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Failed Bank Total This Year Rises to 19
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Two banks, Franklin Bank in Houston and Security Pacific
Bank in Los Angeles, failed Friday, raising the number of banks closed
by regulators this year to 19. The FDIC estimated both failures would
cost the Deposit Insurance Fund a total of $1.8 billion.
All the $3.7 billion in deposits at Franklin Bank, a $5.1
billion-asset institution, were assumed by Prosperity Bank in El Campo,
Texas, for a 1.7 percent premium. The $450 million in deposits at
Security Pacific Bank, a $561 million-asset institution, were assumed
by Pacific Western Bank of Los
Angeles for a 2 percent premium.
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Conforming Loan Limit Same for '09
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The Federal Housing Finance Agency announced that the 2009
conforming loan limit will remain $417,000 for most areas, though there
will be higher limits for some cities and counties. According to the
Housing and Economic Recovery Act of 2008, the limit-the maximum size
of loans that Fannie Mae and Freddie Mac may purchase-is set based on
changes in average home prices over the previous year, but cannot
decline from year to year. Limits will remain at 2008 levels for two-,
three- and four-unit properties.
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Congressmen Back Community Banks
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ICBA applauded several members of Congress for urging
Treasury Secretary Henry Paulson to ensure community banks have access
to the department's Capital Purchase Program. Reps. Gary Miller
(R-Calif.), Jerry Lewis (R-Calif.) and Ken Calvert (R-Calif.) noted in
their letter that community bank involvement would encourage lending
and help small businesses continue running efficiently.
"The community banking industry, in general, is well-capitalized
and is experiencing fewer problem assets than other segments of the
financial services marketplace," the letter states. "Ensuring
that community banks are able to participate in the various programs
being developed will allow these healthy institutions to continue their
common-sense lending throughout communities."
Following ICBA requests, Treasury recently stated it will post
documents and announce a "reasonable deadline" for eligible
privately held institutions. Treasury has also 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) on Nov. 14. More information on this and other economic
stabilization programs is available on ICBA's Economic Recovery Central.
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Fed Alters Interest Rate Formulas
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The Federal Reserve Board announced it will alter the
formulas used to determine the interest rates paid to depository
institutions on required and excess reserve balances, beginning with
the November 6 maintenance period. Under the new formulas, the
rate on required reserve balances will be set equal to the average
target federal funds rate over the reserve maintenance period. The rate
on excess balances will be set equal to the lowest target rate in
effect during the reserve maintenance period.
Previously, the rate on required reserve balances had been set at the
average target federal funds rate established over a reserves
maintenance period minus 10 basis points. The rate on excess balances
had been set as the lowest federal funds rate target in effect during a
reserve maintenance period minus 35 basis points.
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Fed Warns of Fraudulent Loan Scheme
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The Federal Reserve Board issued an alert regarding questionable
solicitations promising consumers access to personal loans through a
nonexistent Federal Reserve lending program. Consumers are encouraged
to deposit large sums of money into a bank account, under the guise of
a security deposit, in order to receive the loan.
The Federal Reserve is advising consumers that it has no involvement in
these solicitations and does not directly sponsor consumer lending
programs. Consumers with questions about solicitations they suspect are
fraudulent are encouraged to visit the Fed's Consumer Help Center or call (888)
851-1920.
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