Groups Warn of Risk Retention Provision in House Financial Services Bill

/PRNewswire/ -- Following is a Joint Statement on Risk Retention from the Community Mortgage Banking Project and the Community Mortgage Lenders of America:

Late Tuesday evening, the House Financial Services Committee released draft legislation to address systemic risks and "too big to fail" concerns. We appreciate the efforts of the Committee to enact reforms that will ensure that the events that led to the current financial market crisis are not repeated. However, we are deeply concerned that one Subtitle of the just-released draft Financial Stability Improvement Act would have a devastatingly, adverse impact on the secondary mortgage market, forcing community-based lenders to reduce lending or go out of business, which will significantly raise the cost of credit for consumers seeking affordable mortgages.

We are concerned that the broad risk retention provisions in the draft Financial Stability Improvement Act could jeopardize affordable mortgages for consumers by crippling the ability of community-based lenders to tap the secondary mortgage market for funding. This would further accelerate the consolidation of the mortgage market into just a handful of the largest institutions. The result would be reduced competition and choice for consumers - an ironic and counterproductive result for a bill intended to mitigate "too-big-to-fail" concerns.

The draft bill requires all lenders to retain up to ten percent of the credit risk on any loan sold into the secondary market. In addition, entities that acquire mortgages and issue mortgage-backed securities will also be required to retain up to ten percent of the credit risk. The committee's intent is to create incentives for sound underwriting standards and enhanced risk management practices by creditors and issuers of mortgage-backed and asset-backed securities.

However, by setting risk retention requirements at each step of the process from sale to securitization, and layering it over multiple years of originations, the cumulative impact of these requirements on lenders and issuers will reduce liquidity significantly and undermine the ability of the secondary mortgage market to deliver hundreds of billions of dollars of low cost mortgage credit needed each year.

The impact would be particularly severe for local lenders, including independent community mortgage bankers and local banks. Today, these lenders provide consumers with safe and affordable mortgage products, local market knowledge and top quality service. But these companies rely heavily on their ability to sell these loans into the secondary market. Today, these local lenders account for more than 40% of all home mortgage originations, and more than 50% of FHA loans. These companies are critical to our nation's mortgage supply chain, but simply are not structured to retain cumulative layers of credit risk over multiple origination cycles.

Independent mortgage bankers would be forced out of business, while community banks would face liquidity and balance sheet constraints that would sharply limit their lending activities. Even the largest institutions would be constrained in their ability to effectively utilize the attributes of the secondary mortgage market in delivering mortgage funds efficiently.

By contrast, H.R. 1728, which already passed the House earlier this year, addressed the risk retention standards in the mortgage market by establishing standards for "qualified mortgage" products that would be exempt from the risk retention requirements, and would therefore enjoy ample availability in the primary market. Qualified Mortgage products are traditional fixed and adjustable rate mortgages. These plain vanilla products, appropriately underwritten, were not the products that drove the current mortgage market debacle. Other provisions of H.R. 1728 (such as requiring creditors to document income and assets and assess ability-to-pay) help ensure that mortgage lenders utilize strong risk management practices and conduct sound underwriting, but with fewer adverse implications for secondary market liquidity.

There is no need for Congress to chance such a drastic outcome, when a more sensible compromise on this issue was forged in H.R. 1728 and passed earlier this year. The undersigned organizations look forward to working with Congress to achieve its objectives, without potentially disrupting the well-functioning secondary market for safe and affordable traditional mortgages.

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US Lawmakers Now Agree with Cayman Approach to Tax Transparency

/PRNewswire/ -- Cayman Finance, representing the financial industry based in the Cayman Islands, today congratulated Chairman Max Baucus of the Senate Finance Committee and Chairman Rangel of the House Ways and Means Committee on their plan to tackle offshore tax abuse through increased transparency and enhanced reporting requirements. The new comprehensive proposal does away with the damaging features of Senator Levin's Stop Tax Haven Abuse Act, which would rely on "lists" and other provisions that would discourage corporations and other financial entities from conducting lawful business in Cayman and providing funding into the United States. "Cayman Finance commends Chairman Baucus, Chairman Rangel and their colleagues for their leadership on this important issue," said Cayman Finance Chairman Anthony Travers. "This proposal is entirely consistent with the approach suggested by Cayman Finance in our many meetings with these and other U.S. policymakers."

