Accurate, Focused Research on Law, Technology and Knowledge Discovery Since 2002

Daily Archives: February 24, 2015

FDIC-Insured Institutions Earned $36.9 Billion in the Fourth Quarter of 2014

FDIC news release: “Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported aggregate net income of $36.9 billion in the fourth quarter of 2014, down $2.9 billion (7.3 percent) from earnings of $39.8 billion that the industry reported a year earlier. The decline in earnings was mainly attributable to a $4.4 billion increase in litigation expenses at a few large banks. More than half of the 6,509 insured institutions reporting (61.2 percent) had year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable during the fourth quarter fell to 9.4 percent from 12.7 percent a year earlier. “The banking industry continued to improve at the end of the year,” FDIC Chairman Martin J. Gruenberg said. “Although total industry earnings declined as a result of significant litigation expenses at a few large institutions and a continued decline in mortgage-related income, a majority of banks reported higher operating revenues and improved earnings from the previous year. In addition, banks made loans at a faster pace, asset quality improved, and the number of banks on the ‘Problem List’ declined to the lowest level in six years.” Chairman Gruenberg added: “Community banks performed especially well during the quarter. Their earnings were up 28 percent from the previous year, their net interest margin and rate of loan growth were appreciably higher than the industry, and they increased their small loans to businesses.” Community banks earned $4.8 billion during the quarter. Based on criteria developed for the FDIC Community Banking Study published in December 2012, there were 6,037 community banks (92.7 percent of all FDIC-insured institutions) in the fourth quarter of 2014 with assets of $2.1 trillion (13.3 percent of industry assets). Fourth quarter net income of $4.8 billion at community banks was up $1.0 billion (27.7 percent) from a year earlier, driven by higher net interest income, increased noninterest income, and lower loan-loss provisions. Community banks’ net income, net interest income, noninterest income, and loan balances all grew at a faster pace than the industry as a whole. Asset quality indicators showed further improvement, and community banks continued to hold 45 percent of small loans to businesses. For the industry as a whole, loan and lease balances rose $149.4 billion (1.8 percent) in the fourth quarter to $8.3 trillion. Commercial and industrial loans increased by $42.2 billion (2.5 percent), and credit card balances grew by $35.4 billion (5.2 percent). Over the past 12 months, loan and lease balances increased 5.3 percent. This is the highest 12-month growth rate for loans since mid-year 2008. Net interest income was $1.1 billion (1 percent) higher than a year ago, as the industry’s interest-bearing assets increased 6.2 percent in 2014. Almost three out of four institutions (70.5 percent) reported higher net interest income than in the fourth quarter of 2013. The average net interest margin (the difference between the average yield banks earn on loans and other investments and the average cost of funding those investments) was 3.12 percent, down from the 3.27 average in the fourth quarter of 2013. This is the lowest quarterly average margin since the 3.11 percent reported in the third quarter of 1989, as larger institutions continued to increase their holdings of low-yield, liquid investments.”

Hoard Behavior During Commodity Bubbles

de Paula, Aureo and Hong, Harrison G. and Singh, Vishal, Hoard Behavior During Commodity Bubbles (February 2015). CEPR Discussion Paper No. DP10441. Available for download at SSRN: http://ssrn.com/abstract=2569270 “Hoarding by large speculators is often blamed for contributing to commodity market panics and bubbles. Using supermarket scanner data on US household purchases during the 2008 Rice… Continue Reading

Hawks and Doves at the FOMC

Eijffinger, Sylvester C. W. and Mahieu, Ronald and Raes, Louis, Hawks and Doves at the FOMC (February 2015). CEPR Discussion Paper No. DP10442. Available for download at SSRN: http://ssrn.com/abstract=2569271 “In this paper we estimate ideal points of Bank Presidents and Board Governors at the FOMC. We use stated preferences from FOMC transcipts and estimate a… Continue Reading

Process Systems Engineering as a Modeling Paradigm for Analyzing Systemic Risk in Financial Networks

Office of Financial Research (OFR) Working Paper Series, February 11, 2015: “Financial instability often results from positive feedback loops intrinsic to the operation of the financial system. The challenging task of identifying, modeling, and analyzing the causes and effects of such feedback loops requires a proper systems engineering perspective lacking in the remedies proposed in… Continue Reading

HBR – What Millennials Want from Work, Charted Across the World

Harvard Business Review – Henrik Bresman, February 23, 2015: “As more Millennials assume leadership positions around the world, organizations are becoming increasingly concerned with how to ensure their success. However, most existing research on those born between the early ‘80s and late ‘90s is skewed toward understanding what a narrow, typically Western, population wants. Conclusions… Continue Reading

Financial Regulators Issue Guidance Encouraging Youth Savings Programs

“Five federal financial regulatory agencies today issued guidance to encourage federally insured depository institutions to offer youth savings programs to expand the financial capability of young people. The guidance also provides answers to frequently asked questions related to the establishment of these programs. Many financial institutions already collaborate with schools to establish programs that allow… Continue Reading

Alaska Leads U.S. States in Well-Being for First Time

“This story is part of Gallup’s annual “State of the States” series, which reveals state-by-state differences on political, economic, religion and well-being measures.” “WASHINGTON, D.C. — Alaska residents had the highest well-being in the nation in 2014, reaching the top spot for the first time since Gallup and Healthways began tracking well-being in 2008. West… Continue Reading

Can the FCC Attract a Full House for the 2016 Broadcast Incentive Auction?

Kagan Media Appraisals: “Our assignment was to prepare an analysis of the financial capacity and competitive appetite of the wireless carriers, in particular AT&T and Verizon, to fully participate in back-to-back AWS-3 and 600 MHz Incentive auctions, assuming a 2016 start date for the 600 MHz Incentive Auction. This report is for informational purposes only… Continue Reading

The Geography of Economic Segregation in America’s Metros

“The MPI aims to deepen our understanding of economic prosperity. Housed at the University of Toronto’s Rotman School of Management, MPI’s mission is to develop a new understanding of, and inform, the broader public conversation about shared and sustainable prosperity that should be an essential part of democratic capitalism.” “Americans have become increasingly sorted over… Continue Reading

New GAO Reports – DOD Acquisition Reform, Drug-Impaired Driving

Acquisition Reform: DOD Should Streamline Its Decision-Making Process for Weapon Systems to Reduce Inefficiencies, GAO-15-192: Published: Feb 24, 2015. Publicly Released: Feb 24, 2015. Drug-Impaired Driving: Additional Support Needed for Public Awareness Initiatives, GAO-15-293: Published: Feb 24, 2015. Publicly Released: Feb 24, 2015. Continue Reading

CRI/CIR advises Belgian Privacy Commission in Facebook investigation

“In December 2014, Facebook announced that it would revise its Data Use Policy and Terms of Service. At the request of the Belgian Privacy Commission, ICRI/CIR (KU Leuven), in cooperation with iMinds-SMIT (Vrije Universiteit Brussel) conducted an extensive analysis of Facebook’s revised policies and terms. Facebook rolled out its new policies and terms on January… Continue Reading

Violence and harassment in European workplaces: Extent, impacts and policies

Eurofound (2015), Violence and harassment in European workplaces: Extent, impacts and policies. Dublin. “This report presents the extent of workplace violence and harassment in the EU28 and Norway. It is based on national – level surveys conducted between 2009 and 2013, as well as on results from Eurofound’s fifth European Working Conditions Survey (EWCS). It… Continue Reading