Under the current administration the Consumer Financial Protection Bureau has been operating under the direction of Mick Mulvaney, who is also the head of the Office of Management and Budget. The Bureau is now poised to have a new director, Kathleen Kraninger, who many industry observers believe will be confirmed.
Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported aggregate net income of $62 billion in the third quarter of 2018, up $14 billion (29.3 percent) from a year ago. The improvement in earnings was attributable to higher net operating revenue and a lower effective tax rate.
On October 25, the Fed Board of Governors, the FDIC and the OCC released the 2017 data on small business, small farm and community development lending reported by commercial banks and savings association as required by the Community Reinvestment Act (CRA).
Your fair-lending regression results indicate a statistically significant disparity… now what? In our last blog post, we discussed the importance of a common-sense approach to statistical analysis. One common error in statistical analysis is to assume that a result is practically meaningful just because a result is statistically different from zero. This in not always the case. In fact, finding a statistically significant result may or may not be meaningful.
As fair lending analysis becomes increasingly technical, industry practitioners have had to familiarize themselves with the terminology of statistical analysis. Statistical significance is one of the most common and foundational concepts to successfully navigating these new waters. Moreover, it is a concept that, when misunderstood, may result in serious error.
Community Banks are important economic cornerstones in many communities throughout the nation. According to call report data, commercial banks with less than $10 billion in assets hold 17 percent of total banking assets in the United States but roughly 53 percent of small loans to businesses. From 2008 to 2017, the number of banks this size in the country decreased by one-third and total assets dropped by 14 percent. At the same time, larger bank assets increased by 13 percent over the same period.
In response to the changing risk landscape, the Depository Trust & Clearing Corporation (DTCC) published a whitepaper titled, “The Next Crisis will be Different: Opportunities to Continue Enhancing Financial Stability 10 Years after Lehman's Insolvency.”
On September 26, 2018, United States Senator Elizabeth Warren (D-Mass.) introduced the American Housing and Economic Mobility Act. Among other things, the legislation expands the scope of the Community Reinvestment Act (CRA), grants $500 billion in subsidies to homeowners and investments in low-income housing projects.
Banking regulations contain a degree of subjectivity. Regulations are broad and pertain to the entire industry, but institutions can vary significantly in operations and size even within the subsets of rules that apply to each. Practically speaking, this often leaves the examination process subject to interpretation in terms of what is compliant and what is not.