time) tomorrow for a lively discussion covering the latest and greatest topics in the BSA/AML environment. This session will address FinCEN guidance, advisories and other formal publications over the past year and provide best practice recommendations. Register Today.

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