The latest round of exam scores are out for the OCC’s Community Reinvestment Act examinations.  Surprise!  Everyone is a winner! The OCC handed out all A’s and B’s.  Wouldn’t you love to take that class?  Last month, they handed out all A’s and B’s, too!

This time, five banks got outstanding, and thirty got satisfactory.  No one earned a score that would require any kind of a strategic plan to improve their service.

One large bank, Fifth Third,  dropped from Outstanding! to Satisfactory.  The OCC decided not to examine any of Fifth Third’s service, investment, or lending for North Carolina.  That is in spite of the fact that Fifth Third acquired First (more…)

Rep. Hensarling is up to examine the testifiers next.  He is having fun with words:

• If banks are not required to make unsustainable loans, are they required to make sustainable loans?
• If the CRA is simple, then why is it, in the view of small banks, expensive?  (Earlier, he mentioned how banks spend between $20,000 and $90,000 reporting on CRA.)

Taylor asks him why he is mixing up lending based on race with lending based upon income.  It’s a pretty good response.

Other questions:

• Why is Josh Silver looking off to the right? What is over there?
• Where are the rest of the Congressmen?  The first three rows of seats are largely empty.

White is back, courtesy of a question for Rep. Neugebauer.  He wants to do it through funding from taxpayers.  He thinks (more…)

The Obama administration is finally getting around to reforming our financial system, right when the underlying anger about banking may be relenting.

The experts who judge our economy believe that we may be about to exit this recession.  Ben Bernanke said as much today during a talk at the Brookings Institution.  He believes that unemployment has reached its peak, that we can expect moderate growth, and that consumer confidence is coming back.  All of that would point to a rebound.  Granted, the evidence is still not visible on Main Street – unemployment tops 10 percent in much of the country. In North Carolina, unemployment is currently 11 percent.  In foreclosure-rich states like California and Florida, unemployment has increased approximately 60 percent from July 2008.

Today is significant for a few reasons – for one, it marks the one year anniversary of the collapse of Lehman Brothers.  (more…)

The OCC announced results on 20 CRA evaluations today. Not surprisingly, 19 of the 20 banks got a “satisfactory” and the other received an outstanding.

It has been our feeling for some time that the CRA exams are a charade.  They are supposed to uncover a lack of performance in low or moderate-income census tracts. In any year, more than 2,000 banks are evaluated. In 2008, 2,051 institutions were evaluated.  Twenty-nine were deemed “needs to improve,” and four received a “substantial non-compliance.  That won’t lead to much change, because it doesn’t take a rocket scientist to realize that the regulators are avoiding conflict.  In fact, the market appears to be a stronger enforcement agent – the two largest lenders to get anything below satisfactory were Countrywide and AIG.

This cycle’s outstanding score went to Ephrata National Bank.  (Ticker – ENBP) Here is the pdf of the exam.  Ephrata (more…)

You cannot regulate it if you can’t regulate it.

The four financial regulator agencies accepted comments up to Thursday afternoon on a proposed rulemaking to apply the Community Reinvestment Act to the private student loan industry.  The proposed rule asked commenters for suggestions about how CRA credit could be designed to encourage the supply of low-cost student loans to low-income students.

We made the following comments (pdf) 11 pages.

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