Treasury Department announces Fannie, Freddie rescue plan
In an announcement on Sept. 7, the Treasury Department and Federal Housing Finance Agency unveiled a plan to rescue Fannie Mae and Freddie Mac. The plan would place the two government sponsored enterprises (GSEs) into conservatorship, replace their CEOs, purchase mortgage-backed securities guaranteed by Fannie and Freddie, provide a secured lending credit facility for GSEs and inject capital to bolster the companies’ ability to attract investors and fund mortgages.
Federal banking regulators are reviewing the exposures of banks and thrifts that hold common and preferred shares. Such exposures are not uniform but can be significant. The bank regulators indicate that they do not believe bank holdings of the GSEs’ stock is large enough to cause major risks to the banking system, but that some individual banks may hold enough to materially affect their capital levels. The agencies encourage institutions to contact their primary federal regulator if they believe that losses on their Fannie or Freddie holdings, whether realized or unrealized, would reduce regulatory capital below “well capitalized.”
Fannie and Freddie have partnered with Iowa banks to provide liquidity to Iowa homebuyers, helping to increase our rate of homeownership to a record 72 percent. At the same time, the rate of delinquencies and foreclosures in Iowa remain well below the national average, reflective of lender efforts to match borrowers with products appropriate for their means. Sadly, these same lending standards have not been universally applied in markets outside of Iowa, contributing to a housing boom and bust cycle that created the difficulties now faced by Fannie and Freddie.
The Iowa Bankers Association is hopeful the Treasury’s action will expedite the recovery of the nation’s housing market.
To assist member banks with media attention related to the situation, the IBA has added talking points and more information on the IBA Web site at http://www.iowabankers.com/safety_soundness.html.
Support Iowa Public Television at the IBA Silent Auction
Do your kids or grandkids sing along to “Elmo’s World” or beg for Barney? Do you have fond memories of watching Big Bird and Mr. Hooper, Oscar the Grouch, Bert and Ernie, Cookie Monster, Super Grover and loveable Snuffleupagus? Perhaps you like to catch “Market to Market” or find yourself and your kids fascinated with an episode of “Nova.” And yes, the floating bubbles of Lawrence Welk remind you of all those Saturday nights you spent watching Sissy and Bobby float on the dance floor to the tunes of the orchestra. “Wunnerful, Wunnerful!” These are just a few of the high-quality programs available to Iowans on Iowa Public Television (IPTV).
Now you’ve got your chance to support the continued broadcast of IPTV programming at this year’s IBA Silent Auction, held during the annual IBA Convention Sept. 21–23. Proceeds from the auction have benefitted IPTV for over 15 years. Items will be on display and available for bidding in the Convention Exhibit Hall from 9 a.m. to 5:30 p.m. on Monday, Sept. 22 and again on Tuesday, Sept. 23 from 9 a.m. until 1 p.m. Bidding will end at 1 p.m. on Tuesday. Winning bidders must be present at this time to pay for and pick up their items.
Please refer to the IBA Web site (www.iowabankers.com) to view a list of all the items available at the auction. As always, there will be plenty of vacation packages, electronics, fun toys and games for the kids and grandkids, as well as items for the men and women of the house.
So stop by the silent auction area, enjoy some cookies and popcorn and support a great cause. If you have any questions, please contact the IBA’s Cheryl Miller at cmiller@iowabankers.com or 1-800-532-1423 ext. 2950.
FDIC offers free deposit insurance coverage seminars
In a Financial institution Letter (FIL-85-2008) released on Aug. 26, the FDIC announced that it will host eight identical telephone seminars for bankers on the FDIC’s rules for deposit insurance coverage. The free seminars will guide bank employees through the process of determining a customer’s deposit insurance coverage.
The seminars will be held between Sept. 17 and Nov. 4 and are available to employees of all FDIC-insured banks and savings associations. One seminar will be offered each week over an eight-week period. Sessions will be offered on different days of the week and at different times to allow scheduling flexibility for participants. Each seminar will run approximately two to three hours and consist of a presentation followed by a question-and-answer period.
Advance registration is required for each session. Registration instructions are available at http://www.fdic.gov/news/news/financial/2008/fil08085.html.
PowerPoint slides are an integral part of the seminar presentation. Participants are encouraged to have a copy of the slides with them during the FDIC staff presentation. Links to the PowerPoint presentation – in both PowerPoint and Acrobat Reader (PDF) formats – are provided on the FDIC Web site.
Questions about the seminar series, including registration procedures or problems accessing the PowerPoint slides, should be directed to the FDIC Call Center at 1 (877) 275-3342.
Governor to host fifth annual Homeland Security Conference
The Iowa Homeland Security and Emergency Management Division will host the Governor’s Fourth Annual Homeland Security Conference Sept. 30 through Oct. 1 at the Embassy Suites Hotel in Des Moines.
This year’s theme is “Building a Culture of Preparedness.” Featured speakers and topics include:
- Keynote speaker Brad Baker, president of The HALO Corporation, will present “21st Century Terrorism: Emerging Threats Internationally and Domestically.”
