National News

Legislation would repeal Durbin Amendment.U.S. Reps. Jason Chaffetz (R-Utah) and Bill Owens (D-N.Y.) introduced legislation on Oct. 12 to repeal the debit card interchange price control provisions of the Dodd-Frank Act. "This is a perfect example of the dangers of price controls and the inefficiency of government intervention in the free market," Chaffetz said. "The Durbin Amendment is an affront to consumers and the banking industry. These legislatively enacted price controls have compelled banks to charge consumers higher (and in some cases new) fees to make up for lost revenue." Banking industry trade groups praised the legislation. .Condition of Deposit Insurance Fund improving.The FDIC updated its loss, income, and reserve ratio projections for the Deposit Insurance Fund over the next several years. The projected cost of FDIC-insured institution failures for the five-year period from 2011 through 2015 is $19 billion, compared to estimated losses of $23 billion for banks that failed in 2010 alone. While these loss projections are subject to considerable uncertainty, under these projections and current assessment rates, the fund should reach 1.15 percent of estimated insured deposits in 2018. The Dodd-Frank Act requires the fund reserve ratio reach 1.35 percent by Sept. 30, 2020. After seven consecutive quarters of negative balances, the DIF became positive in the second quarter of 2011, standing at $3.9 billion at June 30. .Fraud and compliance costs rising, community bankers say.Results from the 2011 ICBA Community Bank Payments Survey, conducted every two years, reveal more than 25 percent of respondents ranked compliance costs as their top threat and 75 percent cited it among their top three. As a result of increased fraud and increased regulation, community banks are reporting declining payments revenue – 40 percent of respondents indicate that their consumer payments revenue has decreased over the past year, with 10 percent reporting a significant decrease. Nearly every community bank surveyed was affected by debit card fraud, with 95 percent reporting an associated monetary loss from a customer's debit card last year, an increase of 28 percent since 2009. Ninety-two percent of community banks reissued a debit card last year as a result of fraud. Check fraud also faced a sharp increase, with 76 percent of community banks experiencing monetary losses due to check fraud, an increase of 20 percentage points from 2009. .Income from annuity sales strong.Income earned from the sale of annuities at bank holding companies in the first half of 2011 hit a record $1.53 billion, up 25.0 percent over $1.22 billion earned in first half 2010, according to the Michael White-ABIA Bank Annuity Fee Income Report. Of the 934 BHCs in the country, 383 or 41.0 percent participated in annuity sales activities during first half 2011. Of the 6,805 banks, 887 or 13.0 percent participated in first-half annuity sales activities. BHCs with assets between $1 billion and $10 billion recorded a decrease of 1.1 percent in annuity fee income. BHCs with $500 million to $1 billion in assets generated $12.3 million in annuity commissions in first half 2011, up 12.4 percent from $11.0 million in first half 2010. About one in three banks with $500 million to $1 billion in assets engage in annuity sales activities.