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The Federal Deposit Insurance Corporation (FDIC) is alerting the public to questionable solicitations directed at homeowners. Consumers have contacted the FDIC with questions and complaints after receiving solicitations suggesting there is a “Community Reinvestment Act (CRA) Program” that entitles certain homeowners to cash grants or equity disbursements. Some of these solicitations may imply that the FDIC endorses or supports the offers they contain.

These solicitations appear to be a deceptive effort to encourage consumers to apply for a mortgage loan secured by the consumer’s home. The FDIC does not endorse or sponsor mortgage loan programs. In addition, the federal law known as the Community Reinvestment Act, or CRA, does not require programs as described in the solicitations, nor do such programs exist. The FDIC cautions the public about loan solicitations or other offers from lenders or mortgage brokers that offer consumers cash as part of a “Community Reinvestment Act (CRA) Program.”

The Community Reinvestment Act is a federal law that was enacted in 1977. It encourages depository institutions to help meet the credit needs of their communities, including low- and moderate-income neighborhoods, in ways that are consistent with safe and sound banking operations. The CRA does not entitle individuals to any grants or loans.

Consumers should be very suspicious of conducting business with lenders or mortgage brokers that make deceptive claims. Individuals who are considering taking out a loan using their house as security are urged to compare various programs. Comparing loan programs offered by a variety of different lenders can help consumers make a well-informed decision and

secure the best program to meet their needs. Useful information on shopping for home loans can be found on the FDIC’s Web site at http://www.fdic.gov/consumers/looking/index.html.

Questions about these solicitations may be directed to the FDIC’s toll-free Central Call Center at 1-877-275-3342 or 1-877-ASK-FDIC (1-800-925-4618 or 202-942-3147 for the hearing impaired). Questions may also be submitted to the FDIC’s Web site using the Online Customer Assistance Form found at http://www2.fdic.gov/starsmail/index.html.

Posted under Finance, Privacy

Virtually every bank examined for Community Reinvestment Act compliance during September passed, and none received the dreaded “Substantial Non-compliance” rating according to the FDIC.

Two banks received “Needs Improvement” ratings.

They are First Mutual Bank of Bellevue, WA and Pilgrim Bank of Pittsburg, TX.

The Act prohibits redlining, requiring that banks serve the entire community in which they are located.

Posted under Finance

The Federal Deposit Insurance Corporation (FDIC) Board of Directors has approved final rules that will raise the deposit insurance coverage on certain retirement accounts at a bank or savings institution to $250,000 from $100,000. The increase, the result of a new law boosting federal deposit insurance coverage for the first time in more than 25 years, will become effective on April 1. The basic insurance coverage for other deposit accounts, however, will remain at $100,000.

“The increase in deposit insurance coverage on certain retirement accounts is a significant change,” said Martin J. Gruenberg, Acting Chairman of the FDIC. “The FDIC is committed to helping depositors understand clearly the change that has been made and how it will affect the deposit insurance coverage for which they are eligible.”

Under the FDIC’s new rules, up to $250,000 in deposit insurance will be provided for the money a consumer has in a variety of retirement accounts, primarily traditional and Roth IRAs (Individual Retirement Accounts), at one insured institution. Also included are self-directed Keogh accounts, “457 Plan” accounts for state government employees, and employer-sponsored “defined contribution plan” accounts that are self-directed, which are primarily 401(k) accounts. In general, self-directed means the consumer chooses how and where the money is deposited.
In addition, the IRAs and other retirement accounts that will be protected under the new rules to $250,000 are insured separately from other accounts at the same institution that will continue to be insured up to at least $100,000.

The new law also established a method by which the FDIC would consider an increase in the insurance limits on all deposit accounts (including retirement accounts) in the future, but only every five years starting in 2011. Any such increase would be based, in part, on inflation. Otherwise, accounts will continue to be insured as described above.

Posted under Finance

The Federal Deposit Insurance Corporation (FDIC) has scheduled public hearings in April in the Washington, D.C. area, and the Kansas City, Missouri, metro area on the application for federal deposit insurance filed on behalf of the proposed Wal-Mart Bank.

On July 19, 2005, an application for federal deposit insurance was submitted to the FDIC by Wal-Mart Bank, a proposed Industrial Loan Company (ILC) headquartered in Salt Lake City, Utah. ILCs are state banks that are supervised and insured by the FDIC.

