This blog will share the new developments in the field of banking in the entire world.
Friday, March 26, 2010
Dodd seeks Senate debate on bank reform in April
WASHINGTON ) - Senate Banking Committee Chairman Christopher Dodd, D-Conn., on Friday said he hopes to have the full Senate debate sweeping bank reform legislation in the second week of April. "It is my hope that shortly after our return in the second week of April that we will come to the floor of the United States Senate to debate about how we reform the financial services sector of our nation," Dodd said on the Senate floor.
Bank Of America Set To Offer More Principal Reductions For Underwater Mortgages
Bank of America is looking to offer more principal reductions for homeowners that have lost value in their homes and now have an underwater mortgage. In an article on money.cnn.com, it states that while not all homeowners are going to be able to get a principal reduction, homeowners that are greatly distressed in their mortgages may soon find help.
Homeowners that have an underwater mortgage, meaning they owe more than their home is worth, have been walking away from their home and as this is becoming more and more common there is also the trouble being caused since more and more homes are losing value.
Principal reductions are becoming more common, but banks are still resistant to principal reductions on a more widespread scale. Many feel that homeowners that have an underwater mortgage have an obligation to stick with their mortgage since there are no guarantees that a home’s value will rise.
However, with the extent that some homes have lost value, it’s not hard to see why someone that views their home as an investment would simply want to get out. Yet, it is hoped that principal reduction programs are going to give homeowners the incentive to stick with their mortgages and see a bright spot in a gloomy housing situation.
Homeowners that have an underwater mortgage, meaning they owe more than their home is worth, have been walking away from their home and as this is becoming more and more common there is also the trouble being caused since more and more homes are losing value.
Principal reductions are becoming more common, but banks are still resistant to principal reductions on a more widespread scale. Many feel that homeowners that have an underwater mortgage have an obligation to stick with their mortgage since there are no guarantees that a home’s value will rise.
However, with the extent that some homes have lost value, it’s not hard to see why someone that views their home as an investment would simply want to get out. Yet, it is hoped that principal reduction programs are going to give homeowners the incentive to stick with their mortgages and see a bright spot in a gloomy housing situation.
Thursday, March 25, 2010
"earned principal forgiveness"
A Bank of America (NYSE: BAC) program that will start in May will allow mortgage holders who are significantly underwater to reduce the principal on their mortgages over five years. Critics of loan modification efforts to date have been calling for such plans, especially for those stuck with negative amortization loans in which principal builds in return for lower monthly payments.
Bank of America's program, according to Reuters, offers "earned principal forgiveness" that calls for the bank to offer an interest-free forbearance of principal that the homeowner can turn into forgiven principal annually over five years, provided they stay current on their payments. Over five years, the loan value can be brought back to the home value if all goes well.
This is an interesting move, one that follows a suit that charges Bank of America has failed in its attempt to modify mortgages so far. The announcement of the new program also follows a report by the TARP watchdog that rips the home loan modification effort so far. We'll have to see how many people are able to access the plan. By the time the program really gets rolling, home values may be moving up a bit
Bank of America's program, according to Reuters, offers "earned principal forgiveness" that calls for the bank to offer an interest-free forbearance of principal that the homeowner can turn into forgiven principal annually over five years, provided they stay current on their payments. Over five years, the loan value can be brought back to the home value if all goes well.
This is an interesting move, one that follows a suit that charges Bank of America has failed in its attempt to modify mortgages so far. The announcement of the new program also follows a report by the TARP watchdog that rips the home loan modification effort so far. We'll have to see how many people are able to access the plan. By the time the program really gets rolling, home values may be moving up a bit
Tuesday, March 23, 2010
NEWS FROM SUNTRUST BANK ATLANTA
ATLANTA — SunTrust Banks Inc. on Tuesday said it is creating a consumer unit, as the regional bank follows larger rivals in reorganizing ahead of regulatory reform.
The Atlanta-based bank also shuffled its commercial and investment banking operations.
The Obama Administration has called on banks to improve their consumer operations after the recession revealed problems in the sector. And Congress is considering several consumer-focused regulatory changes, including adding a division to the Federal Reserve or creating a freestanding agency to oversee consumer banking products like savings accounts, mortgages and credit cards.
SunTrust is one of the top 10 issuers of debit cards in the U.S.
The bank named C.T. Hill, 59, to lead the new consumer banking unit, which includes its deposit and lending products, including mortgages and credit cards. Hill previously ran the bank's Mid-Atlantic banking group and retail operations.
Thomas G. Kuntz, 53, was named head of SunTrust's geographic banking organization, which will oversee 16 units that comprise nearly 1,700 branches in 11 states and the District of Columbia. He was head of the company's Florida banking group and its commercial business.
Amy W. Medendorp, 48, will now lead the commercial business. She was co-head of SunTrust's corporate and investment banking. Hugh S. (Beau) Cummins III, 47, takes over leadership of corporate and investment banking after sharing that role with Medendorp.
