The more things change, the more they stay the same. Ten years ago today, the Obama Administration unveiled its $1 trillion plan to shore up the banking industry amid the financial crisis. Here is how ABC News reported it at the time: President Obama said today that his economic team is “very confident” that the administration’s newest effort to stabilize banks – a mix of public and private funds that could total $1 trillion – will help to free up credit. The president spoke shortly after Treasury Secretary Timothy Geithner officially announced the long-anticipated program. The plan aims to remove so-called toxic assets – many of them bad mortgage investments – from the banks’ balance sheets through a private-public partnership. The program will rely heavily…
The mortgage industry on Sunday urged the Treasury Department and Federal Reserve to take additional emergency steps to ensure money is available to lenders at a time when borrowers may be slow to make their mortgage payments amid the COVID-19 pandemic. The Mortgage Bankers Association called for an increase in the scope of mortgage-backed securities (MBS) and the development of a facility to support mortgage lenders in anticipation of widespread delays in payments from property owners. “We believe these actions should be taken as urgently and swiftly as possible to counter volatility in the market, protect consumers, and ensure all market participants that the liquidity strains being caused by COVID-19 do not escalate into solvency problems throughout financial markets,” MBA…
The federal government on Wednesday ordered a 60-day moratorium on foreclosures and evictions for single-family homeowners with Federal Housing Administration, Fannie Mae and Freddie Mac-backed mortgages amid the coronavirus pandemic. U.S. Department of Housing and Urban Development Secretary Ben Carson announced the moratorium for FHA loans, which directs mortgage companies to: Halt all new foreclosure actions and suspend all foreclosure actions currently in process; andCease all evictions of persons from FHA-insured single-family properties. The Federal Housing Finance Agency also directed Fannie Mae and Freddie Mac to suspend foreclosures and evictions for at least 60 days due to the coronavirus. FHFA also announced earlier this month that Fannie and Freddie would provide “payment forbearance” to borrowers impacted by the coronavirus. Forbearance…
The Federal Reserve Board announced Tuesday that it will establish two “facilities” to support the flow of credit to people and businesses during the turmoil caused by the coronavirus pandemic. The Fed is establishing a Commercial Paper Funding Facility (CPFF) and a Primary Dealer Credit Facility (PDCF), both designed to ensure credit is available to Americans. The Treasury will provide $10 billion of credit protection to the Federal Reserve in connection with the CPFF from the Treasury’s Exchange Stabilization Fund. “By providing short-term credit, the CPFF will help American businesses manage their finances through this challenging period,” U.S. Treasury Secretary Steven T. Mnuchin said. “The CPFF will provide a liquidity backstop to U.S. issuers of commercial paper through a special…
The Federal Deposit Insurance Corporation announced Monday that the early retirement and separation program offered to up to 20 percent of its workforce has been suspended as part of the agency’s response to the coronavirus. The FDIC announced the buyouts earlier this month, saying the program is an effort to rebalance the workforce by growing its examination and risk-related teams. Additionally, the FDIC plans to add specialized information technology, computer science, data management and loan-review personnel. As part of the plan, the FDIC announced several field offices will be closed and consolidated with other offices. In announcing the suspension of the buyout program, the FDIC also announced: The Board of Directors meeting Tuesday will be held on a “notational basis.” Vote results and…
Federal banking agencies on Monday urged lending institutions to use the Federal Reserve Discount Window, which helps commercial banks manage short-term liquidity needs. In a statement, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency encouraged “depository institutions to use the discount window to meet demands for credit from households and businesses at this time.” The agencies said, “By providing ready access to a backup source of funding, the discount window helps depository institutions manage their liquidity risks efficiently and avoid actions that have negative consequences for their customers, such as withdrawing credit during times of market stress. Thus, the discount window supports the smooth flow of credit to households and businesses.”…
Noting that “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” the Federal Reserve voted Sunday to lower the benchmark interest rate to 0 percent. “The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook,” the Federal Reserve announced. “In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent.” The vote comes after the Fed had just made an emergency rate cut on March 3 to 1 percent to 1.25 percent and pumped $1.5 trillion into the bond market last week. The Fed said it is “prepared to use…
A coalition of six banking regulators announced Monday that it would support financial institutions if they are impacted by the coronavirus. The statement came from the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency and the Conference of State Bank Supervisors. “The agencies understand that many financial institutions may face current staffing and other challenges,” the agencies said in a statement. “In cases in which operational challenges persist, regulators will expedite, as appropriate, any request to provide more convenient availability of services in affected communities. The regulators also will work with affected financial institutions in scheduling examinations or inspections…
The Consumer Financial Protection Bureau announced Monday a lawsuit against Fifth Third Bank for allegedly creating fake accounts on customers’ behalf to artificially inflate sales numbers. Fifth Third officials said in a news release that it “rejects” the allegations in the lawsuit. The CFPB said that for several years Fifth Third created accounts without consumers’ knowledge. For several years, the CFPB says, Fifth Third employees created fake credit card accounts, improperly transferred money into fraudulently opened accounts, enrolled customers in unauthorized online-banking services, and activated unauthorized lines of credit on consumers’ accounts. “Fifth Third Bank respects and values the important role that the CFPB plays in protecting consumers but believes that the civil suit filed today is unnecessary and unwarranted.…
House Financial Services Committee Chairwoman Maxine Waters expressed concern about the Federal Deposit Insurance Corporation’s plan to close offices and offer buyouts to 20 percent of its workforce. “I am deeply concerned by the FDIC’s decision to massively downsize its experienced workforce and close or consolidate offices in Los Angeles and across the nation,” Waters, D-California, said. “The FDIC should be working to ensure stability in the financial system, not to destabilize the livelihoods of its employees.” Last week, the FDIC announced it is offering voluntary retirement and early separation to as many as 1,200 employees. It also said several field offices will be closed and consolidated with other offices, including those in Oklahoma, Florida, Kentucky, Tennessee and Ohio. The…
