WASHINGTON FDIC Too Cautious In Chopping Premiums?
The Federal Deposit Insurance Corp. relied on overly conservative assumptions when proposing cuts in deposit insurance premiums, some experts say. Even after the cuts, the agency is going to raise a lot more revenue than it needs, says Jim Chessen, chief economist for the American Bankers Association.
Dredging up a perennial revenue option, the Clinton administration's 1996 budget will propose charging state banks and bank holding companies for federal exams. America's Community Bankers immediately slammed the plan as "bad public policy."
Taking aim at a key bank lending product, the Clinton budget calls for the government to take over the entire student loan program by 1997. The industry reacted with surprise. "Everything is moving toward privatization, not 'governmentization,'" said Joe Belew, president of the Consumer Bankers Association.
Under attack from the new Republican congressional majority, federal regulators said they would curb their use of a controversial legal doctrine in lawsuits involving failed thrifts and banks.
19802 REGIONAL BANKING Australians Plant Flag With Michigan Deal
With its $1.56 billion bid for Michigan National Corp., National Australia Bank Ltd. moved to join the ranks of foreign banks with a strong, full-service foothold in U.S. retail and commercial markets. The deal is in keeping with an acquisition strategy that National Australia has carried out in Britain and Ireland, where it owns a network of medium-size regional banks.
Struggling to fend off a dissident proxy challenge, Compass Bancshares has enlisted the aid of some big Wall Street guns. Birmingham, Ala.-based Compass confirmed that it had hired Wachtell, Lipton, Rosen & Katz for legal advice and CS First Boston Corp. as its investment banker.
Household International's banking division has reached agreements to sell off $2.9 billion of deposits and 90 branches in three states to focus on its core midwestern markets.
The IRS' decision to stop indicating whether customers are entitled to claimed tax refunds used to collateralize loans is causing some banks to quit the business. Bankers fear that without credit checks from the federal government, these typically small-loan customers will take the money and run.
18096 COMMUNITY BANKING Bank Claims Fraud in $10M Warehousing Loss
Fidelity Bank of Fort Worth, Tex., which six months ago pushed for limits on the state bank commissioner's power to regulate its mortgage warehousing business, says it has taken a hefty loss on the unit. The bank said it could lose up to $9.8 million after taxes for what it describes as procedural lapses in the unit and fraud perpetrated against it.
The Office of Thrift Supervision has lost its battle to ban a former California thrift executive. The Ninth U.S. Circuit Court of Appeals denied without comment an OTS request that the court rehear OTS arguments to uphold an industry ban against Young Il Kim, former president of Delta Savings Bank.
William J. McDonough, the president of the Federal Reserve of New York, is taking the industry to task over continuing reports of racial discrimination. In a speech before the New York State Bankers Association, Mr. McDonough lashed out at lending bias caused by either "habit and culture" or "deliberate acts."
A Nebraska legislative proposal that would exempt credit unions from a state financial institutions tax and greatly expand their reach has angered the state's bankers.
A New Jersey golf pro wants a $447 million-asset thrift holding company in which he owns stock teed up for sale, but management and shareholders have knocked his proposal into the rough. Pulse Bancorp shareholder Steele King introduced the proposal two weeks ago.
18134 SMALL BUSINESS Do SBA Loans for Realty Still Make Sense?
The draconian budget cuts facing the Small Business Administration have some lenders questioning whether the agency should continue guaranteeing real estate loans. They argue that such credit does little for the economy.
It may not be Ronald Reagan's federalism, but a small business loan program offered by Oregon has bankers saying it is easier to use and better than those offered by the U.S. Small Business Administration.
18117 COMPLIANCE Atlanta Home Loan Bank Has a CRA Best Seller
The government is doing a booming business with a lending analysis product. Over the past three years, the Federal Home Loan Bank of Atlanta's CRA Geographics has attracted about 250 financial institutions.
As banks rely more on technology for services such as home banking, they will encounter new compliance challenges. Rapid technological changes will require banks to be faster, better, and more convenient, risk managers gathered in San Antonio were told.
18214 CREDIT UNIONS Credit Unions Stage Run on Seized Corporate
More than one-quarter of Capital Corporate Federal Credit Union's deposit base evaporated by midday Tuesday as 154 nervous members yanked funds. The ailing corporate credit union - which was seized by the government Jan. 31 after suffering huge losses on mortgage derivatives - lost 28% of its deposits, shrinking to $576 million.
