Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Office of Thrift Supervision

The federal bank regulatory agencies announced today that they will start conducting forward-looking economic assessments of large U.S. banking organizations as the Capital Assistance Program (CAP) gets underway. These assessments will be done on an interagency basis as a coordinated supervisory exercise to ensure they are carried out in a timely and consistent manner. Supervisors will work with institutions to estimate the range of possible future losses and the resources to absorb such losses over a two-year period.

Currently, the major U.S. banking institutions have capital in excess of the amounts required to be considered well capitalized. The CAP is designed to ensure that major U.S. banking organizations have sufficient capital to perform their critical role in our financial system on an ongoing basis and can support economic recovery, even in more severe economic environments.

The assessments will be conducted at eligible U.S. bank holding companies with assets exceeding $100 billion under two economic scenarios: a baseline and a more adverse scenario. The baseline scenario reflects a consensus expectation among private forecasters and the more adverse scenario reflects a deeper and longer recession than in the baseline. The agencies expect to complete the assessment process as soon as possible, but no later than the end of April 2009.

The agencies are issuing a set of Frequently Asked Questions (FAQs) with additional details about the assessment process. The FAQs are attached.

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(FDIC: PR-25-2009)

Attachment:
FAQs – Supervisory Capital Assessment Program – PDF (PDF Help)

Media Contacts:

The Federal Deposit Insurance Corporation (FDIC) announced today a settlement with CompuCredit Corporation, Atlanta, Georgia (CompuCredit), a company charged with deceptive marketing of subprime credit cards with three FDIC-supervised banks in violation of the Federal Trade Commission Act (FTC Act). Two of the banks previously settled with the FDIC.

The settlement will result in an order that will correct the FTC Act violations, and provide restitution of approximately $114 million to consumers in the form of credits for certain fees arising from the deceptive marketing practices. Eligible consumers whose current balances are less than the amount of credits to be applied will receive cash refunds, the aggregate amount of which is estimated to be approximately $3.7 million. All other eligible consumers will receive credits only. No action by consumers is required; eligible consumers will be contacted directly by CompuCredit. The credits and cash refunds will be verified by an independent accounting firm acceptable to the FDIC. The order also includes a civil money penalty (CMP) of $2.4 million.

In addition to restitution and a CMP, the order requires that credit card solicitations that include representations about credit limits or available credit disclose clearly and prominently, and on the same page, fees and other restrictions affecting initial available credit. The order also includes a broad prohibition against misrepresentations in the marketing of open-end credit products. In agreeing to the issuance of the order, CompuCredit does not admit or deny any liability.

"The enforcement actions brought by the FDIC and the settlement reached today underscore the FDIC's commitment to address the harm suffered by consumers due to inadequate credit card disclosures and predatory lending practices, particularly with certain subprime credit products, whether the harm is caused by FDIC-supervised banks or their institution-affiliated parties," said FDIC Board member Thomas J. Curry. "An institution's board of directors and senior management are ultimately responsible for managing activities conducted through third-party relationships, and identifying and controlling risks arising from such relationships, to the same extent as if the activity were handled within the institution." Director Curry also noted that the FDIC's Guidance for Managing Third-Party Risk, issued June 6, 2008, reinforces this principle.

The FDIC commenced enforcement actions on June 10, 2008, against CompuCredit, First Bank of Delaware, Wilmington, Delaware (FBD), and First Bank & Trust, Brookings, South Dakota (FBT), for violations of the FTC Act in connection with the marketing of three types of credit card products. The most significant claims, in terms of restitution, relate to a fee-based credit card that was marketed to consumers with low credit scores. The FDIC alleged that the solicitations failed to adequately disclose significant upfront fees and misrepresented the consumer's initial available credit. The solicitations appeared to offer credit cards with a $300 credit limit; however, consumers were immediately charged as much as $185 in inadequately disclosed fees, leaving them with as little as $115 in available credit.

Columbus Bank and Trust Company (CBT) settled with the FDIC prior to litigation by agreeing to a Cease and Desist Order requiring, among other things, clear and prominent disclosures of all fees and restrictions that affect initial available credit and a CMP in the amount of $2.4 million. CBT also agreed to a back-up restitution provision in the amount of $7.5 million, to be paid in the event CompuCredit did not provide restitution.

