Housing Finance Legislation

As anticipated, Financial Services Committee Chairman Jeb Hensarling has released a broad and aggressive proposal addressing a number of issues relating to housing finance - "The Protecting American Taxpayers and Homeowners (PATH) Act."

In addition to phasing out Fannie and Freddie, and refocusing the mission of the FHA, the proposal contains significant regulatory relief in the mortgage lending arena.  The Committee release and Executive Summary provides significant additional information.

Additionally, IBAT issued a statement regarding the proposal, applauding the inclusion of meaningful reforms to stifling regulatory burden on mortgage lending, with a focus on in-portfolio lending.  For in-portfolio loans, the ability-to-repay, escrow requirements and several other provisions are eliminated. Further, for all mortgage loans, the Dodd-Frank high-cost definition, prohibition on balloon payments, ability-to-repay as a defense to foreclosure, prohibition on arbitration and other requirements go away.  

This will clearly be a long and arduous process, and IBAT will continue to be highly engaged with the Chairman, other members of Congress and Committee staff as we attempt to work through these critical issues.

Week in Review: July 12, 2013

For those who were lucky enough to be a teenager during the 70's, you may recall the urban myth surrounding everybody's favorite rock band, Led Zeppelin. It was rumored that if one played "Stairway to Heaven" backwards, at high speed, hidden messages could be detected. Well, coming from one who tried to find those hidden messages, they were never discovered and all I succeeded in doing was scratching up my favorite album. Now, I realize that some readers won't know what a record album is, but that's beside the point. The point is, as experts and non-experts alike continue to pour over the recently released minutes of June's FOMC meeting looking for hidden messages, it just may be that there aren't any. When Mr. Bernanke says that discussions of "tapering" are not intended to be signals of policy changes, maybe that's actually what he means. Policy has not changed. What has changed... Read more in the Baker Market Update.

Elizabeth Duke Resignation

Federal Reserve Governor Elizabeth “Betsy” Duke announced  last week her resignation from the Board effective August 31.  Governor Duke served as Chairman of both the Committee on Consumer and Community Affairs and the Subcommittee on Supervision and Regulation of Community and Small Regional Banking Organizations.

A “real” banker, she had experience in both regional and community banking prior to joining the Fed Board.

“Governor Duke has clearly been the ‘go-to’ person for us and the community banking industry”, said Christopher Williston, IBAT President and CEO.  “She ‘gets it’, and will be sorely missed.  We have had the pleasure of meeting with Governor Duke to discuss a number of issues, including Basel, fair lending concerns, mortgage lending challenges and a two-tiered regulatory system.  She is indeed an impressive individual, and we very much appreciate her service to the industry and the country.  We obviously wish her the very best in whatever she chooses to pursue going forward.”


Was the Board of the Texas Windstorm Insurance Association and/or the Texas Department of Insurance negligent in failing to fully assess insurance carriers for losses from recent windstorms?  That's the question posed to the Texas Attorney General's office in a request for opinion issued by six members of the Texas House of Representatives.  

In total, insurers were assessed $530 million, but that was inadequate to cover losses from Hurricane Ike in 2008 – one of the primary events that led to the current financial concerns of TWIA.   Since TWIA has and/or had the authority to further assess insurance carriers to cover losses, the Representatives are asking Abbott to weigh in on the TWIA Board's inaction with regard to insurance carrier assessment.  

A complete copy of the request is available on the IBAT website and includes a thorough summary of events leading to the request.

Silver Alert




The TYLER POLICE DEPARTMENT is searching for WALTER JAMES GRAY, diagnosed with DEPRESSIVE PSYCHOSIS, BLACK, MALE, 80 years old, DOB 03/09/1933, HEIGHT 5’ 9”, WEIGHT 160 lbs, GRAY Hair, BROWN Eyes, BEIGE JUMPSUIT.

The senior citizen was last seen at 0221, 07/10/2013 at 1501 W 29TH STREET TYLER, TX, he is on foot.

Law enforcement officials believe this senior citizen’s disappearance poses a credible threat to HIS own health and safety.

If you have any information regarding this missing senior citizen, contact the TYLER POLICE DEPARTMENT at 903-531-1000.

News Media Point of Contact is TYLER POLICE DEPARTMENT at 903-531-1000.

A Closer Look

Last week's unanimous vote by the Board of Governors of the Federal Reserve System adopting final Basel Rules has drawn generally positive reactions from community bankers.  Many IBAT members who responded to IBAT's breaking news email last week were relieved that federal regulators abandoned preliminary plans to apply complicated risk weighting categories to various real property assets.

