Credit Card Reform Bill Passes through the House
The House passed by an 312-112 vote a credit card reform bill (H.R. 5244). Dubbed the "Credit Cardholders' Bill of Rights," the legislation, among other things, would allow cardholders to cancel cards when faced with rate increases, while paying off existing balances at agreed-to rates; prohibit retroactive rate increases on existing balances; and require payments made by 5 p.m. EST on a bill's due date to be credited for that day.

Released by the ABA

Fed Loans AIG $85 Billion
In an attempt to save financial markets and economy, the U.S. government agreed to provide an $85 billion emergency loan to rescue the huge insurer AIG. Treasury Secretary Henry Paulson said the administration was working closely with the Fed, the Securities and Exchange Commission and other government regulators to "enhance the stability and orderliness of our financial markets and minimize the disruption to our economy."

"I support the steps taken by the Federal Reserve tonight to assist AIG in continuing to meet its obligations, mitigate broader disruptions and at the same time protect taxpayers," Paulson said in a statement.

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WaMu Fails, JP Morgan Chase Acquires the Assets
JP Morgan Chase agreed to acquire the deposits of Washington Mutual in a deal that protects all WaMu depositors and has no impact on the Deposit Insurance Fund, the FDIC announced. FDIC said that JPMorgan Chase acquired substantially all of the assets, assumed the qualified financial contracts and made a payment of $1.9 billion. Claims by equity, subordinated and senior debt holders were not acquired.

FDIC Chairman Sheila C. Bair said, "For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning." Click here to read FDIC Press Release.

Published by FDIC

SEC Adopts Rules Against Some Short-selling Opts
Federal regulators took measures aimed at reining in aggressive forms of short-selling that were blamed in part for the demise of Lehman Brothers. Go to Forbes Magazine for the full article.

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Industry Earnings Fall to $5 billion in Second QTR
FDIC reports banks and savings institutions earned $5 billion in the second quarter of 2008, which is $31.8 billion (86.5 percent) less than the industry's $36.8 billion profit in the first quarter of 2007. The size of the earnings decline was attributable primarily to a few large institutions, but 56.4 percent of all institutions reported lower net income, the agency said.

Loan-loss provisions totaled a whopping $50.2 billion in the second quarter, more than four times the $11.4 billion set aside a year ago. Click here to get more information from the FDIC website.

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Citigroup Trims the Fat, Cutbacks on Perks
According to the New York Times, a memo from John Havens, the head of Citi's institutional clients group about expenses indicates that Citi is cutting out the perks. Here's some of the items the cutbacks will affect: management consultants and contractors--cut; color copying and printing are reserved only for client presentations--double sided; computers and other technology that "can be demonstrated to be absolutely critical" will be approved; non-client travel--scaled back; car service and meals--reduced; and external training--limited. Go get the New York Times article.

Released by the New York Times

National Bank Offices Affected by Gustav Can Close
The Office of the Comptroller of the Currency issued a proclamation allowing national bank offices affected by Hurricane Gustav to close at their discretion. The closed offices are encouraged to reopen as quickly as possible to address the banking needs of their customers. Click here to read the proclamation.

Released by the OCC

ABA Intermediate Compliance School in October
The ABA Intermediate Compliance School will begin Oct. 28th through the 30th in Chicago. School topics include assessing risk on new initiatives or product/service enhancements; due diligence for mergers and acquisitions; advertising and marketing reviews; and the intersection of risk families. The curriculum also features a special question-and-answer session and study tips for bankers who are preparing for the Certified Regulatory Compliance Manager exam. Register or contact Perette Bonner. .

Released by the ABA

Visa’s Online Community Taps into Small Biz Market
Visa® unveiled the Visa Business Network , which is dedicated to connecting with small businesses on Facebook®. According to Visa, the Visa Business Network was created with small businesses for small businesses, and is a unique environment built on Facebook Platform for the small business arena. Visa will award a total of $2 million in Facebook advertising credit to help small business owners reach new customers and drive new growth. While this idea may seem novel to some, the truth is that Visa is finally catching up to several top financial institutions, like Bank of America's , have already created applications for social-networking outlets. But what separates Visa from the rest is that instead of building a community on a microsite, Visa chose to partner with Facebook.com.

Relased by VISA®

Budget Deficit Likely to Break US Records in '09
The Treasury Department reported that the deficit for July totaled $102.8 billion, nearly triple the $36.4 billion deficit recorded in July 2007. Revenues in July totaled $160.5 billion, down 6 percent from last year. Outlays rose 27 percent from last year to $263.3 billion, a record for the month of July. Treasury officials noted that calendar factors made last year's outlays lower than usual. Contributing to July's record outlays were $15 billion in Federal Deposit Insurance Corporation (FDIC) disbursements to cover insured deposits at failed financial institutions.

