1: CAST SERVICE HIGHLIGHT

Service Enhancement & Capacity Creation
Identify and create workforce capacity within operations areas

Enhancing customer service delivery and identifying excess capacity within an existing work force are key challenges facing leading financial services organizations.  Too often, previous expense control initiatives have resulted in short-sighted resource ‘rightsizings’ which can no longer be rationalized.  To remain competitive, companies must identify ways in which to incorporate incremental work volumes and raise service performance without additions to staff.    

Factors influencing staff and productivity management

• Failure to fully integrate processes and systems following mergers and consolidations
• Limited understanding of the implications and capabilities of newly installed technologies, resulting in untapped automation opportunities 
• Lack of systems or tools to fully capture and analyze performance data
• Inability to identify internal best practices and optimize performance
• Inefficiencies resulting from past arbitrary, across the board staff reductions
• Lack of tools for objectively monitoring and managing productivity
• Inadequate performance metrics

Why CAST for Service Enhancement and Capacity Creation

• Extensive experience in work force management in most operational areas in banking, insurance and capital markets
• Powerful data capture and statistical analysis methodology and tools
• Proven approach to developing work force management standards and performance metrics
• Customized staffing models
• Demonstrated expertise in organizational design
• Financial services industry ‘best practices’ database
• Established implementation tools and techniques

If you would like additional information, please contact Tom Vleisides at (213) 614-8066 ext. 244 or email tvleisides@castconsultants.com.

2: AMERICAN BANKER - An Uneasy Relationship

The financial crisis and the persistent regulatory uncertainty on Capitol Hill continue to roil the correspondent banking market, making it difficult for community banks to find crucial support needed to regain their financial footing and start making loans again.

Community banks have relied on their correspondent relationships for loan syndications, Fed Funds lines and loans directly to the bank holding company backed by its stock. But many banks offering correspondent services-banker's banks and some commercial banks-have grown leery of doing business with community banks whose health can be difficult to gauge.

As of Dec. 31, more than 700 banks were classified as problem institutions by the Federal Deposit Insurance Corp., and hundreds more were under formal or informal enforcement actions. Meanwhile, the bankers' banks themselves have come under increased regulatory scrutiny for the so-called "concentration risk" posed by extending loans to community banks within their geographic footprint.

The result, says Walter Moeling, a partner at the law firm Bryan Cave, is that "there are virtually no sources for community banks to turn to for loan support."

Though the issue has become critical lately, commercial banks exiting or scaling back their correspondent business has been the trend for decades. At one time, large banks liked to offer correspondent services as away toutilize excess capacity. They would do check processing, along with cash management, international payments, lending, capital markets and consulting.

Since then, several factors have pushed commercial banks out of the business, explains Steve Brown, the president and chief executive at the $616 million-asset Pacific Coast Bankers' Bank in San Francisco. Check processing has gone electronic, so excess capacity is less of an issue. Also, over the last 10 years there's been a renewed focus on the branch network and a growing attitude that community banks are competitors. These large banks also see greater growth potential in overseas markets and have built international correspondent relationships.

The financial crisis has only accelerated this long-term trend. According to Foresight Analytics in Oakland, Calif., banks had $85.7 billion of loans to other depository institutions in the U.S. at the end of 2009; that figure was almost unchanged from2008 and 2007, but down significantly from the pre-crisis level of $123.6 billion in 2006.

A few commercial bank shave cut back drastically in the past year. Bank of America slashed its loans to other banks from $16.4 billion in 2008 to $274 million in 2009. Volume also dropped at Fifth Third Bank, from $509 million to $20 million, and at U.S. Bank, from $132 million to $85 million, Foresight data showed. Industry observers say even for small banks that manage to get a loan or already have one, it is common for lenders to drastically shorten repayment periods, demand more collateral and increase rates.

Bankers' banks would appear to be in position to pick up the slack, but they are facing challenges of their own. By their nature these institutions are less diversified than larger commercial banks for which correspondent lending is just one line of business. Now the Federal Reserve Board has instructed several bankers' banks, including the Independent Bankers' Bank of Florida, to develop a plan for reducing concentrations of loan participations and loans to other banks and bank holding companies.

"Concentration risk can't be avoided with bankers' banks," says James McKillop, the CEO of the $474 million-asset bank in Lake Mary. "Sure it's a concentration, but is it a risk? For years it's been a good business model. If the community banks are not at risk, I would contend the bankers' bank is not at risk."

