Open for Comment

Overdraft ProgramsA proposal by the Federal Reserve Board that would require banks to give customers a chance to opt out of overdraft programs before charging them one-time fees on automated teller machine withdrawals or debit card transactions. The central bank is seeking comment on whether banks must get customers' permission before enrolling them in an overdraft program, or must give them a chance to opt out of such programs. The proposal would not apply to overdrafts caused by checks, automated clearing house transactions, or preauthorized transfers. Expected to be published soon in the Federal Register with comments due in 60 days.

Appraisal Standards

Proposed guidance by federal banking and thrift regulators that would strengthen the independence of the appraisal process. The guidance seeks to emphasize the importance of the independence of an institution's appraisal and evaluation program, and it requires a paper trail that would support an institution's credit decision. Published Nov. 17 in the Federal Register. Comments due Jan. 20.

Recent Actions

Builder-Affiliate RuleThe Department of Housing and Urban Development said Wednesday that it would delay for 90 days implementation of a rule that bans home builders from offering incentives to borrowers for choosing an affiliated lender. The rule had been scheduled to take effect Jan. 16. The rule is the subject of a lawsuit between HUD and the National Association of Home Builders, which argues the agency exceeded its authority.

CRA Guidance

Regulators finalized a set of questions and answers on Tuesday designed to help banks comply with the Community Reinvestment Act. The release offered guidelines for investing in nationwide community development funds and withdrew a controversial change to a question about legally binding commitments to invest in development funds.


The Federal Deposit Insurance Corp. announced Jan. 2 that it had signed a letter of intent to sell IndyMac Federal Bank to a private-equity consortium led by the head of Dune Capital Management LP. IMB HoldCo LLC would buy the battered Pasadena, Calif., lender for $13.9 billion and recapitalize the $26 billion-asset thrift with roughly $1.3 billion in cash.

Under a loss-sharing agreement, the new holding company would cover 20% of losses on a pool of IndyMac loans, and the FDIC would bear the vast majority of the remaining losses.

Overall, the agency estimated that the failure of IndyMac Bancorp will cost $8.5 billion to $9.4 billion, potentially topping a prior estimate of $8.9 billion. Losses include a $6.3 billion payment to the Federal Home Loan Bank of San Francisco for its advances to IndyMac and $341.4 million in penalties for paying off these advances early.

Call Reports

Federal regulators reminded banks Dec. 31 of a change in their fourth-quarter call reports to reflect higher deposit insurance coverage. A letter from banking regulators said banks opting for unlimited coverage of zero-interest checking deposits must record which of those deposits exceed the standard insurance limit of $250,000. The regulators also told banks they must still use the former standard insurance limit of $100,000 per account as a benchmark in reporting other data for uninsured deposits.


The Treasury Department said Dec. 29 that it gave GMAC LLC, the financing arm of General Motors Corp., $6 billion in support from the Troubled Asset Relief Program.

Under the agreement, the Treasury has purchased $5 billion in senior preferred stock with an 8% dividend from GMAC. In return, GMAC will issue warrants to the agency in the form of additional preferred equity in an amount equal to 5% of the preferred stock purchase that will pay a 9% dividend if exercised.

The Treasury also said it would lend up to $1 billion to General Motors so the automaker can participate in a rights offering at GMAC's reorganization as a bank holding company.


The Fed said Dec. 24 that it had approved GMAC's application to become a bank holding company. The central bank acknowledged that the company faced "unique issues" but said GMAC would diversify its activities and has modified in significant ways its agreement with GM to provide customer and dealership financing.

The Fed also issued an order that GM and Cerberus Capital Management, the majority owner of GMAC, could not continue to hold controlling stakes in the new bank holding company since their activities fall outside of financial services.

Mod Defaults

The Office of the Comptroller of the Currency and the Office of Thrift Supervision released a report Dec. 22 finding high redefault rates among modified mortgages. The report said borrowers had missed payments within the first three months of a new mortgage in 42% of privately securitized loans that had been modified in the first quarter, and within the first six months in 60.8% of such loans. The report also said modified loans were likelier to succeed if servicers continued to hold the loans on their books.