Bankers also rejoiced when learning that community banks under $250 billion in assets have an option to opt out of marking to market the value of their bond and securities portfolios (AOCI) and the potential devastating impact that requirement would have meant for capital impairment as rates begin to rise. Still others (banks under $15 billion) celebrated the grandfathering of Trust Preferred Securities consistent with the phase out (2031) in the Dodd/Frank Financial Modernization Act.

While IBAT was disappointed that regulators chose not to provide an outright Basel III exclusion for community banks under $50 billion, as advocated in IBAT's comment letter, IBAT President and CEO Chris Williston offered these observations. "Generally, we are ecstatic with the final rule.  While we didn't get everything we hoped for, we commend the regulatory community for listening to our concerns and making the necessary adjustments with the realization that community banks operate under a different business model than the large systemically important banks and deserve special considerations and exemptions accordingly."

ICBA has raised concerns about the new threshold limits of mortgage servicing rights which could affect some members who maintain large mortgage portfolios and the new capital conservation buffer (2.5% of risk-weighted assets) that will be required under the proposal. The Fed has provided a one page guide on the implications of the final rule on community banks that can be found here.

So what's next?  The FDIC and the OCC are both expected to approve identical final rules this week. Once approved by all three agencies, the new Basel III requirements will go into effect for community banks under $50 billion on January 1, 2015 barring any Congressional attempts to modify the final rules. Lawmakers are carefully reviewing the implications of the new rules and it is possible that legislation will be introduced to further modify or eliminate the rule entirely prior to its implementation.

Staff contact: Chris Williston, cwilliston@ibat.org, 512-474-6889

Week in Review July 5, 2013

Judging by the “ooooo’s” and “ahhhh’s” being heard around trading rooms [Friday] morning, one might think that market participants were still enjoying [Thursday] night’s 4th of July fireworks. Well, think again. The source of today’s expressions of amazement and wonder was a better-than-expected Jobs Report from the Bureau of Labor Statistics (BLS). It was announced this morning that not only did June’s 195k jump in Non-Farm Payrolls beat the market’s expectation of +165k, May’s reported 175k gain was upwardly revised to 195k with April’s +50 recount bringing the two month net revision total to +70k. Things are/were looking up! Looking up, however, would not help one find out where bond prices have gone. In early morning trading, thin though it is, a 1 ½ point slide in the price of the Treasury’s Benchmark Ten Year Note has taken that issue’s yield up to 2.70%; a level not seen since August 2011... Read more in the Baker Market Update.

God Bless America

Our nation celebrates its 237th birthday this week and despite the many challenges facing our country all Americans pause to celebrate the freedom we enjoy.  We are reminded of the countless men and women who have fought valiantly throughout our history to preserve those freedoms and all who have served or are serving the public good throughout this nation.

Your IBAT family wishes you a fun-filled and safe Fourth of July holiday.  Our offices will be closed July 4 and 5 in observance.

May God continue to bless the United States of America and Main Street community banks!

Week in Review: June 28, 2013

From a galloping horse, one might be hard pressed to see what Ben Bernanke and Paula Deen have in common. Both, it seems, have had difficulty lately in being understood by their respective followers. For Ms. Deen, the problem may lie with her message; for Mr. Bernanke, the problem may lie with his audience. Ben’s audience, which is pretty much everybody, seems to have heard things that were never actually said. So, it’s been an interesting week as a veritable Murderer’s Row of Fedspeakers have gone to great lengths to clarify the Chairman’s previous clarification. Attempts to assuage the markets’ vexation have focused on reassurances that monetary policy is not reversing course. Remarks made yesterday by New York Fed President William Dudley were supposed to remind everyone that it will be, as it has been, the performance of the economy that determines the flavor of monetary policy. Nevertheless, markets remained roiled as the Benchmark Treasury Ten Year note reached a yield of 2.61% before returning to something nearer the 2.50% level... Read more in the Baker Market Update.

4th of July Office Hours

In observance of the July 4th holiday, the IBAT offices will close at 4 PM on Wednesday, July 3, 2013, and will remain closed for the remainder of the week.  Business hours will resume to normal on Monday, July 8.

ICBA Payments Survey

ICBA seeks your assistance in setting a payments course that focuses on emerging issues of great importance and impact to community banks. Please take a few moments to complete the 2013 Community Bank Payment Survey between now and Friday, June 28.  

Findings will enable ICBA to:

  • Communicate community bank payment trends and directions to legislative, regulatory, and other rulemaking entities.
  • Prioritize its payment strategies and identify efforts to assist community bankers in charting a payment course.
  • Develop a peer-comparison tool that can be used to measure community banks’ current payment activities and help them reaffirm their strategic direction.

Community bankers who complete the survey by June 28th will have the opportunity to be entered into a cash drawing, with prizes totaling $1,000.