The new Senate-House proposal sets in place practices that will clamp down on jurisdictions which still practice tax evasion and improve taxpayer compliance by giving the IRS new administrative tools. The "Foreign Account Tax Compliance Act" aims to force foreign financial institutions, foreign trusts and foreign corporations to provide information about their U.S. accountholders, grantors and owners. The government and financial firms in the Cayman Islands have supplied full financial information and tax information for many years under the 1990 and 2001 treaties with the United States, and take pride in the regulatory and fiscal transparency that is a requirement for IOSCO (International Organization of Securities Commissions) membership. Cayman has also signed tax transparency treaties with the European Union and more than 12 other jurisdictions.

"Cayman Finance is confident that enactment of the U.S. legislation proposed by the two Chairmen will contribute significantly to the certainty and stability that the capital markets require, as well as the ability of the Cayman Islands to continue to successfully fund United States institutions from those markets," Travers said.

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McIntosh State Bank Announces Agreement with Regulators

/PRNewswire/ -- Pete Malone, Chief Executive Officer of McIntosh State Bank, headquartered in Jackson, Georgia, has announced that after working with the Georgia Department of Banking & Finance and the Federal Deposit Insurance Corporation, a formal agreement has been reached that is designed to make sure the bank is correcting identified problems in a good faith effort on the part of both the Board of Directors and the bank's management team. The regulatory order, known officially as a "cease and desist order", which the board signed on October 15, is designed to improve the condition of the Bank. The basis for the order is largely due to the bank's concentration in residential real estate acquisition, development and construction loans, coupled with the effects of the current real estate and economic downturn. It is based primarily on the bank's numbers as opposed to any specific actions or non-actions by bank officers and employees.

Mr. Malone was quoted as saying, "We have been expecting this order and have already met many of its requirements. We will continue to operate under a business as usual environment and look forward to making additional positive progress to satisfy regulators' directives." According to Mr. Malone, the bank has plans to raise additional capital to meet the terms of the agreement. This is in addition to the $3 million in capital injected by the bank's directors and executive officers in December 2008. The bank's directors and executive officers have also relinquished over $1 million in retirement plan compensation as a further boost to capital. Mr. Malone further noted, "One of our biggest accomplishments in 2009 has been our ability to sell over $8.4 million of foreclosed real estate. We also have an additional $1.5 million in real estate under contract. A bank's health is indicative of the community it serves, and we believe in the ultimate health of our local economy and plan to be in position to thrive as conditions improve. The factors that made our local areas attractive for growth over the last several years continue to exist."

Regulatory orders have become more common as a result of the current economic downturn. Many Georgia banks with significant concentrations of non-performing assets are believed to be subject to some form of enforcement action. McIntosh State Bank has two banking offices in Henry County, one of the hardest hit areas in Georgia. Mr. Malone said, "Because much of our bank's market is located in the South Atlanta region, we participated in the area's real estate growth and its subsequent slowdown. We are very focused on addressing our problems and working through them."

McIntosh State Bank, a subsidiary of McIntosh Bancshares, Inc. (Other OTC: MITB.PK), was established in 1964 and operates four full service bank locations in Jackson, Monticello, McDonough and Locust Grove. As of September 30, 2009 the bank had assets of $419.4 million and deposits of $373.3 million.

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Ameris Bancorp Announces Acquisition of American United Bank

/PRNewswire/ -- AMERIS BANCORP (NASDAQ: ABCB) , announced today (October 23) that its wholly-owned banking subsidiary, Ameris Bank, has entered into a definitive agreement with the Federal Deposit Insurance Corporation (the "FDIC") to assume all of the deposits and acquire certain assets of American United Bank, a full service, single office bank located in Lawrenceville, Georgia. The Georgia Department of Banking and Finance today (October 23) declared American United Bank closed and appointed the FDIC as receiver.

As a branch of Ameris Bank, the Lawrenceville location will be open and serving customers on Monday, October 26, 2009, during the bank's normal business hours. American United Bank depositors will automatically become depositors of Ameris Bank, and deposits will continue to be insured by the FDIC. With this acquisition, Ameris Bank will now operate 51 locations in Georgia, Florida, Alabama and South Carolina.

