December 27, 2017

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The U.S. Department of the Treasury and the Federal Housing Finance Agency (FHFA) agreed to a set of modifications to the terms of the Preferred Stock Purchase Agreements (PSPAs). The agreement allows Fannie Mae and Freddie Mac to maintain a limited capital buffer in an amount that should be sufficient to cover income fluctuations in the normal course of business.
Under the modifications, Fannie Mae and Freddie Mac will be allowed to maintain a capital buffer of $3 billion each. The dividend payment owed to Treasury will be calculated each quarter using the $3 billion capital buffer as a baseline. To compensate taxpayers for the dividends they would have received absent these letter agreements, Treasury's liquidation preference for the Preferred Stock held in Fannie Mae and Freddie Mac will increase by $3 billion as of December 31, 2017. Additionally, any failure by Fannie Mae or Freddie Mac to declare and pay a full quarterly dividend will result in the automatic, immediate termination of its capital buffer.

"Treasury's first duty is to ensure that taxpayers are being protected," said Treasury Secretary Steven T. Mnuchin. "This agreement balances the concerns of the FHFA with compensation for taxpayers. The Administration looks forward to working with Congress on comprehensive housing finance reform, a top priority in the year ahead."

In a statement, FHFA Director Mel Watt indicated that he believed that a $3 billion capital reserve is necessary to cover ordinary income fluctuations. Treasury consented to this request in agreeing to this modification. Further, the FHFA contemplates that the dividends will be declared and paid beyond the $3 billion capital buffer in the absence of exigent circumstances. Both the Treasury and the FHFA believe that a draw on the Treasury funding commitment may be required given tax reform legislation and the write-down of the deferred tax assets held on the balance sheets of Fannie Mae and Freddie Mac.
Credit card payments grew significantly in 2016, increasing 10.2 percent to total 37.3 billion, according to new data from the Federal Reserve. The total value of credit card transactions was $3.27 trillion. Debit card payments grew more modestly, increasing by 6 percent in number and 5.8 percent in value.
The survey found that remote payments continued to grow in popularity - 22.2 percent of all general-purpose credit and prepaid debit card payments made in 2016 were done so remotely, compared to 20.7 percent in 2015.
Meanwhile, payments made through the ACH network grew 5.3 percent by number and 5.1 percent by value, with the value of the average network transfer falling slightly from $2,159 in 2015 to $2,156 in 2016. Checks continued to decline - falling 3.6 percent by number and 3.7 percent by value.
The data also reflected the U.S.' ongoing transition to chip card technology, which began in 2015. The number of general-purpose card payments made using chip cards reached 15.1 billion by number in 2016, up from 1.5 billion in 2015. As the transition took place, the survey also noted a shift in card fraud trends away from in-person fraud - the type of fraud chip technology is designed to prevent - to remote fraud. In-person fraud declined from 53.8 percent of total card fraud in 2015 to 41.5 in 2016, while the share of remote fraud increased from 46.2 percent in 2015 to 58.5 percent in 2016.
The data >>>>   
by Mark Totten,  The Hill  

As the legal fight over leadership of the Consumer Financial Protection Bureau lingers, the states are flexing their muscles and promising to fill the gap.
Last week, a group of 17 attorneys general  wrote  President Trump and vowed to "vigorously enforce state and federal laws to ensure fairness and deter fraud." The legal chiefs pledged to "redouble our efforts at the state level" if the president impedes the agency from carrying out its mission.
The AGs are on solid ground.  In fact, they may have more power than they realize.
When Congress passed the Dodd Frank Act of 2010, the centerpiece of consumer protection was the Consumer Financial Protection Bureau (CFPB), a new agency that would serve as a federal watchdog and protect consumers from predatory practices. Tucked away in the act was an  obscure provision that empowered state attorneys general to enforce federal laws protecting consumers in the financial marketplace. These laws include a  new prohibition against any "unfair, deceptive, or abusive act or practice" in the offering of any financial product or service, and  arguably a long list of consumer finance laws already on the books.  
Learn More >>>> 
 by Frank Koechlein, The Financial Brand 
There is a troubling gap growing in the adoption rates of advanced analytics between community institutions and their big bank counterparts. Half the banks with $50+ billion assets have already implemented advanced analytics, but less than 9% of institutions under $1 billion have done the same.
Here is another alarming statistic from the Federal Reserve. In the past few years, one of every four community banks has vanished. A similar plight has afflicted America's financial cooperatives, where 7,165 credit unions in 2012 shrank to only 5,812 in 2017, a drop of 19% in just five years. That leaves megabanks - those with $100+ billion in assets - controlling approximately $3 of every $5 dollars in the U.S. banking system.
Leadership teams that don't see the dashed line connecting these facts might feel comfortable continuing to drag their feet on a data strategy. These two inter-related trends pose a major threat to community banks and credit unions. 
Continue >>>> 
Farmer Mac Reports $385M in New Business      
Farmer Mac reported $385.4 million in net new business volume grow th in the third quarter, which brought total outstanding business volume to $18.6 billion
Net income attributable to common stockholders was $18.5 million, compared to $17.5 million in the second quarter and $16.4 million the in third quarter of 2016.    
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