Jimmy Thomason, president and CEO of the $164 million-asset Arkansas Bankers' Bank in Little Rock, adds that if the bank operates in an agricultural area, then of course there are going to be lots of agricultural loans. "Sure there's a concentration, but what am I going to do?"

In response to the challenges the industry faces, the American Bankers Association helped form a correspondent banking working group in January to help influence policy decisions.

Many bankers point to the failure of the $4.1 billion-asset Silverton Bank in Atlanta last year as the source of the intense scrutiny. "The Silverton failure really changed the environment," says Chris Cole, the senior regulatory counsel at the Independent Community Bankers of America. "But I think Silverton is an exception."

Besides making loans to banks, officers and directors, Silverton bought trust securities and subordinated debentures, assets bankers' banks don't routinely hold on their balance sheets. What's more, Silverton operated across the country, very unlike the typical bankers' bank, which is focused locally. "Silverton had not really been operating as a bankers' bank for some time, but we were all painted with that model," says Thomason.

Thomason and others believe the market's recovery depends on two elements: one is simply time for the financial crisis to unwind; the other is regulatory clarity, which is now muddled by political pressure and proposed rule changes. Randy Cameron, a senior vice president at Zions Bank, says that possible amendments to the Federal Reserve's Regulation F (limitation on interbank liabilities) are particularly worrying. Last fall, the four federal banking regulators issued proposed guidance on correspondent concentration risks for public comment. The proposed guidance requires financial institutions to implement policies and procedures for identifying, monitoring, and managing correspondent concentration risk exposures and perform appropriate due diligence on all interbank credit exposures and funding transactions. But many smaller correspondent banks fret this will create another level of competitive inequality with too-big-to-fail banks, as well as the Federal Reserve Board and Federal Home Loan banks.

Yet among the tumult there is opportunity. Several executives say that once the industry stabilizes there will be far fewer banks offering correspondent services and still many small banks in need of loans. Already some, such as JPMorgan Chase, Citizens Financial Group, and Bank of New York Mellon, are ramping up, according to Foresight Analytics.

And correspondent banks continue to serve small banks in other ways. Zions has seen a 250 percent customer increase over the past three years as it has rolled out new services, such as credit risk management and core processing. Zions offers seven times more products than it did four years ago, Cameron estimates. Pacific Coast's Brown estimates his roster of clients grew20 percent last year alone.

Thomason says that when market conditions improve, community banks will remember the correspondent banks that stuck around. "We're going to pull through these issues, and the banks that remain will have a lot of opportunity in front of them."

3: AMERICAN BANKER - 5 Ways to Optimize the Branch

Everyday, people walk into banks and pass by rows of dusty teller windows—many of which will probably never host another smiling face from behind the Plexiglas. What does stare back from the bulletproof windowpane is a reflection of vacant cubicles along the opposite wall. That scene plays out like the early stages of a post-Apocalyptic movie, right at the point when things start to really go wrong.

It's a bit melodramatic, but only just, because banks are on the brink of earth-shattering changes. Their challenge: to maintain the branches' relevance at a time when more and more customers are banking online and depositing checks remotely.

It might make sense to simply cut a few tellers, but think of it from the customer's perspective: By pulling people from your branch—which already appeared too big for the amount of staff working there during peak hours—you create what amounts to a ghost town in your own lobby and sour the one physical interaction you get with all those customers who bank remotely for weeks, or even months, at a time.

The good news is that there are effective ways to manage the growing void in branch transactions. But most of them require investing resources, time and energy before the cutbacks start to pay off. Here are five strategies to get you started on the path to creating a more efficient and effective branch network.

1. Build Smaller

One of the first things bankers and consultants bring up when talking about ways to improve efficiency in the branch network is to simply make branches smaller. But how small, and how many to build at the diminished size, varies from one bank to another.

The $9.3 billion-asset Umpqua Bank in Portland, Ore., is in its third year of constructing what it calls "neighborhood" stores. At a scant 1,500 square feet, they are among the smallest around.

"We know we can build those for a third of the cost of a normal store location and obviously create multiples very quickly," says Lani Hayward, Umpqua's executive vice president for creative strategies. Five of the bank's 176 branches are of the smaller variety, and Umpqua is planning to build six more this year.

