National News

Second quarter industry earnings show continued improvement.In the second quarter, the banking industry earned $42.2 billion, a 22.6 percent increase from the $34.4 billion in profits the industry reported a year ago, according to information released August 29 by the FDIC. Marking the 16th consecutive quarter with a year-over-year increase in earnings, average return on assets rose to 1.17 percent from 0.99 percent last year. This is the highest quarterly ROA for the industry since the 1.22 percent posted in the second quarter of 2007. Across all lending categories, total loan and lease balances increased by $73.8 billion in the second quarter. Commercial and industrial loan balances rose by $30.4 billion. Asset quality also improved. Bank charge-offs dropped by $6.3 billion to $14.2 billion in uncollectible loans. Noncurrent loans and leases fell by $21.7 billion. The number of problem banks declined to 553 from 612. .Small business optimism returns to pre-recession levels.Small business optimism is the highest it has been since third quarter 2008, according to the latest Wells Fargo/Gallup Small Business Index released in August. Optimism improved to 25 in the second quarter, a jump of 36 points since the fourth quarter of 2012. Third quarter 2010 was the lowest recorded index at negative 28. While the index has improved, only a quarter of small business owners reported an increase in capital spending in the past 12 months. Additionally, only a quarter said they are planning to increase spending over the next year. The No. 1 reason business owners cited for not making a capital investment was continued overall concern about the economy..Fed to appeal interchange fee decision.The Federal Reserve will appeal the U.S. District Court decision that ruled the Fed had illegally overpriced debit-card transaction fees, a lawyer for the central bank said. On July 31, Judge Richard Leon of the District of Columbia said the Fed considered costs not allowed by the Dodd-Frank Act when it capped interchange fees at 21 cents plus up to 5 basis points per transaction. He required the Fed to reduce the fee. On August 21, Scott Alvarez, the Fed's general counsel, told Leon that the agency will appeal his ruling to a higher court before it will redraft its interchange rules. The Fed also asked Leon for a longer stay of his ruling, requesting the court allow the current rule to remain in place until the end of the legal process. .FDIC goes after former bankers.In order to recoup losses from the bank failures of the Great Recession, the FDIC has initiated legal battles against hundreds of former bank directors and officers for failures that cost the deposit insurance fund billions of dollars. The agency has announced 76 lawsuits against 574 former bank executives since 2008. Thus far in 2013, thirty-two cases have been filed, which is three times the number of cases filed by August in 2012. Losses from 483 banks, many of them small community banks, depleted the DIF by $89 billion over the past five years, according to the FDIC. Thus far, the FDIC has recovered $727 million from individuals associated with failed banks. Just one of these lawsuits reached a jury.