Edwin W. Hortman, Jr., President & CEO of Ameris Bank commented, "We are excited to welcome the American United Bank customers and employees to Ameris Bank. Customers can be confident that their deposits are safe and readily accessible. Ameris Bank has supported the financial needs of local communities since 1971 and is excited about continuing this tradition through loss-sharing arrangements with the FDIC."

As a result of this acquisition, Ameris Bank will be acquiring the assets and deposits of American United Bank at a discount of $19,645,000 and a premium on deposits totaling approximately $286,000. Ameris Bank will assume approximately $101 million in total deposits and acquire $83 million in total loans and $3.6 million in other real estate (ORE). The loans being purchased are covered by a loss share agreement which affords Ameris Bank significant loss protection for the next five years.

Ameris Bancorp is headquartered in Moultrie, Georgia, and has 51 locations in Georgia, Alabama, northern Florida and South Carolina. For additional information about Ameris Bank, please visit our web site at www.amerisbank.com.

Ameris Bancorp Common Stock is quoted on the NASDAQ Global Select Market under the symbol "ABCB". The preceding release contains statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "believe", "estimate", "expect", "intend", "anticipate" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates which they were made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Readers are cautioned not to place undue reliance on these forward-looking statements.

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Lawmakers Pass Amendment to Exclude Auto Dealers From New Federal Agency

/PRNewswire/ -- The House Financial Services Committee approved a key amendment, 47-21, to keep automobile dealers under the already effective federal and state laws which govern vehicle financing.

The amendment, sponsored by Rep. John Campbell, R-Calif., will not subject auto retailers to the regulations of the proposed Consumer Financial Protection Agency (CFPA), but will continue the full range of consumer protection rules of the Federal Reserve, the Federal Trade Commission and state laws.

The National Automobile Dealers Association (NADA) led a grassroots campaign in support of the Campbell Amendment.

"NADA and dealers across the country applaud the overwhelming bipartisan support for the Campbell Amendment," said David Westcott, chairman of NADA's Government Affairs Committee and a multi-franchise dealer from North Carolina. "It makes sense to exclude dealers. Dealers had absolutely nothing to do with the credit crisis."

H.R. 3126, the Consumer Financial Protection Agency Act, later passed the full committee with the Campbell Amendment included. However, the bill still has a number of other hurdles before reaching the White House for final approval. The House Energy and Commerce Committee, which also has partial jurisdiction over the new agency, will have an opportunity to consider the bill before a House vote. The Senate will have to go through a similar process.

NADA's legislative office, as well as dealers across the country, will continue to be involved throughout the process. "We will continue to work on behalf of consumers and dealers to maintain dealer-assisted financing as an efficient and competitive credit-delivery system," Westcott said.

"We applaud Rep. Campbell for his leadership in building strong bipartisan support in the financial services committee," Westcott said. "The overwhelming majority of committee members clearly understand that CFPA jurisdiction over dealers is unnecessary and that increased uncertainty in the auto marketplace would limit consumer finance options and increase car buyers' costs."

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Banks’ Actions on Credit Cards Undermine Consumer Protections

Low- and middle-income households with credit card debt owe, on average, $9,827 on their cards. If you make the minimum monthly payment -- under many agreements 2 percent of the balance or $10 -- at 10 percent interest, it will take you more than 26 years to pay off the balance, including $6,812 in interest payments.

But what if the rate was raised even higher, or if your rate was tacked to the prime rate (currently 3.25 percent). It could take more than a lifetime to pay off that kind of debt.

In May, Congress adopted the Credit CARD Act to protect consumers from capricious rate hikes. Under the act, banks must give consumers at least 45 days notice before raising their rates. And beginning in February 2010, banks cannot raise rates on existing balances unless a consumer is in default.

Just last week, however, House Financial Services Committee chair Barney Frank accused banks of abusing the “grace period” they were given before all the law’s provisions take effect. Unfortunately for consumers, he’s right.

For example, Wells Fargo announced last week it was raising rates on existing accounts by up to 3 percentage points. Other card issuers, including such large banks as Bank of America and JPMorgan Chase, also have been accused of raising rates on balances prior to the law’s effective date.

Additionally, in June, Bank of America and Chase switched many cardholders from fixed- to variable-rate cards. Variable-rate cardholders are not protected from unexpected rate changes under the new law, because rate changes are permitted as the prime rate moves up and down.