Other banks, like the $3.7 billion-asset WSFS Bank in Wilmington, Del., won't go much below 2,500 square feet. "That seems to me the smallest thing that we can build that feels like it's a full-service part of our branch system," says Richard Wright, executive vice president of retail banking and marketing for WSFS. The bank, with 37 branches, opened two small branches last summer and expects to have a couple more up and running by the end of the year.

Downsized branches offer advantages beyond just shrinking capital expenditures. They allow banks to embed themselves in neighborhoods where previously they could not have gone, for lack of suitable space.

Still, large banking centers with 3,500- to 5,000-square-foot floor plans aren't going away. Banks still need larger locations to house commercial bankers, wealth managers and other specialized personnel. The difference now is that what once was the standard size and template for every branch is now becoming a specialized hub to anchor spokes of smaller stores in the area. "It's just a matter of what are the spokes, where do you put them, and what do they do," says Hayward.

One downside to downsizing is that smaller branches are less prominent, which can negatively impact brand perception and require banks to build awareness by bolstering marketing or other efforts, says David Kerstein, president of Peak Performance Consulting Group.

And bear in mind that it doesn't make sense to sell or tear down large facilities only to buy or construct smaller ones. In some cases, simply revamping branch interiors can have a huge impact on efficiency.

2. Design Smarter

The most obvious way to optimize space in a branch where fewer customers are transacting with tellers is to reduce the number of teller stations. Some of the latest branch designs, similar to the open "Occasio" model developed by Washington Mutual, do away with teller windows altogether, thanks to the advent of cash recyclers. These next-generation automated teller machines replace tellers' cash drawers by sorting and dispensing money automatically.

"Those have worked out fantastically," Umpqua's Hayward says. "We've used those in a number of locations, including larger ones."

With the bulky vaults of teller-lines gone, suddenly the possibilities for branch design open up. And the success of smaller staffs working in smaller bank buildings can indeed hinge on opening things up—literally.

"In a conventional branch, the middle of the space is where the customers are, and the perimeter is where all the staffing is," says Tim Ryan, an architect and managing partner at Branch Development Group, a consulting firm in Ballston, N.Y., that helps banks build better branches. "That makes it really hard for staff to change from one activity to another."

Reversing that paradigm by clustering universally trained staff in the middle lets them multitask with ease by shifting a few feet from one station to the next, instead of having to traipse across the branch through multiple locked doors.

WSFS calls its new setup a "permeable teller counter." It includes greeter, teller and sit-down stations in one open structure, with an adjacent Internet cafe. This front area of the bank can be incorporated into buildings of various sizes.

Offices, safety deposit boxes and the like are hidden from view, which allows larger branches to run with fewer staff when necessary, without seeming like a ghost town to customers, Wright says.

Even though new branch designs like those of Umpqua and WSFS include private areas for staff to help customers, some bankers still fear people could get turned off by an apparent lack of privacy in the open floor plans. Kenneth Olan, executive vice president of First Victoria Bank in Victoria, Tex., is in this camp.

Instead of gutting the $1.6 billion-asset bank's teller lines and platform stations, he's using 150 to 200 square feet of space just inside the entrance of every new branch the bank builds for what he calls a "V-Source" center. It has a coffee bar, copier, fax machine, laminator, coin counter, Internet service, a computer with games for kids, a library with books on financial topics, and an area that converts into a mini-theater to host investment seminars or a Saturday screening of "The Lion King."

"People don't say, 'I want to go to the bank.' They say, 'I have to go to the bank,'" Olan says. "So what else might they want to do when they go out? Where may we be able to add some value to their trip to make things more convenient for them?"

First Victoria has installed three V-Source centers, all in newly built branches. It's hard to pinpoint their impact on transactions and account openings, Olan says, but they don't cost more than building a traditional lobby, and they do increase foot traffic and brand awareness.

3. Use Technology

Cash recyclers and systems that automate check processing by capturing an image of each check are the two most significant pieces of technology banks are implementing for efficiency gains at the branch level, says Nicole Sturgill, TowerGroup's research director for delivery channels. Together, they address the bulk of branch transactions and free up tellers to do other things.

But there are less obvious high-tech solutions that can help conserve space and resources. One is video conferencing.

"Video conferencing allows the bank to have subject-matter experts centralized, but able to assist customers according to their availability, not the bank's," Sturgill says. "That, I think, we're going to see much more of going forward." The technology has been around for years, but only now has it gotten good enough to make it seem as if you're sitting across from someone who's on the other end.

