AICPA survey reveals lack of awareness of complex financial instruments

More market awareness is needed to prevent another financial crisis, a recent survey of certified public accountants (CPAs) by the American Institute of CPAs (AICPA) found. © Shutterstock Specifically, 53 percent of CPAs polled said there isn’t enough market awareness of complex financial instruments — such as mortgage-backed securities, interest rate swaps or other derivatives […]

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More market awareness is needed to prevent another financial crisis, a recent survey of certified public accountants (CPAs) by the American Institute of CPAs (AICPA) found.

© Shutterstock

Specifically, 53 percent of CPAs polled said there isn’t enough market awareness of complex financial instruments — such as mortgage-backed securities, interest rate swaps or other derivatives — to prevent a financial crisis. In contrast, only 22 percent said they believe there is adequate awareness.

The study revealed that 59 percent of the CPAs surveyed reported having complex financial instruments on their company balance sheets. Of that 59 percent, 69 percent expect financial instruments to become more complex over the next one to three years. Only 1 percent expect them to decrease in complexity.

Additionally, 55 percent said they are concerned about the valuation of derivatives while 56 percent said it would be easier to determine the value of complex financial instruments if they were measured and reported on a consistent and transparent basis.

Complex financial instruments historically have been difficult to value, and that difficulty is seen as a major cause of the financial crisis of 2008.

“With financial instruments growing in complexity and taking up an increasing share of balance sheets, it is imperative that executives and finance teams understand these potentially risky investments,” Ash Noah, managing director of CGMA learning, education and development for the Association of International Certified Professional Accountants, said. “A uniform framework to value financial instruments will provide companies the information they need to make better decisions and offer greater transparency to investors and other stakeholders.”

The AICPA created a Financial Instruments Performance Framework to improve the consistency and transparency of fair value measurements for these complex instruments. The framework will help assure financial statements and disclosures are consistent and supported.

“Creating standard processes for documenting and valuing these instruments will improve clarity and transparency within the valuation profession. This will provide executives, investors, and regulators information on the value of these securities in a consistent manner,” Jeannette Koger, vice president for advisory services and credentialing, said.

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Read more / Original news source: https://financialregnews.com/aicpa-survey-reveals-lack-of-awareness-of-complex-financial-instruments/

OCC Releases CRA Evaluations for 23 National Banks and Federal Savings Associations

The Office of the Comptroller of the Currency (OCC) released a list of Community Reinvestment Act (CRA) performance evaluations that became public during the period of June 1, 2019 through June 30, 2019. The list contains only national banks, federal …

The Office of the Comptroller of the Currency (OCC) released a list of Community Reinvestment Act (CRA) performance evaluations that became public during the period of June 1, 2019 through June 30, 2019. The list contains only national banks, federal savings associations, and insured federal branches of foreign banks that have received ratings.

Read more / Original news source: https://www.occ.gov/news-issuances/news-releases/2019/nr-occ-2019-74.html

OCC Releases CRA Evaluations for 23 National Banks and Federal Savings Associations

The Office of the Comptroller of the Currency (OCC) released a list of Community Reinvestment Act (CRA) performance evaluations that became public during the period of June 1, 2019 through June 30, 2019. The list contains only national banks, federal …

The Office of the Comptroller of the Currency (OCC) released a list of Community Reinvestment Act (CRA) performance evaluations that became public during the period of June 1, 2019 through June 30, 2019. The list contains only national banks, federal savings associations, and insured federal branches of foreign banks that have received ratings.

Read more / Original news source: https://www.occ.gov/news-issuances/news-releases/2019/nr-occ-2019-74.html?utm_source=RSS_feed&utm_medium=RSS

OCC Hosts South Dakota Workshop for Board Directors and Bank Management

The Office of the Comptroller of the Currency (OCC) will host a workshop in Sioux Falls, South Dakota, at the Holiday Inn Sioux Falls – City Centre, August 6-7, for directors, senior management team members, and other key executives of national communi…

The Office of the Comptroller of the Currency (OCC) will host a workshop in Sioux Falls, South Dakota, at the Holiday Inn Sioux Falls - City Centre, August 6-7, for directors, senior management team members, and other key executives of national community banks and federal savings associations supervised by the OCC.