On October 9, 2008, FBD also settled with the FDIC on terms similar to those in the CBT settlement, except that the back-up restitution provision was smaller, and FBD also agreed to develop and implement, with the assistance of an outside consultant, significantly enhanced plans, policies, and procedures to improve its compliance management systems, particularly with respect to the oversight of third-party lending partners. FBD also agreed to reduce the number of its third-party lending relationships and paid a CMP of $304,000.

Separately, the Federal Trade Commission (FTC) announced settlement of its parallel federal court action against CompuCredit and Jefferson Capital Systems, a subsidiary of CompuCredit, for violations of the FTC Act and the Fair Debt Collection Practices Act (FDCPA).

Copies of the FTC settlement and the FDIC's Order to Cease and Desist, Order for Restitution, and Order to Pay are available at each agency's Web site. The FTC's Web site may be found at http://www.ftc.gov, and at the FDIC's Web site at http://www.fdic.gov.

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Attachment:
Order to Cease and Desist; Order for Restitution; and Order to Pay (PDF Help)

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,494 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-142-2008

The growing challenge related to liquidity issues in the current banking environment is highlighted in the Winter 2008 issue of Supervisory Insights, released today. "The extraordinary events of this past fall shine a bright light on the increasing importance of liquidity contingency planning for financial institutions," said Sandra L. Thompson, Director, Division of Supervision and Consumer Protection. "This issue of Supervisory Insights also addresses other critical issues facing the banking industry."

"The Changing Liquidity Landscape" describes how problems on the asset side of a bank's balance sheet can develop into a liquidity run and discusses steps that institutions can take to anticipate and mitigate liquidity risks.

As the U.S. population ages and life expectancy continues to lengthen, reverse mortgages are likely to become more popular. "Reverse Mortgages: What Consumers and Lenders Should Know" looks at the evolution of this product, identifies risks for consumers and lenders, offers suggestions for managing those risks and discusses key regulatory and supervisory concerns.

Bank supervisors are responsible for determining whether a particular banking practice should be considered unfair or deceptive for purposes of Section 5 of the Federal Trade Commission Act. "Unfair and Deceptive Acts and Practices: Recent FDIC Experience" describes what factors supervisors analyze to reach this determination. Using examples from a series of recent FDIC examination consultations, this article shares the methodology used by FDIC staff to perform compliance analyses and provides tips for avoiding potential violations.

The "Accounting News" feature describes key changes that will affect accounting for mergers and acquisitions under a revised standard issued by the Financial Accounting Standards Board. These changes will apply to business combinations occurring in fiscal years beginning on or after December 15, 2008.

Supervisory Insights provides a forum for discussing how bank regulation and policy are put into practice in the field, sharing best practices and communicating about the emerging issues that bank supervisors face. The journal is available on the FDIC's Web site at http://www.fdic.gov/regulations/examinations/supervisory/insights/index.html. Suggestions for future topics and requests for permission to reprint articles should be e-mailed to supervisoryjournal@fdic.gov. Requests for print copies should be e-mailed to publicinfo@fdic.gov.

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Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,534 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-141-2008

Notes from WorkAtHomeTruth: Here are links to items referenced in this press release:

Supervisory Insights This FDIC publication provides a forum for discussing how bank regulation and policy are put into practice in the field, sharing best practices, and communicating about the emerging issues that bank supervisors are facing. Click here to get the Winter 2008 issue of Supervisory Insights which covers the following topics which are referenced in the above FDIC press release:

• "The Changing Liquidity Landscape"
• "Reverse Mortgages: What Consumers and Lenders Should Know
• "Accounting News"

CNBC/Portfolio.com Survey Finds Some Americans Uncertain About FDIC Protection
The Federal Deposit Insurance Corporation today reminded the American public about the iron-clad protections depositors receive when placing their money in insured financial institutions, including the fact that in the 75-year history of the FDIC no one has lost even a penny of federally insured deposits.

"The American people can rest comfortably knowing that their FDIC-insured deposits are 100 percent safe," said FDIC Chairman Sheila C. Bair. "In fact, there's no safer place in the world for their checking, savings or retirement money."