Umpqua has been testing video conferencing and found that consumers responded well to it, despite the fact that the terminals were out in the open. The bank is now in the process of rolling it out to a few more stores for further evaluation, this time stipulating that the technology be used in private conference rooms.

Trading paper posters and pamphlets for digital ones is another way banks are leveraging technology to improve efficiency. By replacing product collateral in every branch with interactive touch-screens, banks not only save space, but also eliminate printing and other related costs.

Umpqua uses wall-mounted touch-screens connected to computers layered with software from various providers to digitally display the bank's products and services. Customers look up and print only what they need. "It's more interesting for the customer to approach," Hayward says. "And we can change it more rapidly, less expensively, and remotely for all of these locations."

WSFS applies the same principle to signage outside its branches. The bank is able to update messaging throughout its footprint to tout timely promos tailored for each market, all with the press of a few buttons.

4. Cross-Train Employees

For all the fancy machinery and newfangled features banks are putting into their branches, the human element remains most important—and with headcounts getting drastically reduced, all the more so.

Where traditional branches might run best with between eight and 20 people filling specific roles, the new generation of leaner banking centers can run optimally with six people or less. But to pull that off requires a new class of branch personnel, one that can toggle between teller, platform and customer-service duties.

"Now the skill level we're looking for within the branches revolves much more around engaging with the customer-being able to sell, basically," says Sturgill. "But the problem is, you still need people that are good at the transactions. The transactions right now are still occurring while banks are implementing branch automation."

Some banks are even proving that transaction-oriented workers can be effectively cross-trained by having them take calls from the contact center when volume has peaked and there's a lull at the branch. "They even do it in the back office, where branch personnel are scheduled to do work from the loan processing area," says Jackie Hudson, retail practice director for enterprise solutions at Verint, which helps banks implement workforce management programs.

Through a combination of thoughtfully applied technology, revamped interior layout and well-trained staff, Umpqua's new neighborhood stores bring in twice the volume of deposits as the bank's traditional branches. And households served by the new stores use more products and services, and hold twice the average deposits and loan balances, Hayward says.

Still, bank executives say it's hard to find people who are good at traditional teller tasks and also outgoing enough to successfully engage customers to the level required by the newly emerging role of the universal branch rep. They've resigned themselves to the fact that those best suited to the job will likely get paid more than traditional tellers.

5. Improve Staff Retention

First Victoria's Olan says one of the challenges he faced when he joined the bank two and a half years ago was that teller turnover was much higher than the industry norm. So, he says, "I put into effect a number of things that helped the front line feel like they were contributing more, feel like they were listened to—even down to writing a hand-signed birthday card to every single person."

He says people are more secure in their duties and less likely to jump ship when they feel that upper management knows who they are and recognizes their efforts. So he makes a point to interact with staff in every branch.

He has redoubled teller and platform training, and regularly assembles groups to chat with customers about ways to improve products and service.

Olan also increased teller base pay, "so that they wouldn't jump for 25 cents or 50 cents to go to the next bank down the street." He upped teller incentives for referring key products and services, and implemented a more robust reporting system for front line staff to better track their goals.

The results are impressive: a drop in teller turnover from a rate of about 60 percent annually when Olan first joined the bank in 2008, to 33 percent. Sales stemming from referrals that tellers make to platform bankers jumped 820 percent for January and February, compared with the same period in 2008.

The average of products per household during that time frame doubled, consumer checking account openings ballooned 204 percent and business checking account openings 143 percent.

Reading beyond what the numbers say, downsizing branches and sprucing them up with new technology shouldn't overshadow investments in human capital. Or put another way: The purpose of revamping the branch network isn't to wow customers with fancy new digs, but to improve their experience, even as the bank pares resources and personnel.

4: AMERICAN BANKER - It's Money That Matters

Banks these days are offering historically low yields on deposits, but there's still one way for consumers to make out like casino bandits: open a checking account.

As part of the fierce race to capture customers and market share, some banks have been offering increasingly high cash incentives for new checking accounts tied to services like direct deposit or online bill pay.

Over the past year, JPMorgan Chase, SunTrust, Key Bank and PNC Financial Services Group's National City started handing out $150 to $200 in cash or gift cards to customers responding to online and direct-mail ads. In January, Capital One raised the stakes by offering a booty of $300 for a new rewards checking account.