Read more / Original news source: https://www.occ.gov/news-issuances/news-releases/2019/nr-occ-2019-73.html

OCC Hosts South Dakota Workshop for Board Directors and Bank Management

The Office of the Comptroller of the Currency (OCC) will host a workshop in Sioux Falls, South Dakota, at the Holiday Inn Sioux Falls – City Centre, August 6-7, for directors, senior management team members, and other key executives of national communi…

The Office of the Comptroller of the Currency (OCC) will host a workshop in Sioux Falls, South Dakota, at the Holiday Inn Sioux Falls - City Centre, August 6-7, for directors, senior management team members, and other key executives of national community banks and federal savings associations supervised by the OCC.

Read more / Original news source: https://www.occ.gov/news-issuances/news-releases/2019/nr-occ-2019-73.html?utm_source=RSS_feed&utm_medium=RSS

FDIC roundtable addresses minority depository institutions

Efforts to foster collaboration in support of minority depository institution’s (MDIs) continued vibrancy took center stage at a recent Federal Deposit Insurance Corporation (FDIC) roundtable event.© Shutterstock “Collaborative partnerships among large banks and MDIs are critically important not only for individual insured institutions but also for their communities and the vitality of the overall financial […]

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Efforts to foster collaboration in support of minority depository institution’s (MDIs) continued vibrancy took center stage at a recent Federal Deposit Insurance Corporation (FDIC) roundtable event.

© Shutterstock

“Collaborative partnerships among large banks and MDIs are critically important not only for individual insured institutions but also for their communities and the vitality of the overall financial system,” FDIC Chairman Jelena McWilliams said.

The FDIC previously published a resource guide describing how insured depository institutions realize business and regulatory benefits by developing partnerships and other collaborative relationships with MDIs.

The roundtable was held in the wake of the 2019 Interagency MDI and CDFI Bank Conference, which the FDIC hosted in partnership with the Federal Reserve Board and the Office of the Comptroller of the Currency.

An FDIC-generated study outlined the essential role MDIs play in serving low and moderate-income customers, determining MDIs are important service providers to minority populations, which have higher percentages of unbanked households than other groups.

The FDIC seeks to pursue initiatives further promoting and supporting collaborative relationships between non-MDIs and MDIs, such as additional roundtables, clarification on how the relationships receive consideration under the Community Reinvestment Act, raising awareness among insured institutions and targeted training for agency examination staff.

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Read more / Original news source: https://financialregnews.com/fdic-roundtable-addresses-minority-depository-institutions/

Consumer bankers urge lawmakers to pass plain-language loan disclosures

The Consumer Bankers Association (CBA) is urging lawmakers to support the Student Loan Disclosure Modernization Act, which would require federal student loans to carry plain-language disclosures on the true cost of the loan.© Shutterstock In a letter to the bill’s sponsors, Sens. Tim Scott (R-SC) and Joe Manchin (D-WV), CBA officials point out that private […]

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The Consumer Bankers Association (CBA) is urging lawmakers to support the Student Loan Disclosure Modernization Act, which would require federal student loans to carry plain-language disclosures on the true cost of the loan.

© Shutterstock

In a letter to the bill’s sponsors, Sens. Tim Scott (R-SC) and Joe Manchin (D-WV), CBA officials point out that private student loans offered by banks already have these disclosures. These disclosures on private loans contribute to a 98 percent repayment rate of private student loans.

“For many students and families, a college education will be one of the most important – and expensive – investments they make,” CBA President and CEO Richard Hunt said. “Unfortunately, federal student loans do not carry a consumer-friendly disclosure like student loans offered by banks. Ensuring students and their families know the true cost of their loan will help them make better long-term decisions and set them up for success after graduation instead of trapping them in a debt trap set by opaque federal disclosures. This bipartisan legislation is a good first step in helping ensure borrowers have the information necessary to make informed decisions about financing higher education.”

The current federal loan disclosures include six pages of legal jargon in fine print and shows only generic loan costs and repayment terms.

