Banking Law Prof Blog

Current Condition of the U.S. Thrift Industry

OTS has recently release "Thrift Industry Highlights - First Quarter 2007".  With all the concern about the U.S. housing market, this report contains some reassuring statistics. 

The bottom line of this report is:  "The thrift industry reported solid earnings and profitability in the first quarter of 2007 despite continued weakness in housing markets and a flat-to-inverted yield curve.  Levels of problem assets rose again in the first quarter reflecting the slowing housing sector and the current credit cycle, but remain at generally low and manageable levels."

Link:  http://www.ots.gov/docs/1/147100.pdf 

(ag) May 28, 2007, in Federal Banking Agencies/OTS 

"The Future of Community Banking Is at a Crossroads"

Director of the Office of Thrift Supervision John Reich spoke to the New Jersey League of Community Bankers.  The key point of his address was this cautionary statement:  "The future of community banking is at a crossroads.  Its future is by no means certain and I believe few outside this room and industry truly understand the cost to our communities from the loss of this important resource.”

In addition to discussing community banking issues and the thrift charter, Director Reich also talked about current issues with subprime lending.  He urged financial institutions to work with troubled subprime borrowers.

Link to Speech:  http://www.ots.treas.gov/docs/8/87136.pdf

(ag) May 8, 2007, in Federal Banking Agencies/OTS

Meet New Managing Director for Examinations, Supervision, and Consumer Protection for OTS

The Office of Thrift Supervision (OTS) has a new Managing Director, Examinations, Supervision, and Consumer Protection, effective April 18, 2007.  Tim Ward comes to this position after a five-year stint as CFO and CIO for the OTS.  He has an excellent track record in thrift regulation.

Link:  http://www.ots.treas.gov/resultsort.cfm?catNumber=145&dl=108&edit=0

(ag) May 2, 2007, in Federal Banking Agencies/OTS

National Housing Forum

On Monday, Nov. 11, 2006, at the National Press Club in Washington, D.C., the Office of Thrift Supervision will host a "National Housing Forum".  Topics on the agenda include: 

• Outlook for the U.S. Housing Market and Potential Impact on Banks and Thrifts
• Challenges & Emerging Risks in the Home Mortgage Business
• Critical Consumer Protection Issues in Housing Finance Today
• Mortgage Fraud

OTS has assembled an impressive array of panelists on each topic.

Link to announcement:  http://www.ots.treas.gov/

(ag) Nov. 9, 2006, in Federal Banking Agencies - OTS

He Said, She Said -- FDIC and OTS Differ on CRE Guidance?

Last week, agency heads for both OTS and FDIC addressed America's Community Bankers.  Commercial Real Estate (CRE) issues are important to both agencies, although they appear to have a somewhat different take on the January 2006 Proposed Joint Agency Guidance on Commercial Real Estate.

On Oct. 15, 2006, OTS Director John Reich noted that the January 2006 Guidance was developed in response to the dramatic increase in CRE lending by banks between $100M and $10B, which he termed small-to-mid-sized community and regional financial institutions.  Acknowledging industry complaints about regulatory burden and the perception of "hard limits" on CRE loans, Reich said that, in his view, the Interagency Guidance is only a "reference" for financial institutions and examiners, not a limit or threshold above which CRE lending is "suspect or barred".  He further said that he "remains uncomfortable with the particular numerical thresholds set forth in the proposed guidance".

On Oct. 17, 2006, FDIC Chairman Sheila Bair also acknowledged that the Interagency Guidance contains "benchmarks, not caps".  However, her remarks focused more sharply on CRE as a lending area that warrants examiner scrutiny.  She said, " Portfolio concentrations in CRE assets have been increasing.  At the end of June, over 1,700 insured banks and thrifts -- almost 20 percent of the industry -- reported both construction and development loans that exceeded their roral capital and commercial real estate loans that exceeded 300 percent of total capital. Construction loan growth has been very high, almost 32 percent over the past year.  These trends have caused the regulators to take a close look at risk management practices in this type of lending."

From these speeches, it appears that the Federal Banking Agencies have a ways to go before they achieve agreement sufficient to issue the Final CRE Guidance.

Link to Reich Speech:  www.ots.treas.gov/docs/8/87125.pdf

Link to Bair Speech:  www.fdic.gov/news/news/speeches/chairman/spoct1706.html

Link to Proposed Interagency CRE Guidance:  http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/pdf/06-340.pdf

(ag) Oct. 23, 2006, in Lending Issues/Federal Banking Agencies/FDIC/OTS

What Directors Need to Know

OTS has issued Updated Directors' Responsibility Guide and Guide to Management Reports.  Especially in light of Sarbanes Oxley, these guidelines merit attention.

Link to OTS Press Release:  http://www.ots.gov/docs/2/25245.pdf

(ag) Oct. 20, 2006, in Federal Banking Agencies - OTS