Cash incentives of $50 to $75 are still more common, such as with recent offers from Fifth Third Bank and Wells Fargo. But the bar keeps going up.

"What we've seen is an uptick in both the number of banks offering the service and the amount of cash payouts," says Doug Johnson, vice president of risk management policy at the American Bankers Association.

It's a trend expected to continue, according to direct-marketing intelligence firm Mintel Comperemedia. "We expect to see more offers with a $200 cash incentive," says Susan Wolfe, vice president of financial services at Mintel.

Experts speculate that some banks may be doling out the higher incentives to keep up with competitors, as well as to boost fee income by attracting more debit card users.

The incentives are viewed as a first step in getting customers hooked into growing rewards programs, which were attached to 21 percent of debit cards issued in 2009 (a figure expected to grow to 33 percent in 2013, according to Aite Group). "Incentives have been used in banking for a very, very long time, but it used to be in the form of free merchandise-the free toaster, free Tupperware," Wolfe says.

Other banks offering triple-digit cash payouts, as tracked by Mintel, were M&T Bank, Citibank and Bank of America.

Often the payouts are tied to services like direct deposit, online bill pay or a signature debit card. Bank of America spokesman Don Vecchiarello says that its new customers get the cash after a point-of-sale transaction with a debit card, and two online bill pays within the first 30 days.

Critics say these incentives attract opportunistic customers, not necessarily profitable ones.

"You could have a lot of people coming in the front door and then going out the exit very soon thereafter," says Brad Strothkamp, an analyst at Forrester Research. "I'm a believer that longstanding relationships don't come from incentives like this."

Capital One is betting otherwise, as it concentrates on building deposit share in its markets.

The McLean, Va., company offered $300, plus 4,000 airline miles, to those opening a rewards checking account in January-with only a single direct deposit as a condition. Previously it had been paying $150 to $200 since at least the end of the third quarter of 2008.

The strategy has helped Capital One achieve a market-leading 19.3 percent share of deposits ($14.3 billion) in Louisiana. It also has built a bulkhead in New York, where it has most of its deposits ($31.9 billion) and is ranked fifth in deposit market share with 6 percent. (Its branches also span New Jersey, Texas and the Washington, D.C. area.)

5: AMERICAN BANKER - Overdrafts' Demise May Be Overblown

Less than two months before new rules on the coverage take effect, early indications suggest banks won't suffer as big a blow to fee revenue as feared.

Ever since the Federal Reserve announced last year that it would require financial institutions to get consumers' consent before enrolling them for overdraft protection on debit card purchases and automated teller machine withdrawals, it was widely assumed that customers would opt out in droves.

New research, as well as anecdotal evidence, indicates otherwise. That means features like free checking — which some have put on the endangered species list — might not be headed for extinction after all, at least not just yet.

A recent study from ACTON Market Intelligence shows that consumers who use overdraft protection on a regular basis are likely to opt in and are willing to pay for the coverage — in some cases, even more than they pay now.

"Losing overdraft fees is not a foregone conclusion," said Gary Gabelhouse, an analyst at the unit of ACTON Marketing LLC. "The bank doesn't have to lose. An enlightened bank can make this work."

After surveying nearly 1,300 consumers around the country in February and March, ACTON determined that 58% of all customers would opt out. However, the vast majority of those who use overdraft protection regularly will choose to keep the service. As a result, the study, which ACTON distributed to its clients last month, concluded that about 73% of the nation's overdraft business is secure, leaving only 27% of the business at risk.

Under the Fed's Regulation E, banks and credit unions have until July 1 to obtain permission from new customers and members, and until Aug. 15 to get permission from existing customers.

Of the 100.1 million debit card accounts in the country, 37% had been overdrawn and used their respective bank's overdraft protection at least once in the past year, according to the ACTON study.

Thirty-five percent of overdraft users are considered "heavy" users, meaning they use overdraft protection more than 10 times in a year. That slice of the market accounts for 81% of all overdrafts every year, ACTON said.

The study found that heavy users "would likely pay even increased fees — even $45 per covered transaction."

Still, several banks have recently moved to reduce some of their fees and cap the number of times a person can be charged in a single day for overdrawing his or her account. Analysts called such moves a way to boost banks' overall image, which can be more valuable than the fees themselves.

"When you get into overdraft, you also have the moral high ground that some banks are trying to play," said Hank Israel, director of checking and payments for Novantas LLC, a New York consulting firm.