The Scott-Manchin bill would streamline the disclosure to explain the costs and terms of the loan specific to the individual borrower.

A recent CBA poll found that 90 percent of borrowers should receive disclosures detailing monthly payments and terms before they take out an education loan. This will promote more informed decision-making and discourage over-borrowing.

CBA also recommends increasing the availability of Pell Grants; renaming “award” letters provided by colleges to the more accurate “financing” letters; and requiring school certification of private education loans.

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Read more / Original news source: https://financialregnews.com/consumer-bankers-urge-lawmakers-to-pass-plain-language-loan-disclosures/

Federal Reserve Board releases annual determination of aggregate consolidated liabilities of financial companies

Federal Reserve Board releases annual determination of aggregate consolidated liabilities of financial companies

Federal Reserve Board releases annual determination of aggregate consolidated liabilities of financial companies

Read more / Original news source: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20190701a.htm

Largest banks meet Fed expectations for capital planning

The nation’s largest banks have strong levels of capital, and most are meeting supervisory expectations for capital planning, the Federal Reserve Board reported last week.© Shutterstock Consequently, as part of its annual Comprehensive Capital Analysis and Review (CCAR) review, it is not objecting to the capital plans of all 18 firms. However, it requires one […]

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The nation’s largest banks have strong levels of capital, and most are meeting supervisory expectations for capital planning, the Federal Reserve Board reported last week.

© Shutterstock

Consequently, as part of its annual Comprehensive Capital Analysis and Review (CCAR) review, it is not objecting to the capital plans of all 18 firms. However, it requires one firm, Credit Suisse, to address limited weaknesses identified from the test.

The CCAR evaluates the capital planning processes and capital adequacy of 18 of the largest banking firms. Stable capital levels are important because they act as a cushion to absorb losses and help ensure that banking organizations can lend to households and businesses even in times of stress.

“The stress tests have confirmed that the largest banks are both well capitalized and place a high priority on strong capital planning practices,” Fed Vice Chair for Supervision Randal Quarles said. “The results show that these firms and our financial system are resilient in normal times and under stress.”

The Fed looks at both quantitative and qualitative factors when evaluating a bank’s capital plan. Quantitative factors include a bank’s projected capital ratio under a hypothetical severe recession while qualitative factors include risk management, internal controls, and governance practices.

If the board objects to a firm’s capital plan, the bank cannot make any capital action unless authorized by the board. The firms in the test have significantly increased their capital since the first round of stress tests in 2009.

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Read more / Original news source: https://financialregnews.com/largest-banks-meet-fed-expectations-for-capital-planning/

Credit Union National Association addresses Senate version of NDAA

Credit Union National Association (CUNA) officials said the organization would continue to work with Congress regarding National Defense Authorization Act (NDAA), despite Senate passage of its version.© Shutterstock The Senate legislation contains CUNA-opposed language, officials said, noting it expands certain waivers for rent and other facilities costs for financial institutions on military installations currently granted […]

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Credit Union National Association (CUNA) officials said the organization would continue to work with Congress regarding National Defense Authorization Act (NDAA), despite Senate passage of its version.

© Shutterstock

The Senate legislation contains CUNA-opposed language, officials said, noting it expands certain waivers for rent and other facilities costs for financial institutions on military installations currently granted to credit unions.

The House version of the NDAA, which advanced the House Armed Services Committee earlier this month, does not contain such language.

The Department of Defense has discretionary authority to waive the cost for land leases and other fees for credit unions that meet the specific field of membership standards and secure an agreement with individual base commanders on a case by case basis. CUNA is expected to work with Congress as the bill moves into conference committee.

The CUNA acknowledged this year’s version of the Senate NDAA language is not as severe as what was in last year’s House NDAA, which CUNA, leagues and the Defense Credit Union Council successfully fought to exclude.

The language in the current Senate-passed NDAA broadens the exemption for banks, but only if they meet the same standards as credit unions eligible for the exemption, most notably that 95 percent of the membership of the institution is active duty or retired service members and their families.

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Read more / Original news source: https://financialregnews.com/credit-union-national-association-addresses-senate-version-of-ndaa/