Banking Weekly Rundown
BANK NEWS:
• Helpful Change: Community bankers will be very interested to know that the Dodd-Frank Act includes a provision that raises the threshold triggering a material loss review (MLR) to$200mm from the current $25mm or 2% of assets. MLRs are conducted when a bank fails and investigators try and explain why it failed and where examiners went wrong. The problem with MLRs is that they also tend to increase fear, change behavior and lead to second-guessing.
• No Value: Both the ICBA & ABA are calling on FASB to with draw its exposure draft and not proceed with proposed fair value accounting changes. If passed, the proposal would require banks to record all financial assets (including loans)and liabilities at fair value on the balance sheet.
• Ugly Autos: The world’s 3 largest automakers reported the biggest monthly sales decline in 28Ys yesterday, as US
consumers pulled back sharply on big-ticket purchases. Toyota reported a 34% drop in deliveries, General Motors slid 25% and Ford dropped 11%. All were much worse than projected.
• Clear And Focused: Dallas FRB President Fisher (alternate voting FOMC member) said that while he did not have a specific position on whether Congress should launch any new spending programs, if any were to surface they should “be focused on providing incentives for job creation.”
• Office Stress: Analysis by CBRE Econometrics Advisors finds vacancy rates for office in the 2Q climbed to 16.7%, the 11th consecutive quarter of vacancy growth.