Robert Sterner, executive vice president at Velocity Solutions Inc., a financial services consulting firm in Wilmington, N.C., said most of his clients have forecast a 10% to 15% decline in overdraft-related income.

All the evidence suggests that an overwhelming majority of customers are opting in for the service, he said.

"They are telling us at a very high rate that they want to have the same service that they have been provided historically, and that flies in the face of what consumer groups have said," Sterner said. However, he acknowledged the early numbers could be skewed a bit since one could draw the conclusion that most people who respond right away are probably heavy users of the service.

First Tennessee Bank, a unit of First Horizon National Corp. of Memphis, started alerting customers to the changes only last week, but Dave Miller, its head of retail banking, is encouraged by what he's seen so far.

"Our view is that a significant number will choose to opt in," Miller said. Research shows 70% of First Tennessee customers, when alerted at an ATM that they are about to overdraw on their account, withdraw the money anyway, he said. There are about 2 million overdraft transactions in a given year at First Tennessee, Miller said.

Regions Financial Corp. also doesn't expect a big impact on business from the rule change, but in its case, it's because a very small portion of its customers use overdraft regularly, said Evelyn Mitchell, a spokeswoman for the Birmingham, Ala., bank.

During the second half of 2009, less than 7% of Regions customers were charged overdraft or insufficient-funds fees more than four times in the six-month period, she said.

Still, Regions has changed its fee structure to simplify things for customers. In April, the bank eliminated the fee on overdrafts of $5 or less in a day. It also capped the number of fees it would charge for multiple overdrafts or transactions with insufficient funds in a given day at four, down from eight. A handful of other banks, including First Tennessee and Wells Fargo & Co., have also put limits on the number of overdraft fees they assess in a given day and have eliminated fees when an account is overdrawn by $5 or less — in effect quieting some of the criticism over banks charging $35 for the proverbial $5 cup of coffee.

Regions also moved from a tiered structure that was based on the number of overdraft or insufficient-funds occurrences to a flat fee of $35. Wells charges a flat $35 fee on overdrafts of more than $5, as well. The San Francisco bank has said that it expects about $500 million in lost fees this year from the rule changes.

U.S. Bancorp, which has also made changes to its fee structure, has forecast a pretax impact of between $300 million and $400 million as a result of last year's credit card reform act and the crackdown on overdraft fees.

In addition to capping accounts to three overdraft fees in a single day, waiving fees on overdrafts of less than $10, U.S. Bancorp said last week that it will reduce overdraft fees to $10 for transactions of $20 or less.

This year, Bank of America Corp. went a step further than many of its competitors and eliminated overdraft fees on debit purchases altogether. Starting this summer, the Charlotte bank will block debit card purchases that would overdraw accounts. So consumers who don't have sufficient funds will be denied the purchase at the point of sale.

Some analysts suspect that even if the impact on fees from the overdraft regulation is minimal, the industry is still headed toward a more fee-based model in general. "There is a pressure to find new fee income," said Gwenn Bezard, research director at the consulting firm Aite Group. "The trend away from free checking is still real. … The problem is [demand for] lending is not great."

Fiaz Sindhu, an executive in Accenture's banking practice, agreed that banks are going to need to re-evaluate their checking products.

"The current model is unsustainable, and I think the banks know it's unsustainable," he said. "I think that as they run their analysis in the next few months, you'll probably see some more definitive direction about what they are going to do."

Sterner, however, warned that coming up with new fees isn't necessarily the best way to make up for lost revenue. The idea should be "to get those low-usage accounts to begin interacting with the bank," he said. "Apathy is the biggest concern."

6: AMERICAN BANKER - Proposal Seeks to Limit Size of 6 Biggest Banks

WASHINGTON — Two Democratic senators are seeking to take the Wall Street reform bill one step further by pushing for adoption of an amendment that would eliminate the risk of "too big to fail" by capping the size of the six largest U.S. financial institutions.

The amendment, co-sponsored by Sens. Sherrod Brown, D-Ohio, and Ted Kaufman, D-Del., would limit the size of the largest banks by imposing a 10% cap on any bank holding company's share of total insured deposits.

"We want to put a hard limit on the size of these behemoth banks so they don't control so much of our economy that come crisis time we have to save them, we have to bail them out to save the economy," Brown said in a floor speech. "The simplest, most effective way to manage this risk is to spread it out to have several modestly sized institutions instead of a few giant ones," he said.

