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Regulators Move Forward with Stability Plan
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Federal regulators took a series of steps to advance
economic stabilization plans authorized by Congress on Friday. ICBA,
state community banking associations and individual community bankers
were critical advocates that ensured the new law includes provisions
important for community banks.
The Treasury Department outlined its process for hiring asset managers to
oversee the $700 billion program and avoiding potential conflicts
of interest of outside contractors working with the program. Treasury
also announced the regulatory
authority it has to engage private firms in implementing the Emergency
Economic Stabilization Act of 2008 and posted three solicitations
for financial agents to provide services that are needed for
implementing the Troubled Asset Relief Program (TARP). A Treasury
official told CNBC that Assistant
Secretary Neel Kashkari has been tapped to run the TARP on an interim
basis, though Senate confirmation will be required.
The Federal Reserve announced a plan to
encourage lending across a range of financial markets. The central bank
will increase the size of 28-day and 84-day Term Auction Facility
auctions to $150 billion and begin paying interest on required and
excess reserve balances. Required reserve balances will be paid at 0.10
percentage points below the federal funds rate, and excess balances
will be paid 0.75 percentage points below the rate.
The President's Working Group on Financial Markets said it is working with
industry and regulatory leaders from around the globe to restore
confidence and stability in financial markets. The coalition of top
regulators also outlined initiatives included in the stabilization
package.
The new law includes several ICBA-backed measures, such as a temporary
increase in deposit insurance limits; inclusion of community banks in
the TARP; fair tax treatment for GSE preferred losses; a prohibition on
future money market mutual fund guarantees; and authorization for the
SEC to suspend "mark-to-market" accounting rules.
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FDIC Insurance Coverage Enhanced
Through 2009
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Under the Emergency Economic Stabilization Act, FDIC
insurance limits will increase from $100,000 to $250,000 for insured
deposit accounts through Dec. 31, 2009.
Single accounts will now by insured at $250,000 per owner; joint
accounts will be insured at $250,000 per owner; and revocable trust accounts
will each be insured up to $250,000 for the interests of each
beneficiary, subject to certain limitations. IRAs and certain other
retirement accounts will stay at $250,000 per owner.
Using a simple example, a husband and a wife could each have a single
account for $250,000 plus a joint account and have total coverage of
$750,000. More information is available on the FDIC Web site.
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Hope for Homeowners Underway
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Federal officials unveiled the Hope for
Homeowners program authorized by the Housing and Economic Recovery Act
passed in July. The $300 billion program will help struggling
homeowners refinance troubled mortgages into FHA-backed loans.
The program, to run through Sept. 30, 2011, is available to owner
occupants with mortgage payments exceeding 31 percent of their monthly
income. Mortgages must have originated on or before Jan. 1, 2008.
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ICBA Survey: Data Security a Top Community Bank Priority
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Community banks regard protecting customer data as their
primary technological concern, according to a new ICBA survey. The 2008 ICBA
Community Bank Technology Survey also found more than 80 percent of
respondents said vigorously maintaining data security is their top
priority.
An overwhelming majority of the nearly 1,300 community bank respondents
said they were exploring additional ways to keep customers' personal
information safe, and 57 percent said they planned to increase spending
on security technology.
In addition, 89 percent maintain an Internet banking site that allows
their customers to conduct banking transactions, and 30 percent plan to
increase their technology spending for mobile banking over the next two
years. Read ICBA Release.
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Consumer Confidence Up in September
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Consumer confidence rose moderately in September, according to the latest
Conference Board study. The cutoff date for the research group's survey
was Sept. 23, before the latest financial disruptions. The survey
reflected a short-term consumer outlook, as those expecting improved
business and employment conditions rose. Inflation expectations were
down, however, reaching a six-month low.
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