Mark Griffith used Ivy League background and street savvy to co-found the nation's first hip-hop credit union, in the Bedford-Stuyvesant neighborhood of Brooklyn
19764 CREDIT/DEBIT/ATMs New Highs, Mostly with Same Old Customers The bank credit card business grew at a healthy pace last year, and according to well-established patterns. The vast majority of new accounts were opened by people who already had other cards, and the growth in receivables was concentrated among industry leaders like Citibank, MBNA, AT&T, and First USA.
Banc One Corp. announced a breakthrough in selling the Triumph software that it developed with Andersen Consulting. It sold a license to American Express, which intends to use the system in streamlining global charge card operations.
Wachovia Corp. introduced a Prime Rate for Life credit card, promising customers hundreds of dollars in interest savings over competing products.
Chase Manhattan Bank and Nynex Corp. unveiled a joint credit card, to be offered beginning in March to telephone customers in New York. Marketing in other northeastern states will follow.
Internet Inc., the Virginia-based company that operates the Most automated teller machine network, announced an alliance with SmartPay Processing Inc. SmartPay will be a "preferred provider" of home banking and bill paying services for members of Most.
18104 INVESTMENT PRODUCTS Comerica Sells Insurance At Home-State Branches
In a fresh sign of banks' relentless pursuit of fee income, Comerica Inc. has begun selling insurance throughout its Michigan branch network. The $31.6 billion-asset banking company, based in Detroit, kicked off sales of life, disability, and long-term care insurance last month at 290 branches.
The latest rise in interest rates may finally calm the financial markets enough to spur lagging sales of mutual funds, some bank executives said. In interviews, they said they were confident that the Federal Reserve had made its last interest rate hike for a long while, and that stability would return to the stock and bond markets.
The chairman and chief executive of State Street Boston Corp. has proclaimed a heady growth goal for its sizable money management unit. Marshall N. Carter said he expects the new unit that oversees the banking company's institutional money management, personal trust, and defined contribution retirement services "to grow at a rate of 30% annually through the end of the decade."
As Benham Management International was acquired by Twentieth Century Cos., experts wondered whether banks had missed another chance to feast at the mutual fund merger banquet.
18165 MORTGAGES Bank of New York May Liquidate Mortgage Unit
In a stark sign of the downturn in home lending, Bank of New York Co. is poised to liquidate its sizable mortgage unit. After failing to find a buyer for its Arcs Mortgage, Bank of New York has decided to shut down the unit's production offices, lay off most of its 500 employees, and sell a $9 billion servicing portfolio, according to sources close to the unit. The company said the unit is under review.
American Express has hired Prudential Home Mortgage to market residential loans to holders of its credit cards, the latest sign of a boom in affinity lending.
PNC Mortgage Corp. and Coldwell Banker Corp. are launching the nation's largest joint venture to sell residential loans to homebuyers. More than 340 company-owned Coldwell offices will be offering mortgages by the third quarter and will be joined later by its 2,066 franchise offices.
Home equity lending could soon take a giant step toward becoming reality in Texas, where the loans are now banned. The state legislature is expected to consider changing the 156-year-old law against the loans.
18152 TECHNOLOGY Data Suggest that EDI Can FlyIf Banks Buy In
Electronic data interchange may finally be ready to deliver on its promise, according to a survey by the National Automated Clearing House Association. Of 220 companies, 64% said they would use the paperless communications and payment technique if their banks were "EDI capable."
Harbinger EDI Services, an Atlanta-based provider of electronic data interchange services, established a business unit to explore the use of the technology over the Internet.
Electronic Data Systems Corp. topped $10 billion in revenues for the first time last year, and the financial industry contributed $1.35 billion. Two of the company's fourth-quarter highlights were long-term outsourcing contracts with American Express Bank and INA Group, a major Italian insurer.
Cybercash Inc. has begun working with banks on secure methods for processing payments over the Internet and other open networks. William Melton, who founded the company last year, hopes to duplicate his earlier success with Verifone Inc., now the leading provider of card authorization terminals.
18239 FINANCE Dim Profit Outlook Brings Out the Bears
The latest in a series of warning flags about bank earning prospects was raised by Francis X. Suozzo of S.G. Warburg & Co., who advised his clients to reduce holdings of money-centers and West Coast banks.
NationsBank Corp. won the assignment to arrange a $1 billion loan for HealthSouth Rehabilitation, in a deal that underscores the attractiveness of the bank loan market to below-investment-grade companies.
A growing conviction that they could not prevail over dissident shareholders led chief executive Robert Mylod and the directors of Michigan National Corp. to make the agreement to sell the company, sources close to the deal said.
A soft landing for the economy would be the best of all worlds for banks - but economists were doubtful the Fed can engineer one.
BankAmerica Corp.'s credit ratings were affirmed by Standard & Poors after the bank announced it would repurchase up to 11% of its shares.