The amendment is expected to be taken up for a vote this week — along with dozens of others — as part of the debate on Senate Banking Committee Chairman Chris Dodd's reform bill. (See related stories: 1, 2).

Another amendment expected from Sen. Carl Levin, D-Mich., would change the business model for credit rating agencies by requiring them to be paid by an independent third party instead of receiving direct payments from investment banks whose products they rate.

"You would probably require the SEC to have an intermediary," the chairman of the Senate Permanent Subcommittee on Investigations told Dow Jones Newswires Tuesday. "They would be tasked with identifying the intermediary to avoid the conflict."

The Securities and Exchange Commission would also be asked to review credit rating firms' structures, he said.

Levin said he is still crafting the amendment, which will include other provisions designed to put a stop to abusive lending in the mortgage business. Levin said his amendment will address so-called liar loans that are based solely on what customers declare as their income as well as negative-amortization loans that cause mortgages to balloon by allowing homeowners to defer principal or interest payments.

Last month, Levin's subcommittee hauled in two of the biggest rating firms — Moody's Corp. and Standard & Poor's Corp. — after the panel's staff conducted more than a year of investigations into the relationship between rating firms and investment banks.

The Brown-Kaufman provision would also limit the size of nondeposit liabilities at financial institutions to 2% of gross domestic product for banks and 3% for nonbank institutions, and set a 6% leverage limit for bank holding companies and selected nonbank financial institutions.

Over the past 15 years, assets of the six major banks have leapt from 17% of GDP to 63%, Brown said. Combined, these large banks control $9 trillion of assets.

Kaufman said adopting the amendment would merely return the country's biggest banks to the size they were less than a decade ago. Using Goldman Sachs Group Inc. as an example, Kaufman said the bill would scale back the investment bank from $850 billion of assets, to just above $300 billion. Until 2003, Goldman's assets didn't exceed $100 billion.

Co-sponsors of the amendment are Sen. Bob Casey, D-Pa., Sen. Sheldon Whitehouse, D-R.I., Sen. Jeff Merkley, D-Ore., Sen. Tom Harkin, D-Iowa, Sen. Bernie Sanders, I-Vt., and Sen. Roland Burris, D-Ill. Thomas Hoenig, the president of the Federal Reserve Bank of Kansas City, former Fed Chairman Paul Volcker and Mervyn King, the governor of the Bank of England, among others, have endorsed the amendment.

7: AMERICAN BANKER - Retailers' Safes Get Networked

Armored couriers have longed served a valuable role physically transporting cash from businesses to banks. It's not a business the banks themselves have wanted in on, and for good reason given the logistics, vehicles, weapons training and equipment necessary. But over the past 10 years couriers have begun to offer more sophisticated electronic services-such as smart safes-that some bank executives worry strays into their treasury management business.

Huntington National Bank, for one, is fashioning a robust competitive response with the help of a recently released solution from Burroughs Payment Systems (recently spun off of Unisys) called the SmartCash Networked Vault.

Burroughs networked safes record exactly how much currency is fed into the safes. The data is then transmitted to Burroughs' data centers, which at the end of the day transmits the deposit total to the bank. The bank can then post these to customer accounts without receiving the physical cash. Huntington is coupling this technology with its remote deposit capture capabilities to offer a solution that can handle both cash and checks electronically.

For a bank that shies away from the cutting edge, it's a chance to leverage remote deposit capture to forge deeper service relationships with clients.

"Huntington is not typically at the forefront of technology," says Lindsey Scott, a product manager at Huntington National Bank. "But we're taking this and running with it. We've been doing so well with remote deposit capture and this is the natural next step."

The technology offers advantages for customers and the institution, Scott explains. For the customer, the technology posts funds to an account quickly, before it's physically picked up by the courier. This means businesses only need a courier once or twice a week instead of daily, which saves money on transportation and other shipping costs. Plus, the Huntington product will handle checks and cash, unlike the couriers' smart safes, which handle just cash.

Another advantage is being able to offer customers a single bank account for all networked safes. No matter its size and geographic reach, a business can have a single bank account with Huntington instead of managing many bank accounts near its various branches or outlets.

Furthermore, the Huntington product makes it unnecessary for a business to integrate an armored courier's smart safe into its back-office. Since each of the big couriers-Brinks, Garda, Dunbar, Loomis-have their own proprietary systems it's difficult to switch couriers or have multiple courier relationships.