Jim Nussle, the White House budget director, predicted that the deficit would more than double in the current 2008 fiscal year — to $389 billion, from $162 billion in 2007 — before shooting up to $482 billion in the 2009 fiscal year, which begins in about two months. The deficit projected for 2009 would be the largest in absolute terms, easily surpassing the record of $413 billion in 2004.

The national debt, which refers to the cumulative amount the government has borrowed and not repaid, is almost $9.5 trillion, the highest in U.S. history, the U.S. Treasury Department says.

Go to New York Times to read more about it.

Published by New York Times

Sub-prime Woes Hit Credit Unions
The woes of the mortgage industry is affecting everyone, including a few of the nation’s largest credit unions. The Wall Street Journal reported that five of the nation’s largest corporate credit unions (U.S. Central Federal Credit Union, Western Corporate Federal Credit Union, Members United Corporate Federal Credit Union, Southwest Corporate Federal Credit Union, and Constitution Corporate Federal Credit Union) are taking losses on investment grade sub-prime and Alt-A RMBS, as the value of securities in both sectors plummets. Apparently, the losses accumulated by these big players now totals roughly $5.7 billion. Although corporate credit unions aren’t consumer facing, they do provide investment services and financing to more regular credit unions nationwide.

By June, U.S. Central had placed $10.9 billion of its $35.3 billion in investments into the “held for investment” category, according to the Journal, while Western Corporate has moved one-third of its total investments ($9.6 billion) into the same category.

Read the full article

Published by the Wall Street Journal

Mortgage Lenders Cut Direct Mail Efforts
Mintel Comperemedia, a media monitoring service, found that mortgage and home equity lenders reduced direct mail by 50 percent when comparing the first six months of 2008 to the first six months of 2007. Lenders sent an estimated 750 million secured loan mail pieces from January to June 2008, according to the report. In 2007, they sent 1.5 billion during the same period. Secured loan direct mail has been steadily declining each quarter since Q1 2007, when the mortgage and credit mess first came into view. Mintel Comperemedia’s Q2 2008 estimates show mortgage and home equity mail volume 10 percent lower than during Q1 2008 (360 million versus and estimated 400 million mail pieces in Q1). In spite of the mortgage and credit slump however, Chase increased its mail volume 90 percent, while Capital One boosted offers nearly 140 percent between quarters. Each lender’s DM efforts encouraged recipients to refinance into a fixed rate mortgage. Click here to get more information.

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Senator Seeks Higher Fines For Banks In ARS Cases
The highest-ranking Republican on the Senate Finance Committee, Senator Charles Grassley (R-Iowa), wants the Securities and Exchange Commission to ensure that banks--including Citigroup Inc.© and UBS AG (UBS)--don't benefit from a tax deduction on penalties they may face for their involvement in selling auction-rate securities.

Published by CNN

Government Takeover Fannie and Freddie
Both Freddie Mac and Fannie Mae were placed into a government conservatorship that will be run by the Federal Housing Finance Agency. The new agency created by Congress this summer will regulate Fannie and Freddie.

Officials announced that the executives and board of directors of both institutions were replaced. Herb Allison, a former vice chairman of Merrill Lynch, was selected to head Fannie Mae, and David Moffett, a former vice chairman of US Bancorp, was picked to head Freddie Mac.

Treasury Secretary Henry Paulson says the historic actions were being taken because "Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe."

The huge potential liabilities facing each company, as a result of soaring mortgage defaults, could cost taxpayers tens of billions of dollars, but Paulson stressed that the financial impacts if the two companies had been allowed to fail would be far more serious.

"A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance," Paulson said. Go to the Washington Times

Published by the Washington Times

Mortgage Delinquencies & Foreclosures on the Rise
New foreclosures increased from 0.99 percent to 1.19 percent in the second quarter, and the delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a record 6.41 percent, according to a survey by the Mortgage Bankers Association. Click here for more information.

Released by the Mortgage Bankers Associations

Unemployment Rate Up in August
The unemployment rate rose from 5.7 to 6.1 percent in August, and non- farm employment fell by 84,000 jobs, the Labor Department reported. Employment fell in manufacturing and employment services, while mining and health care continued to add jobs. Click here for more information.

Released by the U.S. Department of Labor