On Tuesday, BankTalk slammed the recent surge in Pacific Capital shares (see “Is there a Bubble at Pacific Capital?).  Pacific Capital has soared from less than $1 to over $4 this year.  On Wednesday, Pacific Capital shares closed at $4.07.  On Thursday morning, they opened at $1.98, and today they are trading at about $1.85. The game-changing news: Pacific Capital accepted a massive stock-diluting investment from Texas financier Gerald Ford. Ford will now own 91 percent of PCBC, providing that shareholders (including the Treasury Department) approve the sale.

North Carolina slam-dunked the initial round of Census 2010 turnout.  Census reports that 74 percent of North Carolina households returned their form. By the way, the Old North State is in a race with New Jersey to claim a Congressional seat.  Jersey didn’t get out the count, with just 72 percent of households mailing back before the deadline.

I am shocked at the loan volumes in the new HMDA data.  The banks might have been trying to say otherwise, but they really didn’t make a lot of loans in 2009.   Case in point, Bank of America made 3,683 conventional home purchase loans for single-family houses (owner-occupants, first lien) in its hometown in 2008.  In 2009, they made 1072 in Charlotte.  Same town, different bank: Wells/Wachovia made 3,064 such loans in 2008, but just 1,047 in 2009.  Pinch me and tell me the data is wrong!

I’m wondering about how wise it was for Arizona to decide to be so draconian right now.  (I’m also wondering how wise it is, ever.) If your state stands to win or lose hundreds of millions of dollars depending upon how well it can get out a count of its residents, don’t you think you’d want to put off plans to deport them until after Census 2010? Yes, the bill will not go into effect until 90 days after the end of the current legislative session.  Even so, I would imagine that its threat will be felt right away. How receptive are immigrants going to be when a government worker knocks on their door, asking to record who lives at this address?

JP Morgan Chase‘s decision to exit refund anticipation lending means that 13,000 independent tax firms will no longer have a means to advance their customers the cost of tax preparation.  Chase gave notice this week, with the intent to give their former partners as much time as possible to prepare for the next tax season.   RALs may not be entirely eliminated before next year, but at the same time, the marketplace is fractured. Block will have RALs, and some stores in the Jackson Hewitt and Liberty chains may as well.  The “mom and pops” will not, unless something changes shortly.

This should put pressure on policy makers to find an answer for tax settlement. It is a question that concerns not just the IRS, but also the OCC, the tax prep chains, and even consumer advocates. What is to be done?

We still can’t ignore that RALs were a problem. They were a solution to tax settlement costs, but they came at a high cost.  There were all kinds of externalities for all kinds of market players.

• They seemed to invite tax fraud.
• They created the platform for all kinds of additional fees, from “technology fees,” to “e-file fees,” to “account fees.”  The money drained the accounts of needy people, and undermined the impact of the Earned Income Tax Credit.
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The Office of the Comptroller of the Currency has just released its latest CRA exam results. The news is hardly surprising – everyone passed!

In fact, of the 35 banks evaluated, 4 were given an “outstanding” and 31 were recognized as satisfactory. There were no “needs to improve” or “substantial noncompliance” ratings.

Grade inflation has run amok at the OCC for some time.

The OCC gave an outstanding rating to First National Bank of Audrain, located in Mexico, Missouri. This is in spite of the fact that FNB Audrain made no loans (zero) to low-income borrowers. There were plenty of low-income people in Mexico, Missouri. The OCC reports that it can characterize 16 percent of families in the area as low-income. FNB of Audrain made no loans in low or moderate income census (more…)

JP Morgan Chase has just given word to the Community Reinvestment Association of North Carolina that it will be exiting the refund anticipation loan business. CRA-NC heard the news through their RAL department.  In a separate e-mail, the news was confirmed by a CRA officer at Chase.

The new direction will be effective immediately.

This is a huge decision. Chase supplied refund anticipation loans to approximately 13,000 independent tax preparation firms. BankTalk has discussed how well those partners followed the law. Suffice to say, Chase is probably averting a near-term public relations disaster by moving on without RALs.

Going forward, the playing field for refund anticipation loans is narrowing. H&R Block will continue to have a funding stream for RALs (more…)

Will today’s hearings before Senator Levin’s subcommittee on Capitol Hill with Goldman Sachs actually lead to some kind of change?

Goldman Sachs executives testify before the Senate Permanent Subcommittee on Investigations.

The Senators are having a good time grandstanding.

• Sen. McCaskill: “It is pure gambling. You are the gambler. You are the house….you have less oversight than a pit boss in Las Vegas…what worries you is a bad article in the Wall Street Journal. Not a regulator.”
• Sen. McCain: “It is unethical, and the American people will have their judgment.”

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