Law and regulation

The city of Miami has sued Bank of America, Citibank and Wells Fargo in U.S. federal court in Florida, for discriminatory mortgage lending practices against minority residents that resulted in a rash of foreclosures, city officials said Thursday.

Representative Mel Watt, who will leave Congress to become regulator of Fannie Mae and Freddie Mac, said he will delay a planned increase in the fees the U.S.-owned companies charge to guarantee mortgages.

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By assessing nearly $100 million in fines and restitution against Ally Financial on Friday, regulators sent a warning shot to all indirect auto lenders that they will be severely penalized if partnering dealerships charge higher interest rates or fees to minorities.

The Office of the Comptroller of the Currency has taken disciplinary action against the banking software provider Jack Henry & Associates for failing to get a processing center damaged by Hurricane Sandy up and running in a timely manner.

A recap of the informed opinions (and discussions they generated) on BankThink this week.

The Senate voted 59-34 Friday to end debate on the nomination of Janet Yellen to head the Federal Reserve.

Ally Financial (GKM) and Ally Bank will pay $98 million in fines and restitution to settle government claims that they discriminated against minorities through their indirect auto lending business.

Hudson Valley Holding (HVB) in Yonkers, N.Y., has hired a former regulator to be chief risk officer for its bank.

The American Association of Bank Directors and the Independent Community Bankers of America are objecting to a provision in the Volcker Rule requiring banks to shed trust-preferred securities.

First Citizens Banc (FCZA) in Sandusky, Ohio, has raised $25 million to exit the Troubled Asset Relief Program.

Ally Financial (GKM) and Ally Bank will pay $98 million in fines and restitution to settle government claims that they discriminated against minorities through their indirect auto lending business.

Compliance is a top growing expense, the regulatory bar has increased, banks needs better talent management and cybersecurity is everyone's problem.

Guidance released by regulators meant to clarify the impact of the Volcker Rule on small institutions was quickly rejected by banks.

Although Ocwen Financial agreed to pay more than $2 billion to settle allegations it mishandled foreclosures and mortgages for thousands of borrowers, it could have been even worse for the country's largest nonbank servicer.

In the space of just a few hours, regulators issued -- and banks condemned -- guidance meant to clarify the impact of the Volcker Rule on small institutions.

A hike in guarantee fees could encourage banks to retain loans they might have otherwise sold to Fannie or Freddie, but observers are skeptical that it will accomplish its true mission of jump-starting the market for private-label mortgage securitizations.

Regulators raised more concerns on Thursday that some institutions might take heightened risk by seeking profits from locking into longer-term fixed yields and diving into complicated growth markets such as oil, gas and leveraged lending.

A bipartisan group of lawmakers is urging regulators to reconsider a provision in the recently finalized Volcker rule that they warn could harm community banks that own trust-preferred securities.

Many small banks are well managed and provide value to their customers and investors. The more profound question for the economy is what effect the little guys have on the stability and efficiency of the U.S. financial system.