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Fed Survey: Community Banks Better Positioned to Lend
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Credit conditions continued to tighten during the third
quarter, according to the Federal Reserve Board. The Fed's Senior Loan
Officer Survey demonstrates that
community banks may be bettered positioned to lend than the largest
banks during these difficult times. According to the October 2008
Survey on Bank Lending Practices, approximately 80 percent of the
largest banks and just 55 percent of smaller banks reported tighter
residential real estate lending standards for prime borrowers. In
addition, higher percentages of large banks reported tightening
standards on credit card and other consumer loans, and smaller banks
lowered credit card limits at one-third the rate of larger banks.
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ICBA Urges Capital Program Details, Extension
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Following a letter to the Treasury
Department urging a workable term sheet and deadline extension for
non-publicly traded banks interested in the agency's Capital Purchase
Program, Treasury stated it will post
documents and announce a "reasonable deadline" for eligible
privately held institutions at a later date.
In its letter, ICBA urged the agency to use the association's
recommendations for a workable term sheet to include privately held,
Subchapter S and mutual institutions under the Capital Purchase
Program. ICBA also reiterated the need for the program to allow access
for all community banks that wish to participate and asked that the
Nov. 14 deadline be extended so that interested bankers have sufficient
time to consider and apply for the program.
In addition to the announcement regarding privately held institutions,
Treasury issued a variety of documents on the program for publicly
traded financial institutions, which must submit their applications no
later than 5 p.m. (Eastern time), Nov. 14. The new documents include a
term sheet, securities purchase agreement and form of letter agreement.
The letter is the latest of ICBA's continuing efforts to press Treasury
for more information through meetings and communications with
administration and Treasury officials, including President George
Bush and Treasury Secretary Henry Paulson, to discuss how all financial
institutions can participate in the program. More information on this
and other economic stabilization programs is available on ICBA Economic Recovery Central.
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FDIC Liquidity Program Deadline
Approaching
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Financial institutions have until Nov. 13 to submit
comments to the FDIC on its Temporary Liquidity Guarantee Program Interim Rule. Community
bankers can submit comments on the FDIC's Web site or via e-mail with the reference
number (RIN #3064-AD37) in the subject line. Remember to exercise
caution regarding the inclusion of signatures and other confidential
information because comments are posted on the FDIC's Web site without
changes.
Nov. 12 is also the last day banks can choose to opt out of either
parts of the program. The FDIC is creating an opt-out form it will make
available to all institutions.
The program guarantees all amounts in non-interest bearing transaction
accounts until Nov. 13, after which depository institutions can
continue to participate through December 2009 for an extra
10-basis-point assessment on amounts in the affected accounts above
$250,000. Financial institutions can also choose a federal guarantee on
senior unsecured debt issued through June 30, 2009. Participating
institutions would pay a 75-basis-point annualized fee. An ICBA summary on the TLGP and
other economic stabilization resources are available on ICBA's Economic
Recovery Central.
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Report: Agencies Discussing Mortgage Guarantees
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The Treasury Department and FDIC are discussing a plan to
help homeowners avoid foreclosure, according to Dow Jones
Newswires. Unnamed sources were reported as saying the plan could
involve partial federal guarantees on modified home mortgages, and the
$700 billion in economic stabilization funds authorized by Congress
could be tapped.
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Treasury Encourages Lending
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The Treasury's Capital Purchase Program is aimed at
healthy banks which should use the funds to make loans, Acting Under
Secretary for Domestic Finance Anthony Ryan said in remarks to the
Securities Industry and Financial Markets Association. He also said Treasury will publicly
disclose the name and capital purchase amount of participating
institutions within two business days of authorizing payments. He noted
Treasury has signed final agreements with nine large banks holding 50
percent of U.S. deposits, which began receiving the capital injections
on Tuesday, and several more regional banks have been granted
preliminary approval. Approvals will continue to be granted on a
rolling basis, Ryan said.
ICBA is continuing discussions with Treasury officials to include
Subchapter S corporation, mutual, privately held and non-publicly
traded banks in the Treasury plan. Community bankers that would like to
participate in the program are urged to contact their primary federal
regulator.
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