The week before Labor Day is traditionally a quiet one in Washington, and this year was no different. Even the CFPB had no public announcements. Things should pick up this coming week as, among other things, Congress is back in session. In the meantime, there were a few broad economic announcements of interest to community banks. The FDIC's Quarterly Banking Profile showed increased net income by community banks although in the words of Chairman Gruenberg, "challenges remain" in the form of responses to the low-interest rate environment. The Bureau of Labor Statistics released its monthly jobs showing modest improvement; the impact on the discussion of rate normalization at the Federal Open Market Committee meeting in less than 10 days remains to be seen. The Fed's Beige Book noted a generally improving economy, but one with several weaknesses.
The full set of recent developments over the past week is as follows:
- Bureau of Labor Statistics releases August jobs report (Sept. 4).
- Unemployment rate now 5.1%.
- 173,000 new jobs.
- 19,000 new jobs in financial sector.
- Report available at http://www.bls.gov/.
- Federal Reserve issues Beige Book for August (Sept. 2).
- "Reports from the twelve Federal Reserve Districts indicate economic activity continued expanding across most regions and sectors during the reporting period from July to mid-August."
- "Districts reporting on the banking sector mostly tallied increases in both business and consumer loan volumes. Credit quality was reported to be improving in most Districts, while credit standards were generally said to be unchanged."
- "Reports on residential and commercial real estate markets across the Districts were mostly positive. Existing home sales and residential leasing widely improved, with home prices moving up in most areas."
- "Commercial real estate activity also rose in most Districts; commercial construction activity ranged from strong in the Cleveland and Minneapolis Districts to up only slightly in Chicago, while commercial leasing was reported to have increased across the board."
- "Retail contacts in a majority of Districts reported that their sales and revenues continued to expand. By contrast, the Cleveland and Minneapolis Districts cited flat consumer activity since the last report, Atlanta was mixed, and Dallas reported decreased sales year-over-year."
- "Most Districts reported increased auto sales."
- "Most Districts reported modest to moderate growth in labor demand, although Boston, Cleveland, and Dallas cited only slight increases in hiring. This tightening of labor markets was said to be pushing wages up slightly in selected industries or occupations, especially in the New York, Cleveland, St. Louis, and San Francisco Districts."
- Beige Book available at http://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201509.htm.
- FDIC releases Quarterly Banking Profile for second quarter 2015 (Sept. 2).
- Per Chairman Gruenberg, "the banking industry – and community banks in particular – had another positive quarter, but challenges remain."
- Community banks report total of $5.3 billion in net earnings and $22.3 billion in net operating revenue, both increases over second quarter 2014.
- Slight increase in holdings of long-term assets, in loan balances, and in small loans to businesses.
- Noninterest expense up 7.1% from second quarter 2014.
- Improvement in asset quality indicators.
- Entire banking industry (including thrift institutions) reported aggregated $43 billion in net income and net operating revenue of $172.9 billion, both also increases over second quarter 2014.
- Profile available athttp://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201509.htm.
- Summary of community bank performance available athttps://www5.fdic.gov/qbp/2015jun/qbpcb.html.
- FinCEN enters into consent order with Caesars Palace for several violations at "private gaming salons" for high-end patrons (Sept. 8).
- Remedies include external audits, independent testing of compliance, reports to FinCEN, enhanced training, and a "look-back" for suspicious transactions.
- $8 million civil money penalty.
- Order available at http://www.fincen.gov/news_room/nr/html/20150908.html.
- Reserve ratio for Deposit Insurance Fund increases to 1.06% as of end of second quarter 2015 (Sept. 2).
- Dodd-Frank requires DIF to attain 1.35 reserve ratio by Sept. 30, 2020; FDIC states that it is on track to do so.
- As reported in Quarterly Banking Profile, available athttps://www5.fdic.gov/qbp/2015jun/qbpdep.html.
- SEC settles accounting fraud charges against Bankrate Inc. and one of three executives (Sept. 8).
- $15 million civil money penalty for Bankrate.
- Bankrate order and other materials available athttp://www.sec.gov/news/pressrelease/2015-180.html.
- Remarks by Deputy Comptroller Gardineer before the 2015 Association of Military Banks of America Workshop (Aug. 31).
- Discussion of compliance with Servicemembers Civil Relief Act and recent Defense Department rules under Military Lending Act.
- Remarks available at http://www.occ.gov/news-issuances/news-releases/2015/nr-occ-2015-120.html.
Too Big to Fail
- Federal Reserve and OCC approve use of "advanced approaches" capital framework beginning in the fourth quarter of 2015 (Sept. 3).
- Announcement available athttp://www.federalreserve.gov/newsevents/press/bcreg/20150903a.htm.
Congressional Activity – Upcoming.
- Sept. 9
- House Financial Services Committee hearing, "Could America Do More? An Examination of U.S. Efforts to Stop the Financing of Terror."
- Sept. 10
- House Financial Services Committee hearing, "Preserving Retirement Security and Investment Choices for All Americans."
- Sept. 17
- Senate Banking Committee hearing on nomination of Adam J. Szubin to be Under Secretary for Terrorism and Financial Crimes.
- Sept. 16-17
- FOMC meeting.
- Sept. 28-30
- OCC workshop, "Building Blocks for Directors", New York, NY.
- Sept. 29
- OCC director workshop, "Risk Governance", Albuquerque, NM.
- Sept. 30
- OCC director workshop, "Compliance Risk", Albuquerque, NM.
- Oct. 15-16
- FDIC, 5th Annual Consumer Research Symposium, Arlington, VA.
- Oct. 20
- OCC director workshop, "Compliance Risk," Dallas, TX.
- Oct. 21
- OCC director workshop, "Credit Risk," Dallas, TX.
- Oct. 27-28
- FOMC meeting.
- Nov. 8-10
- ABA National Conference.
- Nov. 19-20
- National Community Investment Fund, 2015 Development Banking Conference, Chicago, IL.
- Dec. 15-16
- FOMC meeting.
Regulatory Comment Deadlines
- Sept. 11 – FDIC: insurance assessments for small banks.
- Sept. 11 – Basel Committee: consultative document on interest rate risk.
- Sept. 14 – SEC: disclosure of policy on clawback of erroneously awarded incentive compensation.
- Sept. 24 – Federal Reserve: changes to capital planning and stress testing rules.
- Sept. 30 – Treasury: RFI for study of online lending.
- Oct. 30 – CFTC: reporting obligations of swap counterparties and registered entities.
- Nov. 2 – FinCEN: BSA/AML requirements for registered investment advisers.