The Atlanta-based bank also shuffled its commercial and investment banking operations.
The Obama Administration has called on banks to improve their consumer operations after the recession revealed problems in the sector. And Congress is considering several consumer-focused regulatory changes, including adding a division to the Federal Reserve or creating a freestanding agency to oversee consumer banking products like savings accounts, mortgages and credit cards.
SunTrust is one of the top 10 issuers of debit cards in the U.S.
The bank named C.T. Hill, 59, to lead the new consumer banking unit, which includes its deposit and lending products, including mortgages and credit cards. Hill previously ran the bank's Mid-Atlantic banking group and retail operations.
Thomas G. Kuntz, 53, was named head of SunTrust's geographic banking organization, which will oversee 16 units that comprise nearly 1,700 branches in 11 states and the District of Columbia. He was head of the company's Florida banking group and its commercial business.
Amy W. Medendorp, 48, will now lead the commercial business. She was co-head of SunTrust's corporate and investment banking. Hugh S. (Beau) Cummins III, 47, takes over leadership of corporate and investment banking after sharing that role with Medendorp.
BANKING NEWS FROM JAPAN
TOKYO, March 24 (Reuters) - Japan's vice banking minister Kohei Otsuka said on Wednesday that the government had no intention of making Japan Post a machine to support the government bond markets.
He also said it would be difficult for Japan Post to reduce its holdings of government bonds in the near-term.
Otsuka said it would be up to the management of Japan Post to consider how to invest any new money it may have in the future. (Reporting by Hideyuki Sano
He also said it would be difficult for Japan Post to reduce its holdings of government bonds in the near-term.
Otsuka said it would be up to the management of Japan Post to consider how to invest any new money it may have in the future. (Reporting by Hideyuki Sano
"Restoring American Financial Stability Act of 2010"
On Monday the Senate Banking Committee passed the "Restoring American Financial Stability Act of 2010" on a 13-10, party-line vote. The legislation, drafted by committee chairman Chris Dodd, gives the Federal Reserve power to regulate any large company in America. When considered alongside similar legislation that passed the House of Representatives in December, at least part of the intent of the bills' sponsors becomes clear. The current proposals for "financial" reform are stalking horses allowing government intervention into virtually every facet of the U.S. economy.
The bill that passed the House proposed to create a systemic risk regulator with the power to look into any company in America to determine if it poses a "threat" to the economy. If so, the bill gave the Federal Reserve power to order the company to segregate its financial dealings into a separate business to be regulated as a bank holding company. Remarkably the provision was aimed not just at financial firms like insurers or securities and investment businesses. Under its terms the bill would apply to potentially every large company in America, no matter its primary line of business. Were there any thought that this was a mistake, or overly zealous legislative drafting, the plain language of the Senate financial reform legislation should dispel all doubts. The Senate bill is even more explicit in giving the Fed power to regulate commercial, non-financial services companies.
Under both bills a company that is deemed to be "financial" can be made subject to special examination and scrutiny by the systemic risk regulator. Whether or not a company is financial comes down to whether the company is engaged in "financial activities," a term that comes from the Bank Holding Company Act of 1956 and includes things like lending money, holding assets of others in trust, investing in securities, trading derivatives, or even leasing real estate and offering certain consulting services. In short "financial activities" are so broadly defined as to include things non financial businesses do everyday like extending credit to customers and holding downpayments on deposit, or even managing a company's own investment portfolio.
The House bill contained an important if insufficient caveat for companies that were engaged in financial activities as part of their regular treasury operations, but even with this exception many of America's leading manufacturers, retailers and service providers would potentially be roped into the new regulatory scheme. Under Senator Dodd's draft the government's reach is even less restrained: any company "substantially" engaged in financial activities can be made subject to regulation by the Federal Reserve as though it were a bank holding company. For the curious, what is "substantial" is to be determined by the Fed.
Despite non-binding staff explanations to the contrary, there is no mystery as to who is being targeted. Under the bill the Fed gets regulatory authority over bank holding companies with greater than $50 billion in assets, and "nonbank financial companies". As the Fed already regulates bank holding companies the new twist is that non-banks become subject to Federal Reserve regulation for the first time. The language is unusually clear: if the new systemic risk regulator so chooses, any company engaged in routine business transactions can suddenly be deemed "financial" and subject to bank-like regulation.
The list of companies that might find themselves subject to new Federal Reserve regulation is as deep as the U.S. economy itself. An airplane manufacturer that holds customer down payments for future delivery, a large home improvement chain that invests its profits as part of a plan to increase revenues, and an energy firm that makes markets in derivatives are all engaged in "financial activities" and potentially subject to systemic risk regulation. Under the House bill, and even more so under the Dodd legislation, companies that had absolutely nothing to do with the financial crisis of 2008 are finding that they are the object of so-called "financial services reform".