There has been considerable public interest in the application. The FDIC believes that public participation will provide valuable insight into the issues presented by the application and will serve the public interest. The FDIC is interested in obtaining the views of the general public, the financial services industry and other industry trade groups, public interest groups, state financial institution supervisors, other state authorities, and any other interested parties.

The hearing in the Washington, D.C., area will be held on Monday and Tuesday, April 10-11, from 9:00 a.m. to 5:30 p.m. The hearing in the Kansas City metro area will be held on Tuesday and Wednesday, April 25-26, from 9:00 a.m. to 5:30 p.m. The exact locations of the hearings will be announced later on the FDIC’s Web site. The presiding officer for these hearings will be the FDIC’s Chief Operating Officer John F. Bovenzi. Other FDIC senior management officials will be designated as hearing officers at a later date.

Anyone interested in making an oral presentation at the hearings must deliver a written request to the FDIC no later than 5:00 p.m., Friday, March 10, and deliver a copy of the written statement and a two-page (or shorter) summary to the FDIC no later than 5:00 p.m., Tuesday, March 28. Participants generally will be limited to a 5-minute oral presentation at the hearing. There is no limit on the length of a participant’s written statement. Opportunities to make an oral presentation at the hearing are limited; not all requests may be granted.

Anyone interested in submitting a written statement without making an oral presentation at the hearing may do so. All such statements must be received by the FDIC no later than 5:00 p.m., Tuesday, March 28. Attendance at the hearing is not required in order to submit a written statement.

Requests to make oral presentations and written statements can be delivered to the FDIC by e-mail, mail or hand-delivery — e-mail: publichearing@fdic.gov; mail: Robert E. Feldman, Executive Secretary, 550 17th Street, N.W., Washington, D.C. 20429; or hand-delivery: Guard station at the rear of 550 17th Street (located on F Street, N.W.) on business days between 7:00 a.m. and 5:00 p.m.

Posted under Customer Service

The Federal Deposit Insurance Corporation (FDIC) has released an on-line multimedia education tool that consumers can use to learn how to better protect their computers and themselves from identity thieves. The presentation also features actions consumers can take if their personal information has been compromised.

Identity theft continues to be one of the fastest growing crimes in the United States, and has ranked as one of the top consumer concerns for the past several years. Identity theft is evolving in more complicated ways that make it harder for consumers to protect themselves, and easier for criminals to set up virtual storefronts on the Internet to sell confidential personal information.

Some of the steps outlined in the presentation that consumers can take to help safeguard their computers and their personal information from identity theft are:

• never provide personal information in response to an unsolicited telephone or Internet request
• never provide a password over the phone or in response to an unsolicited Internet request
• review account statements regularly to ensure all charges and transactions are correct
• use a firewall and anti-virus and spyware protection software.

One of the more frustrating aspects if identity theft occurs is restoring your good name and credit. If consumers either suspect that their personal information has been compromised, or have been victimized by identity thieves, they should:

• contact the fraud department at one of the three major credit bureaus and ask that a fraud alert be placed in their file at all three companies
• review their credit reports periodically and carefully and look for inconsistencies or red flags such as accounts they didn’t open
• debts they can’t explain or inquiries from companies they haven’t contacted, contact the companies where the fraudulent activity occurred, and follow up any telephone calls in writing
• file a police report with local police or the police department in the community where the crime took place and keep a copy of the report
• file a complaint with the Federal Trade Commission.

Posted under Privacy

In the wake of the damage caused by Hurricane Wilma throughout South Florida, the Federal Deposit Insurance Corporation (FDIC) today asked the banks it regulates to work constructively with borrowers affected by the storm.

“Unfortunately, this scenario has become all too familiar,” said FDIC Chairman Don Powell. “But we’ve learned from the last few hurricanes that bankers will do all they can to help consumers get back on their feet. We’re encouraging banks to help borrowers who are experiencing difficulties beyond their control due to this devastating hurricane.”

The FDIC’s 24-hour toll-free consumer hotline, established in the aftermath of Hurricane Katrina, is still operational. Consumers – and bankers – with banking-related questions should call the FDIC’s hotline at 1-877-ASK-FDIC (1-877-275-3342) or visit the FDIC’s Web site at www.fdic.gov.

