Mortgage bankers have been facing repeated threats of Community Reinvestment Act legislation regulation virtually alone, but now others are being targeted also, the latest being warehouse lenders. Federal Reserve Governor Lawrence B. Lindsey, addressing the National Association of Affordable Housing Lenders in Washington June 6, said the Fed was considering including wholesale lenders in revised CRA reform regulations. Warehouse lenders provide funds to bankers and other mortgage lenders on a short-term basis but because they do not make direct consumer loans, they may prove difficult to place under CRA regulationsa point Lindsey acknowledged. Nonetheless, the Fed was looking at that option, he said.
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The Cleveland-based bank is projecting steady growth in net interest income even as credit losses remain manageable. But Chairman and CEO Chris Gorman also said that he thinks a recession is likely.
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The first-quarter increase involved commercial real estate loans, including some problematic multifamily loans and an office credit, but none of the criticized loans were to consumers, officials at the Dallas company say. Further CRE deterioration is anticipated.
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The Detroit-based company is exploring ways to make more consumer auto loans without running afoul of stricter capital standards that are expected from the Federal Reserve. Possible approaches include more securitizations and the use of credit risk transfers.
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The House Financial Services Committee also sent to the full House two bipartisan bills, including one that would prevent large banks from opting out of having to recognize Accumulated Other Comprehensive Income in regulatory capital.
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Charge-offs and nonperforming loans rose at the Georgia bank in the first quarter. But it blamed the problem on one large client and said the matter has been resolved.
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Amid healthy first-quarter loan growth and improving credit quality, Discover Financial Services slashed its profits by $800 million to offset remediation costs from a 16-year period when it overcharged certain merchants.
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