The FDIC announced Dec. 19 that CompuCredit Corp. will pay $116 million and reform its practices to settle charges the Atlanta marketing firm misled subprime credit card users. CompuCredit must provide $114 million in credits to customers for fees regulators say the company did not properly disclose. It will also pay $2.4 million in civil money penalties.

The FDIC and Federal Trade Commission initially sought $150 million from the company in June, claiming that CompuCredit and three banks that had used its marketing were compelling customers to open accounts with deceptive credit limits.

Credit Cards

The Fed, the OTS, and the National Credit Union Administration finalized a rule Dec. 18 that defines unfair and deceptive credit card practices. The rule included a ban on double-cycle billing and bars a company from raising interest rates on a consumer for reasons unrelated to that card account. In a related move, the Fed also finalized a separate rule that dictated new credit card disclosures.

Maxxam Suit

The FDIC settled a 13-year dispute Dec. 18 with Maxxam Inc., a Houston company whose businesses include real estate and development, over redwood trees and a failed thrift. The FDIC agreed to pay $10 million to Maxxam to resolve a lawsuit in which Charles Hurwitz, Maxxam's chief executive, alleged the agency had been part of a scheme to pressure him into giving 4,000 acres of redwood trees in exchange for debt forgiveness.

State Banking Conditions

The FDIC on Dec. 17 released its third-quarter report of state-by-state banking and economic conditions. The most recent version of its State Profiles sums up regional banking trends — including asset quality, earnings, and loan concentrations, among other indicators — in all 50 states, Puerto Rico, and the Virgin Islands.

FDIC Budget

The FDIC on Dec. 16 approved an 84% increase, to $2.24 billion, in its 2009 budget, almost entirely because of a massive funding increase for receivership operations.

The agency's receivership budget will rise 567%, to $1 billion, nearly half of its 2009 operating budget. The FDIC budget includes the addition of 1,450 new, mostly temporary, positions since the beginning of 2008. The 30% increase in staffing includes 832 new failure-related positions.

Premium Rates

The FDIC finalized premium rates Dec. 16 for the first quarter of 2009. The agency will charge most institutions 12 to 14 cents per $100 of domestic deposits. It plans to finalize assessments for subsequent quarters, and revisit proposed changes to its insurance pricing system, at a meeting early this year. The agency has proposed premium rates of 10 to 14 basis points starting in the second quarter.

Counterparty Agreements

The FDIC finalized a rule Dec. 16 that requires troubled institutions to give the agency records on credit default swaps and other agreements known as qualified financial contracts that a bank holds with counterparties. The requirements are meant to help the FDIC resolve those agreements by the first business day after a failure.

The final rule provided some leniency to the industry compared with a July proposal, including a doubling of the compliance time to 60 days after an institution learns it must provide records, and an easing of record-keeping requirements for institutions with less than 20 qualified financial contracts.

Merger-Related Goodwill

Federal regulators finalized a rule Dec. 16 designed to ease the market for mergers and acquisitions. Before the rule, acquirers had to deduct goodwill or other intangible assets tied to bank deals from their regulatory capital. The new policy allows banks to hold off on deducting a portion of that goodwill.

Bank Failures

Two failures on Dec. 12 brought the 2008 total to 25.

Georgia suffered its fifth bank failure of the year as regulators shut the $572 million-asset Haven Trust Bank in Duluth. The FDIC said all of its $515 million of deposits will be assumed by BB&T Corp.'s main bank subsidiary in Winston-Salem, N.C.

Sanderson State Bank in Texas was also closed. Pecos County State Bank in Fort Stockton, Tex., agreed to take over Sanderson State's $28 million of deposits for a 0.5% premium and buy about $3.8 million of the failed bank's $37 million of assets, the FDIC said.

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