In a letter to banks today, the FDIC outlined a series of steps to help the rebuilding process in damaged areas. Extending repayment terms, restructuring existing loans or easing terms for new loans, if done in a manner that is consistent with safe and sound banking practices, can contribute to the health of the community and serve the long-term interests of the lending institution, the FDIC’s letter stated.

The FDIC is also considering regulatory relief for banks from certain filing and publishing requirements.

Posted under Finance, Safety

“User names” and passwords should be supported in Internet banking transactions with new and better ways of identifying real customers from fraud artists trying to “highjack” bank accounts, according to an update on identity theft from the Federal Deposit Insurance Corporation (FDIC).

“Identity theft, particularly account hijacking, continues to grow as a problem for the financial services industry and for consumers,” said FDIC Chairman Don Powell. “Our review illustrates that ID theft is evolving in more complicated ways and that more can and should be done to make online banking more secure.”

The new findings are in a supplement to an FDIC study issued in December about ways to fight “phishing” scams, in which criminals send fraudulent e-mails to trick consumers into providing confidential financial information that can lead to illegal access to bank accounts. The supplement reviews and responds to public comments that the FDIC received about the original study, identifies the most recent trends in identity theft, and discusses a variety of new technologies that could be used to make Internet banking more secure.

In the latest findings, the FDIC concluded that the risk assessment financial institutions are required to perform regarding information security also should address customer authentication. The supplement also said that if an institution offers Internet banking, it has an obligation to properly secure that delivery channel. This extra level of security for online accounts, often referred to as “multifactor authentication,” would be used in addition to the traditional passwords. These new security features may include “tokens” issued to customers that generate new passwords every 60 seconds, software that can identify the computer that a customer uses to access online accounts, or contacting a customer by phone to make sure that he or she is the one attempting to access the account.

The FDIC and other federal banking agencies are expected to issue guidance this fall to insured financial institutions about improving the security of customer authentication methods. The latest FDIC findings are expected to be considered in the development of that guidance.
“The FDIC does not intend to propose one solution for all, but the evidence…indicates that more can and should be done to protect the security and confidentiality of sensitive customer information in order to prevent account hijacking,” the supplement said. It added that consumers are concerned about online security and may be receptive to using a new form of authentication “if they perceive it as offering improved safety and convenience.”

Posted under Finance, Privacy

Media outlets have been reporting for 15 days that the Federal Deposit Insurance Corporation has notified thousands of employees that the organizations personal data records had been breached, and fraud had resulted from that breach. The news was first reported in the June 16 issue of The Washington Post.

Government Computer News, which obtained a copy of the letter reported on by the Post, said that employees were told that among the information obtained was “name, date of birth, salary, Social Security number and length of service.” The letter also reportedly said that the breach occurred in 2004.

Since the organization’s breach was made public, no official statements have been made, even after two weeks. Various media sources alternately report basic acknowledgments of the breach or referrals to the Federal Bureau of Investigation. Despite part of the FDIC’s mandate calling for “…identifying, monitoring and addressing risks to the deposit insurance funds…”, the organization has been unacceptably silent on this matter.

Consumer Help Web will report at this site any information the FDIC eventually shares about their own data woes.

Posted under Privacy

The Federal Deposit Insurance Commission (FDIC) voted 5-0 today to approve a ruling forcing banks to notify customers when their Social Security number or other identification numbers may have been released or misued by external entities.

The action comes on the heels of Bank of America’s admission that it had lost data tapes with personal records of 1.2 million individuals.

The FDIC ruling, if approved by the Federal Reserve, could cause a significant increase in identity theft disclosures,” said Jim Stickley, Chief Technology Officer of TraceSecurity in a prepared statement. “Today, most large-scale identity thefts go unreported, either because the bank wants to avoid tarnishing their reputation or because they are simply unaware of the breaches. Many banks employ archaic data privacy practices that haven’t kept pace with the evolving threats. The exploits of identity thieves, however, which are often coordinated by international crime syndicates, have become increasingly creative and sophisticated. Many banks are caught in a catch-22 situation: Their customers are demanding greater online access to a broader range of financial services, yet as banks make their services available online to customers, they’re also making them available to thieves.”

Posted under Privacy