Why would the systemic risk regulator seek to make regular American businesses subject to bank-like regulation? No doubt in part it is the belief in some quarters that the government can stop financial crises from happening if only it has enough power and influence over the economy. Even among true believers the near-collapse of the highly regulated banking sector should call that article of faith into question. But there is a more practical reason to seek to turn Walmart, IBM, Boeing and other Fortune 500 companies into "financial" businesses. Under both the House bill and the Dodd legislation it is these companies that are to be taxed to pay for winding up a "too big to fail" firm. If a company gets deemed systemically risky it is on the hook for bailing out financial firms that took on too much risk. Such a regime is neither fair nor sensible from an economic perspective, but existing taxpayers' money is already over-allocated; the Treasury needs the contents of new wallets to pay for the next crisis.
Senator Dodd's systemic risk proposal would authorize the Federal Reserve to have an unprecedented role in regulating the U.S. economy. This proposition deserves more scrutiny and debate than it has thus far received.
The bill that passed the House proposed to create a systemic risk regulator with the power to look into any company in America to determine if it poses a "threat" to the economy. If so, the bill gave the Federal Reserve power to order the company to segregate its financial dealings into a separate business to be regulated as a bank holding company. Remarkably the provision was aimed not just at financial firms like insurers or securities and investment businesses. Under its terms the bill would apply to potentially every large company in America, no matter its primary line of business. Were there any thought that this was a mistake, or overly zealous legislative drafting, the plain language of the Senate financial reform legislation should dispel all doubts. The Senate bill is even more explicit in giving the Fed power to regulate commercial, non-financial services companies.
Under both bills a company that is deemed to be "financial" can be made subject to special examination and scrutiny by the systemic risk regulator. Whether or not a company is financial comes down to whether the company is engaged in "financial activities," a term that comes from the Bank Holding Company Act of 1956 and includes things like lending money, holding assets of others in trust, investing in securities, trading derivatives, or even leasing real estate and offering certain consulting services. In short "financial activities" are so broadly defined as to include things non financial businesses do everyday like extending credit to customers and holding downpayments on deposit, or even managing a company's own investment portfolio.
The House bill contained an important if insufficient caveat for companies that were engaged in financial activities as part of their regular treasury operations, but even with this exception many of America's leading manufacturers, retailers and service providers would potentially be roped into the new regulatory scheme. Under Senator Dodd's draft the government's reach is even less restrained: any company "substantially" engaged in financial activities can be made subject to regulation by the Federal Reserve as though it were a bank holding company. For the curious, what is "substantial" is to be determined by the Fed.
Despite non-binding staff explanations to the contrary, there is no mystery as to who is being targeted. Under the bill the Fed gets regulatory authority over bank holding companies with greater than $50 billion in assets, and "nonbank financial companies". As the Fed already regulates bank holding companies the new twist is that non-banks become subject to Federal Reserve regulation for the first time. The language is unusually clear: if the new systemic risk regulator so chooses, any company engaged in routine business transactions can suddenly be deemed "financial" and subject to bank-like regulation.
The list of companies that might find themselves subject to new Federal Reserve regulation is as deep as the U.S. economy itself. An airplane manufacturer that holds customer down payments for future delivery, a large home improvement chain that invests its profits as part of a plan to increase revenues, and an energy firm that makes markets in derivatives are all engaged in "financial activities" and potentially subject to systemic risk regulation. Under the House bill, and even more so under the Dodd legislation, companies that had absolutely nothing to do with the financial crisis of 2008 are finding that they are the object of so-called "financial services reform".
Why would the systemic risk regulator seek to make regular American businesses subject to bank-like regulation? No doubt in part it is the belief in some quarters that the government can stop financial crises from happening if only it has enough power and influence over the economy. Even among true believers the near-collapse of the highly regulated banking sector should call that article of faith into question. But there is a more practical reason to seek to turn Walmart, IBM, Boeing and other Fortune 500 companies into "financial" businesses. Under both the House bill and the Dodd legislation it is these companies that are to be taxed to pay for winding up a "too big to fail" firm. If a company gets deemed systemically risky it is on the hook for bailing out financial firms that took on too much risk. Such a regime is neither fair nor sensible from an economic perspective, but existing taxpayers' money is already over-allocated; the Treasury needs the contents of new wallets to pay for the next crisis.
Senator Dodd's systemic risk proposal would authorize the Federal Reserve to have an unprecedented role in regulating the U.S. economy. This proposition deserves more scrutiny and debate than it has thus far received.
TOKYO, March 24 (Reuters) - Japan's vice banking minister Kohei Otsuka said on Wednesday that the government had no intention of making Japan Post a machine to support the government bond markets.
He also said it would be difficult for Japan Post to reduce its holdings of government bonds in the near-term.
Otsuka said it would be up to the management of Japan Post to consider how to invest any new money it may have in the future. (Reporting by Hideyuki Sano)
He also said it would be difficult for Japan Post to reduce its holdings of government bonds in the near-term.
Otsuka said it would be up to the management of Japan Post to consider how to invest any new money it may have in the future. (Reporting by Hideyuki Sano)
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