The FDIC noted that a CNBC/Portfolio.com "Wealth in America" survey released today asked the confidence level of consumers that money saved in federally insured bank accounts would be safe if their bank were to fail. The survey found that 32 percent said they were totally confident that their money is safe, 33 percent said they were mostly confident, 20 percent indicated they were only somewhat confident, 11 percent said they were not that confident their money is safe, and four percent said they weren't sure.

The FDIC reiterated the following points to remember:

• Congress recently temporarily raised the basic deposit insurance coverage from at least $100,000 to at least $250,000 per depositor. A depositor may qualify for more than the basic insurance coverage at one insured bank if the funds are held in different "ownership categories," such as such as single accounts, joint accounts, certain retirement accounts, and trust accounts. For example, a depositor's money in three different ownership categories at one bank can qualify for up to $750,000 of FDIC insurance coverage.Note that, under the new law, the basic FDIC insurance limit is scheduled to return to $100,000 on January 1, 2010. However, the reduction in coverage starting in 2010 will not affect certain retirement accounts, which will continue to be protected up to $250,000. The FDIC also has recently expanded the protection for certain trust and checking accounts.
• Since the creation of the FDIC, the agency has handled the failures of more than 2,200 depository institutions and no depositor has lost even a penny of insured funds. The FDIC's insurance fund, which consists of premiums paid by insured banks and the interest earned on them, also is backed by the full faith and credit of the United States government.
• Depositors who have questions about their insurance coverage can turn to the FDIC for assistance they can rely on. The FDIC's resources include consumer information online starting at www.myFDICinsurance.gov, which includes "EDIE," the agency's interactive deposit insurance calculator that will show if a depositor has funds over the insurance limits. A Spanish version is available at www.fdicseguro.gov.

The public also can call the FDIC toll-free at 1-877-ASK-FDIC (1-877-275-3342). Information specialists are available Monday through Friday from 8:00 a.m. to 8:00 p.m., Eastern Time.

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Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,384 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet via the World Wide Web at www.fdic.gov and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-133-2008

With banks and the economy in the news so much lately, many people are thinking more about the safety of their money. The good news for consumers is that federal deposit insurance coverage has significantly increased, primarily as a result of a temporary boost in the basic insurance limit from $100,000 to $250,000. That's also why the Federal Deposit Insurance Corporation has issued an explanation of the new changes along with tips and information to help bank customers better understand their insurance coverage and how to be sure all their deposits are fully protected.

The advice was published as a special edition of the agency's FDIC Consumer News (the Fall 2008 issue) entitled "Your New, Higher FDIC Insurance Coverage: How You Can Be Fully Protected." Among the key points made in the new publication:

• The basic limit on federal deposit insurance coverage has been temporarily increased from at least $100,000 to at least $250,000 per depositor. But as always, a depositor may qualify for more than the basic insurance coverage at one insured bank because the FDIC provides separate insurance coverage for deposits held in different "ownership categories," such as single and joint accounts.
• By law, the basic FDIC insurance limit will return to $100,000 on January 1, 2010. That means all the deposits a consumer has at a bank in his or her name alone will be fully insured up to $250,000 through December 31, 2009. After that date, the depositor will only be insured up to $100,000, with any balance over that limit becoming uninsured. However, it is important to remember that additional coverage may be available depending on how accounts are held, such as when deposits are owned jointly with another person. The reduction in coverage starting in 2010 will not affect certain retirement accounts, which will continue to be protected up to $250,000.
• The FDIC has eased the rule governing "revocable trust accounts" that pass to named beneficiaries when the account owner dies. No longer does the FDIC consider only the account owner's spouse, child, grandchild, parent or sibling as "qualifying beneficiaries" for additional insurance coverage ($250,000 if there is one beneficiary, $500,000 if there are two, and so on). Now, an account owner can name any person or charity as a beneficiary and the owner will qualify for the additional deposit insurance coverage.
• Through year-end 2009, certain checking accounts at participating banks will be fully insured by the FDIC, no matter how much money is in them. This special insurance coverage applies only to no-interest checking accounts and certain other low-interest transaction accounts, and only at participating institutions.

Other articles describe various steps depositors can take to be sure they're fully protected by FDIC insurance, why and how to use the FDIC's online deposit insurance calculator called "EDIE," and common misconceptions depositors have that can inadvertently result in being over the federal insurance limit and at risk of loss if their institution fails.