Those most likely to be harmed by higher borrowing costs are consumers who are relying on their credit cards to carry them through the economic downturn. According to Démos, a non-partisan research and advocacy organization, most low- and middle-income households with high debt-stress levels -- the ratio of a family’s credit card debt to their annual income -- use their credit cards to pay for unavoidable expenses, such as medical expenses or to cover household essentials after a job loss, not for discretionary items.

Higher rates lead to longer payoff periods and thousands of extra dollars in interest payments. Let’s take the case of the average low- and middle-income households with $9,827 in credit card debt. If they continue to make the minimum monthly payment on that amount but at 13 percent interest plus prime, rather than our previous example of 10 percent interest, it must pay $19,897 in interest payments over the more than 45 years it will take to clear the balance. And because the prime rate is at historically low levels, this example likely presents a best-case scenario.

Many cardholders have responded to the downturn and the higher borrowing costs by reducing their debt. In July, revolving credit, which is largely credit-card borrowing, declined. For many, however, reducing debt during these tough times is not an option.

Moreover, changes in the availability of credit are also making it more difficult for cardholders to protect themselves from the banks’ actions. In the past, cardholders could demand better terms by threatening to take their business elsewhere. Today, this option is limited, because many banks have tightened credit-card approval standards.

Banks may be putting themselves at risk by their actions as well. If consumers are subjected to usurious rates as the prime rate rises, more will inevitably default on their debt. Banks will find it difficult to make up for these losses by further raising rates on consumers who are already stretched to their limits.

Bank of America vowed last week to stop raising interest rates before the February limits take effect, making the announcement as Rep. Franks’ committee met to consider moving up the effectiveness date of the new legislation. But such a promise offers too little, too late for many consumers who have already been harmed.

It is time for banks to rethink their recent moves and for Congress to do more to protect consumers.

By Jamie Lau

Jamie Lau is a research fellow with the Community Enterprise Clinic at Duke Law School.

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Georgia Credit Unions Celebrate National 100th Anniversary With 'A Century of Good Advice'

/PRNewswire/ -- Credit unions throughout Georgia today mark the 100th anniversary of cooperative financial institutions in the U.S., and the 75th anniversary of the Georgia Credit Union League, by sharing "A Century of Good Advice." Coinciding with the celebration of International Credit Union Day on Oct. 15, this initiative includes the release of a poll on the savings and spending habits of Georgia consumers, as well as the debut of an online video featuring Georgians of both young and senior ages offering their advice, hopes and dreams for a happy, sound life. In addition, Governor Sonny Perdue yesterday signed a special proclamation honoring International Credit Union Day. The poll results and video are available at www.georgiacreditunions.org.

More than 1,000 credit union members from across the state were polled on questions ranging from the most influential person in their lives financially, to the best financial advice they ever received, to their current spending and savings habits based on the recent recession. Among the poll findings:

-- 46% spend less than they did one year ago; 41% spend the same as they
did a year ago
-- 65% of those polled say that their personal spending habits will be
changed forever because of the current recession
-- 53% say that either their mother or father was the biggest influence
in their lives about money; The breakdown of those who chose father
vs. mother was almost even: 27% said father, 26% said mother

Online Video Featuring Georgians

The short online video, "A Century of Good Advice," features Georgia seniors offering their experience and advice to younger generations for financial and emotional success, balanced with young Georgians who display their dreams for the future and the financial awareness they have gained even at a young age.

"At a time when Georgians are concerned about their spending habits and financial security, it's refreshing to see the financial struggles and triumphs of previous generations and the optimism and enthusiasm of future generations," said Michael Mercer, president and CEO of Georgia Credit Union Affiliates (GCUA). "By compiling testimonials of Georgians young and old about spending and savings habits over the years, Georgia credit unions hope to provide consumers with insight and inspiration for their own financial futures."

Video participants include: Jesus Beltran, Peachtree City; Sarah Diamond, Chamblee; Jesse Dixon, Atlanta; Bob Fowler, Albany; Grady Gafford, Macon; Brian Mulherin, Augusta; Betty Phillips, Macon; and Connie Potts, Conyers.

In addition to viewing the video at www.georgiacreditunions.org, consumers also can visit facebook.com/creditYOUnion to view the video and share their own advice.

It's important for consumers to know that it has never been easier to join a credit union. Many credit unions now open their membership to the broader local communities where they operate. To find a local credit union or for more information, go to www.georgiacreditunions.org.

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