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Tag Archives: Basel III

Fed Approves of Final Rule for Basel III Implementation

The Basel III reforms were created to address ""shortcomings in capital requirements, particularly for larger, internationally active banking organizations, that became apparent during the recent financial crisis."" The Fed also announced a number of changes in the rule designed to address concerns about the regulatory burden on smaller community banks.

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Fitch Sees Potential in FHFA’s Goals to Attract Private Capital

The goal of attracting private capital into the mortgage market is at the center of discussions throughout the industry and the government. Thus far, ""efforts by the Federal Housing Finance Administration and other federal agencies to provide incentives for the creation of a vibrant private mortgage securitization market have been largely unsuccessful,"" according to Fitch Ratings. However, the ratings agency does see some promise in a couple of FHFA's goals.

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Fitch: BofA’s MSR Sales Indicate New Trend Among Big Banks

Following Bank of America's announcement of a $306 billion sale of mortgage servicing rights (MSRs) Monday and amid talk of more MSR sales from the bank Thursday, Fitch suggests BofA may not be alone in its strategy of unloading MSRs. ""We believe that other banks with large MSR assets may also begin to complete sales or pursue other strategies to limit their size on bank balance sheets,"" Fitch said this week. Fitch specifically points to Wells Fargo and JP Morgan as banks likely to fall in line with BofA's approach.

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Banks May Get More Time on Basel III Requirements

The implementation of the Basel III capital rules may be postponed beyond the start of 2013, according to a joint statement released by the Office of the Comptroller of the Currency, the FDIC, and the Federal Reserve. The announcement follows a comment period during which many trade organizations and institutions expressed apprehension about the new requirements.

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Fed’s Duke Supports Idea of Different Rules for Community Banks

While admitting that creating mortgage lending regulations that prevent abuse without over-burdening community banks is challenging, Federal Reserve governor Elizabeth A. Duke suggested Friday that policymakers ""abandon efforts for a one-size-fits-all approach."" Duke first let community bankers know the federal regulatory agencies agreed to postpone the requirements that were set to go into effect at the start of next year. She also said in most cases, evidence supports community bankers' claims that their lending practices did not lead to the financial crises. For example, for community banks, their serious delinquency rate for subprime loans did not go much over 4 percent.

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How Proposed Basel III Rules Could Impact MSRs

The value of mortgage servicing rights (MSRs) may be changing, and the market for acquiring MSRs may be heating up. This market phenomenon is the result of the proposed Basel III capital rules applicable to banks. For non-banks, the Basel III rules may seem irrelevant, but that could be a mistake. The Basel III rules could change how MSRs are priced, who owns the MSRs, and ultimately which servicers handle servicing for the loans that relate to the MSRs.

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