"Your New, Higher FDIC Insurance Coverage" can be read or printed at www.fdic.gov/consumers/consumer/news/cnfall08. To order up to two free paper copies, use the online form on that same Web page or call the Federal Citizen Information Center toll-free at 1-888-8- PUEBLO (1-888-878-3256) weekdays from 8:00 a.m. to 8:00 p.m. Eastern Time and ask for Department 89.

]]> http://www.workathometruth.com/blog/2008/12/04/fdic-publication-helps-consumers-understand-their-new-higher-deposit-insurance-coverage/feed/ 0 http://www.workathometruth.com/blog/2008/11/24/joint-statement-by-treasury-federal-reserve-and-the-fdic-on-citigroup/ http://www.workathometruth.com/blog/2008/11/24/joint-statement-by-treasury-federal-reserve-and-the-fdic-on-citigroup/#comments Mon, 24 Nov 2008 14:51:05 +0000 Paul (Founder, WorkAtHomeTruth) http://www.workathometruth.com/blog/?p=687 File this under: "Hooray, another gigantic corporation that mismanaged their business and assets gets bailed out while the little guy gets screwed!"

Joint Statement by Treasury, Federal Reserve and the FDIC on Citigroup

Read more on Joint Statement by Treasury, Federal Reserve and the FDIC on Citigroup…

U.S. Bank, National Association, Minneapolis, MN, acquired the banking operations, including all the deposits, of Downey Savings and Loan Association, F.A., Newport Beach, CA, and PFF Bank & Trust, Pomona, CA, in a transaction facilitated by the Federal Deposit Insurance Corporation.

The combined 213 branches of the two organizations will reopen as branches of U.S. Bank under their normal business hours, including those with Saturday hours. Depositors will automatically become depositors of U.S. Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage.

Customers of both banks should continue to use their existing branches until U.S. Bank can fully integrate the deposit records of the organizations. Over the weekend, depositors can access their money by writing checks or using ATM or debit cards.

As of September 30, 2008, Downey Savings had total assets of $12.8 billion and total deposits of $9.7 billion. PFF Bank had total assets of $3.7 billion and total deposits of $2.4 billion. Besides assuming all the deposits from the two California banks, U.S. Bank will purchase virtually all their assets. The FDIC will retain any remaining assets for later disposition.

The FDIC and U.S. Bank entered into a loss share transaction. U.S. Bank will assume the first $1.6 billion of losses on the asset pools covered under the loss share agreement, equal to the net asset position at close. The FDIC will then share in any further losses. Under the agreement, U.S. Bank will implement a loan modification program similar to the one the FDIC announced in August stemming from the failure of IndyMac Bank, F.S.B., Pasadena, CA.

The loss-sharing arrangement is expected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers as they will maintain a banking relationship.

Customers who have questions about today's transactions can call the FDIC toll free. Customers of Downey Savings should call 1-800-930-5169, and for PFF Bank 1-800-930-6827. The phone numbers will be operational this evening until 9:00 p.m. pacific; on Saturday from 8:00 a.m. to 6:00 p.m. pacific; and on Sunday noon until 6:00 p.m. pacific and thereafter from 8:00a.m. to 8:00 p.m. pacific. Interested parties can also visit the FDIC's Web site. For Downey Savings they can visit http://www.fdic.gov/bank/individual/failed/downey.html and for PFF Bank http://www.fdic.gov/bank/individual/failed/pff.html.

U.S. Bank currently has 353 offices in California. Downey Savings and PFF Bank are not affiliated with each other. Downey Savings has 170 branches in California and five in Arizona, and PFF Bank has 38 branches in California.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) for Downey Savings will be $1.4 billion and $700 million for PFF Bank. U.S. Bank's acquisition of all the deposits of the two institutions was the "least costly" option for the FDIC's DIF compared to alternatives.

These were the twenty first and twenty second banks to fail in the nation this year, and the fourth and fifth banks to close in California. The last bank to be closed in the state was Security Pacific Bank, Los Angeles, on November 7, 2008.

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Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,451 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-124-2008

The Community Bank, Loganville, Georgia, was closed today by the Georgia Department of Banking and Finance, and the Federal Deposit Insurance Corporation (FDIC) was named receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Bank of Essex, to assume all of the deposits of The Community Bank.

