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44 OCC SETS DATES FOR CRA EVALUATIONS e Office of the Comptroller of the Currency released its schedule for Community Reinvestment Act (CRA) evaluations at national banks and federal savings associations. e evaluations will be conducted in the fourth quarter of 2017 and the first quarter of 2018. According to the Federal Reserve, CRA is meant to meet the credit needs of the communities in which they serve—which largely include low- and moderate-income areas—while still maintaining responsible lending practices. e CRA was enacted by Congress in 1977 during President Jimmy Carter's administration in response to worsening economic and housing conditions in urban cities. e CRA has since been reformed numerous times by subsequent administrations. In its evaluations, the OCC encourages comments from the public and takes into account said comments at the next evaluation. Evaluations have direct effect on institution's request for deposit facilities. Evaluations will begin in October of 2017 and stretch into March of 2018. FREDDIE MAC MAKES CRT DEAL TERMS PUBLIC Freddie Mac announced September 5 that it is now making all available pricing and deal terms for their Agency Credit Insurance Structure and Whole Loan Securities transactions, which are important offerings in its credit risk transfer (CRT) program, open to the public for further transparency. Both build on similar disclosures for Freddie Mac's Structured Agency Credit Risk (STACR) program. In a corresponding Freddie Mac Perspectives blog, Kevin Palmer, SVP of Single-Family Credit Risk Transfer, explained how CRTs indicate whether Freddie's Guarantee fees (G-fees) are in line with what the private market would charge. G-fees are a retained amount of payments received on mortgages sold to Freddie Mac by banks and other sellers. In return, Freddie guarantees payment of principal and interest on the pass-through securities that they issue to their customers, or Gold PCs. "e G-fee essentially covers the cost of providing the credit guarantee—both the non- credit costs, such as administrative costs, and credit costs, which are the expected costs plus the cost of unexpected losses," Palmer said. ough the G-fee would normally be incurred by Freddie Mac if the company retained all the credit risk related to loans in its mortgage securities portfolio, over the last four years, the organization has been transferring a significant portion of that risk to the private market through its Single-Family CRT program. To calculate the G-fee, Freddie analyzes the cost of the past years Structured Agency Credit Risk (STACR) transactions and determines the market-implied G-fee for the lower range of what the private sector would be willing to pay to operate a credit guarantee business like Freddie Mac's. According to Palmer, "CRT is not only shifting risk away from taxpayers and creating new asset classes for investors, it is a key benchmark for policy discussions by providing information about what the private capital markets would charge for absorbing the credit risk generated by the credit guarantee business of a GSE." WELLS FARGO FOCUSING ON FUTURE, CEO EMPHASIZES Freddie Mac announced September 5 that Tim Sloan, CEO of Wells Fargo, expressed his expectation that expenses to the third-largest bank will be reduced to around 60 percent of revenue in the second half of 2017, according to a statement issued at a conference hosted by Barclays and reported by CNBC. Wells Fargo has not specified how much money it has set aside for litigation costs, but at its second-quarter filings it stated that expenses could exceed $3.3 billion. During the first-quarter filings, that figure sat at $2 billion, and those figures do not include nonrecurring costs such as unknown litigation costs. Sloan's goal is to return the bank to its efficiency ratio that falls somewhere between 55 and 59 percent. Despite current issues, CNBC reports that Wells Fargo's shares rose to $51.27, an increase of 1.8 percent. Sloan has remained vigilant in the bank's efforts to right the ship. "We've been very focused on opening every door and turning over every rock in the company," he said. "I can't promise it's exactly over." Sloan has said the bank's efficiency rate is unacceptable, which has largely been attributed to recent issues the bank has under dealt with. Sloan expected third-quarter lending to be reduced by runoff of its mortgage portfolio, but that those declines will be offset by an increase of nonconforming residential mortgage lending.

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