Flood insurance

The first government shutdown since 2019 will slow flood insurance originations and new Small Business Administration loans, though self-funded banking regulators will continue operating as usual.

The FEMA-operated program has over 4.7 million policies in force, and lawmakers have kept it intact via dozens of short-term extensions since 2017.

Lawmakers criticized the Biden administration's Risk Rating 2.0 effort — which was meant to reduce insurance premiums by developing more refined models — as ineffective, arguing that the program has increased rate premiums in vulnerable areas.

Frequent federal budget impasses increase insurance concerns and threaten to jack up financing costs that are already straining lenders.

The indictment of Sen. Bob Menendez, D-N.J., is inconvenient for some Democratic priorities, but unlikely to impact a cannabis banking bill up for debate in the Senate Banking Committee.

Lawmakers on the Senate Banking Committee voiced some scattered support for changes to improve the finances of the National Flood Insurance Program, but comprehensive reform appears out of reach. 

The National Flood Insurance Program has been without a long-term reauthorization for five years, and it seems poised to stay that way after its first congressional hearing since 2019. 

Per bank groups’ request, banking regulators clarified that institutions won’t receive supervisory action for falling short of the guidance.

A congressional hearing on reforming the National Flood Insurance Program focused on whether mortgage companies need to disclose incremental risks even if a homeowner lives outside a federally designated floodplain.

The White House directive may lead regulators to develop new mortgage underwriting standards, stress-test requirements and flood insurance policy, observers said.

Mortgage lenders have much riding on a yearslong effort to overhaul a program that requires homeowners to hold policies in flood-prone areas. A congressional panel meeting to discuss the issue was once again split between lawmakers from storm-threatened states and those concerned about government costs.

The Buffalo, N.Y., bank will pay a $546,000 penalty, which will be passed on to the National Flood Insurance Program to help offset costs.

For decades lawmakers have ignored broad structural flaws in the National Flood Insurance Program, which underpins millions of home mortgages. And the problem is only getting worse.

The GOP is unlikely to discuss much policy that affects financial services this week during its national convention, though there could be remarks addressing controversial changes to the U.S. Postal Service.

The OCC said Citigroup's main bank subsidiary violated the Flood Disaster Protection Act by not ensuring that borrowers with homes in flood hazard areas had insurance coverage.

Bankers had worried about Rep. Maxine Waters' control of the Financial Services Committee, but many now say the Democrat’s working relationship with the panel’s top Republican is refreshing.

A group of 64 House lawmakers is pushing congressional leadership to incorporate premium caps and address a new methodology for assessing risk in flood insurance reform legislation.

Wisconsin Republican Sean Duffy routinely pushed to restructure the Consumer Financial Protection Bureau and authored a bill to reform the flood insurance program.

Members from states threatened by storms say their proposal is better for consumers than recent legislation passed by the House Financial Services Committee.

Lenders should get a boost from refinances and purchase loans; BB&T and SunTrust Banks’ name choice questioned.