The Community Bank's four branches will open on Monday, November 24, 2008 as Bank of Essex. Depositors of the failed bank will automatically become depositors of Bank of Essex. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage.

Over the weekend, customers of The Community Bank can access their deposits by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of October 17, 2008, The Community Bank had total assets of $681.0 million and total deposits of $611.4 million. Bank of Essex purchased approximately $84.4 million of The Community Bank's assets, and did pay the FDIC a premium of $3.2 million for the right to assume the failed bank's deposits. The FDIC will retain the remaining assets for later disposition.

Customers with questions about today's transaction may contact the FDIC toll-free at 1-800-930-1904. This phone number will be operational this evening until 9:00 p.m. eastern; on Saturday from 9:00 a.m. to 6:00 p.m. eastern; on Sunday noon until 6:00 p.m.; and from 8:00 a.m. to 8:00 p.m. Monday and thereafter. They may also visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/community.html.

The transaction is the least costly resolution option, and the FDIC estimates that the cost to its Deposit Insurance Fund will be between $200 million and $240 million. The Community Bank is the twentieth FDIC-insured institution to be closed nationwide, and the third in Georgia, this year.

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Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,451banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-123-2008

The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) today approved a final rule to strengthen the agency's Temporary Liquidity Guarantee Program (TLGP). The Program guarantees newly issued senior unsecured debt of banks, thrifts, and certain holding companies, and provides full coverage of non-interest bearing deposit transaction accounts.

The FDIC adopted the Temporary Liquidity Guarantee Program on October 13th because of disruptions in the credit market, particularly the interbank lending market, which reduced banks' liquidity and impaired their ability to lend. The goal of the TLGP is to decrease the cost of bank funding so that bank lending to consumers and businesses will normalize. The industry funded program does not rely on the taxpayer or the deposit insurance fund to achieve its goals.

"We are confident that the changes our Board approved today will create significant investor demand, and dramatically reduce funding costs for eligible banks and bank holding companies," said FDIC Chairman Sheila C. Bair. "I expect that the industry will take full advantage of this guarantee. I'm confident that the program—working in complement with the Treasury's Troubled Assets Relief Program and the Federal Reserve's Commercial Paper Funding Facility—will achieve its intended purpose to help insured banks increase lending—in a responsible way—to consumers and businesses."

The FDIC received more than 700 comments during the 15-day comment period. Based on those comments, the FDIC has made several significant changes to the interim rule, which was approved back on October 23.

Chief among the changes is that the debt guarantee will be triggered by payment default rather than bankruptcy or receivership. This change will add value to the guarantee and help entities obtain lower cost funding.

Another change is that short-term debt issued for one month or less will not be included in the TLGP, consistent with the objective of the program to facilitate longer term lending.

Finally, the fees to participate in the debt guarantee component of the TLGP have been changed. Originally the FDIC was going to charge eligible entities 75 basis points on an annualized basis for guaranteed debt. After reviewing the comments, the FDIC decided to impose a fee structure based on a sliding scale, depending on length of maturity. Shorter-term debt will have a lower fee structure and longer-term debt will have a higher fee. The range will be 50 basis points on debt of 180 days or less, and a maximum of 100 basis points for debt with maturities of one year or longer, on an annualized basis.

Eligible entities will have until December 5, 2008, to opt out of the TLGP. Once in the Program, an entity is in for the duration. Those that choose to opt out will not be able to participate at a later date. Any debt issued on or before June 30, 2009, will be fully protected through the earlier of the maturity of the debt instrument or June 30, 2012.

Under the transaction account guarantee program, a participating institution will be able to provide customers full coverage on non-interest bearing transaction accounts for an annual fee of 10 basis points. The coverage will be in effect for participating institutions until the end of 2009. After that date, these accounts will be subject to the basic insurance amount. The FDIC Board voted to include NOW accounts with interest rates of 0.5 percent or less and IOLTAs (lawyer trust accounts) in the transaction account program.

"We will implement this Program without relying on the taxpayer or the deposit insurance fund. Fees paid by participating entities should cover any losses associated with the guarantees," said Bair.

The final rule is attached.

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Attachment:
Final Rule regarding the Temporary Liquidity Guarantee Program – PDF (PDF Help)

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,451 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-122-2008