- Rocco Forte, Minneapolis Emergency Management Coordinator, will discuss lessons learned from the I-35 Bridge Collapse.
- Retired U.S. Army Col. Joe Rozek will address current threats in the Midwest.
Register online at www.iowahomelandsecurity.org. Be sure to register by Sept. 15 to guarantee meals.
Legislative Update: Economic concerns may drive lending issues for the 2009 State Legislative Session
By Bob Hartwig, J.D.
Legal Counsel, Iowa Bankers Association
The Iowa Legislature finished the 2008 legislative session on April 26, and considered many bills covering banking issues prior to adjournment. With all of the focus nationally on housing and foreclosure issues, somewhat surprisingly the only significant piece of lending-related legislation passed by the Iowa legislature in 2008 dealt with student loans.
Modeled after recent legislation passed in the state of New York and a bill recently signed into law by President Bush at the federal level, HF 2690 seeks to address certain activities between lenders originating “educational loans” and student financial aid offices. The crux of the legislation is aimed at curbing kickbacks and other practices between certain “preferred student lenders” and financial aid offices of schools highlighted in a recent settlement involving lenders on the East coast and the New York Attorney General’s Office.
Most Iowa banks should be relatively unaffected by this legislation, as it primarily applies to lenders having agreements with area schools serving as “preferred lenders.” According to the most recent information obtained by Iowa Student Loan, there are about 35 Iowa banks serving in such a capacity. These lenders will be required to give a disclosure at application to any student or parent borrower for any qualifying “educational loan” at after the effective date of Jan. 31, 2009. This model disclosure, which highlights rates, fees and other terms of the loan, is currently being developed by the Iowa Attorney General’s Office, who also has enforcement authority over this new law.
Other prohibitions affecting all lenders will be a ban on gifts for financial aid employees (there are several exceptions) and a prohibition on financial aid employees of educational institutions from serving on advisory boards of financial institutions. As the IBA is currently awaiting implementing regulations from the Iowa Attorney General, detailed compliance information regarding this new legislation will be coming soon to all IBA members.
Other issues likely to surface for the 2009 Iowa Legislative Session include possible responses to various problems in the commercial real estate and agricultural lending sectors. On the commercial real estate front, with the recent collapse of Regency Builders, many subcontractors in the Central Iowa area were forced to file mechanics liens for unpaid labor and materials on several housing projects across the region. Because of the confusion in the current mechanics lien law, (chapter 572 of the Iowa Code) the Iowa Finance Authority (IFA) intends to bring a bill to the 2009 Iowa Legislature to:
(1) require contractors and material providers to submit a notice of record prior to filing a mechanics lien, and
(2) clarify or replace the definition of “owner-occupied dwelling” in the mechanics lien statute to include buyers pursuant to purchase agreements.
The intent of this legislation is to provide lenders and settlement agents a clearer standard – where settlement agents could determine which subcontractors have filed the notice and act accordingly by collecting lien waivers from those subcontractors.
On the agricultural lending front, the IBA has been hosting a series of meetings this summer at the request of the Iowa Pork Producers Association focusing on issues relating to high grain prices and its long term effects on the livestock industry in Iowa. Several other related issues are being discussed at these meetings, such as the effects of high grain prices on the ethanol industry, cooperative margin call issues and high input costs, which are causing many customers of IBA member banks to become large unsecured creditors for prepaid 2009 crop expenses.
These ag and commercial real estate issues and resulting public policy implications will be the highlight of this year’s Legislative Symposium – held as part of the IBA Annual Convention on Tuesday, Sept. 23, 2008.
A former residential real estate lender and graduate of Drake University Law School, Bob Hartwig serves as legal counsel for the Iowa Bankers Association. Bob earned his undergraduate degree in Agricultural Business from Iowa State University and is a graduate of the ABA’s National Compliance School. Contact Bob at rhartwig@iowabankers.com.
IBA Annual Convention Highlights
Sunday, Sept. 21
5:30 p.m. Evening Reception (open to all)
6:30 p.m. Dinner & Show featuring The Beatgirls (tickets required)
Monday, Sept. 22
7:30 a.m. Ag Breakfast, featuring Dr. Edmond Seifried
9:00 a.m. Exhibit Hall Open
10:00 a.m. Opening General Session, featuring IBA Chairman Jim Schipper, the James A. Leach Leadership Award ceremony and ABA Chairman Brad Rock.
11:00 a.m. “Common Ground,” featuring keynote speakers Bob Beckel and Cal Thomas
1:30 p.m. Breakout Sessions
4:15 p.m. Chairman’s Reception
Tuesday, Sept. 23
7:30 a.m. Legislative Symposium, featuring Dr. David Kohl
9:00 a.m. Exhibit Hall Open
10:30 a.m. IBA Executive Committee Address
11:00 a.m. “Lone Survivor,” featuring keynote speaker Marcus Luttrell
12:00 p.m. Exhibit Hall Lunch
More IBA Convention resources are available online:
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