National News

Holder notes reluctance to sue big banks .Testifying before the Senate Judiciary Committee on March 6, U.S. Attorney General Eric Holder stunned lawmakers with his admission that the Justice Department has been hesitant to prosecute large banks due to concerns about the economic impact of such lawsuits on U.S. and global financial markets. This is the second time a DoJ official has stated such concern. Lanny Breuer, assistant attorney general of the Justice Department's criminal division, said last fall that he "loses sleep" over the economic impact of prosecuting large banks. Community bank advocates said Holder's comments demonstrate that too-big-to-fail banks operate beyond the reach of law enforcement..Community banks focus on fraud reduction .As payments fraud continues to rise, community bankers are looking to technology and staff training to reduce fraud losses, according to a study conducted by the Federal Reserve Bank of Minneapolis. The survey found that fraud had increased for half of community banks when comparing last year to 2011. Most community banks (84 percent) attribute the increase to signature debit card fraud. To combat this, most community banks (70 percent) have deployed enhanced fraud-monitoring systems, and many banks (63 percent) improved staff training and education in addition to implementing technology upgrades. The survey also found that most community banks (93 percent) offered online information services to reduce fraud risk for business customers..Fed to retain interchange fee cap .After issuing the results of its 2012 survey of banks and credit unions on March 5, the Federal Reserve announced it will retain its current interchange fee cap despite revenue declines for issuers both large and small. Currently the Fed's price cap limits banks with more than $10 billion in assets to 21 cents per transaction plus 5 basis points times the value of the transaction, plus a 1-cent fraud-prevention adjustment. Banks below $10 billion are exempt from the price cap. According to the survey, which looks at 2011 information, large banks per transaction fee dropped by 52 percent to an average 24 cents after the Fed initiated the price cap. Small issuers saw interchange fee revenue drop by 4 percent to 43 cents per transaction. .Small banks gain business lending market share.Despite the dominance of banks with more than $10 billion in assets in the small business lending market, smaller banks took market share in 2012, according the data collected by SNL Financial. Overall, the industry had $539.7 billion in nonfarm business loans at the end of last year, which was down by $10.9 billion from 2011. Banks with more than $10 billion in assets hold 45 percent of all business loans. However, these banks actually saw a 1.79 percent decline in their aggregate portfolios in 2012. Banks with assets between $1 billion and $10 billion held 20 percent of all small business loans at year-end; loans at these banks grew by 3.75 percent. And the smallest banks — those with less than $1 billion in assets — held 34 percent of small business loan at year-end. They reported 1.03 percent growth in their portfolios last year, the most growth coming from loans of between $250,000 and $1 million.