"Having a courier-agnostic solution is a great position for a bank to be in," says Bob Meara, a senior analyst at Celent. "For big retailers in particular it's in their DNA to have multiple courier relationships" in order to negotiate the best pricing. "With a one-safe system you could have as many courier relationships as you want." In addition, remote businesses that aren't served by a big armored courier are free to contract with any local company.

For Huntington a major benefit to rolling out the smart safe network is to expand its treasury management business across the country, beyond its network of physical branches. "It allows us to get outside our footprint," Scott says.

Huntington was at first reluctant to get into the business because it did not want to manage the safe network, which it considers a piece of equipment, not a service. Banks are typically reluctant to deliver physical equipment.

"At first, we saw it as a burden," Scott says. "But gradually we saw the positive side of it."

Critical to Huntington's decision to develop the product is that Burroughs will manage the wireless network linking the safes and also service the physical safes in their individual locations. The managed service runs on a secure data center, certified SAS70 type II.

The safes communicate to the data center through encrypted wireless technology. No network installation is required for the client bank.

Although the product is still in the pilot stage, Scott is optimistic based on anecdotal feedback from prospective customers.

"We've had five businesses clamoring to be included in the pilot," she says. She expects the product will be available for all customers in the third quarter.

8: AMERICAN BANKER - Sears Is Back, Targeting the Underbanked

Decades after 'socks and stocks,' retailer offers check cashing and bill pay

Nearly 30 years after the department store chain set out to become "the largest financial services entity," as its then-chairman put it, Sears is once again challenging banks.

This time around, the nation's fourth-largest retailer is setting more modest goals for itself in financial services and targeting a more downscale clientele: underbanked consumers.

Since late last year, Sears Holding Corp. has been testing financial centers, where customers can go to cash checks, wire money and pay bills, in eight Kmart stores in the Chicago area.

Sears is not offering checking or savings accounts, and it hasn't sought a banking charter since an unsuccessful 2002 application to open an industrial loan company. But according to Susan Ehrlich, the head of Sears' financial services unit, its target market includes a group she calls the "disenfranchised," who are fed up with banks' overdraft fees and other hassles.

This group — primarily young consumers who have, or previously had, low-balance checking and savings accounts — has been growing rapidly, she said.

"It's just not economic for traditional banks to service those customers anymore because of the way the rules and the policies have changed," Ehrlich said. "The customer need hasn't changed. But the services that are available and the price at which the services are available really don't make them an attractive alternative for these people."

The experiment faces hurdles. For one thing, Kmart's rival low-cost retailer Wal-Mart Stores Inc. already offers the same services in more than 1,000 of its stores across the country.

Also, in this niche, "getting the product mix right does require effort," said Philip Philliou, a payments industry consultant and managing director with Philliou Selwanes Partners LLC in New York. "Marketing to this group requires effort."

But Ehrlich said Kmart stores already attract consumers who are shut out of the financial mainstream. "This cash-based, underserved customer is shopping our stores today," she said. "If they need shampoo and toilet paper, there's an aisle for them. When they need money services, we're going to have that location in the store available to solve those problems for that consumer as well."

In trying to foster a banklike relationship with consumers, both Kmart and Wal-Mart "are tapping into the fact that the business model of the traditional bank simply doesn't work," Philliou said.

These consumers tend to have little or poor credit history, and that "makes them somewhat undesirable for many banks," he said.

At the same time, these individuals "are scared of minimum balance requirements, high checking fees, and they have a higher comfort level with the retailer," he said.

Though Sears' last stab at providing a fuller array of financial services had at best mixed results, analysts say its new approach makes sense given the company's current clientele. And its offering of alternative banking products comes as the primary audience for them — underbanked consumers — is widely believed to be growing.

Sears' history in financial services stretches back to the 1930s, when its predecessor company, Sears, Roebuck and Co., started Allstate Insurance Co. In 1953, Sears launched a credit card for use in its stores.

But the big push began in 1981, when Sears acquired the retail investment brokerage Dean Witter Reynolds and the real estate franchise Coldwell Banker. Four years later, Discover was launched as a general-purpose credit card within the Dean Witter unit.

But Sears shareholders complained it was getting distracted from its core business. "The company was rightly criticized for a time for losing focus on their retail business," said Scott Strumello, an associate with Auriemma Consulting Group Inc.

In 1993 Sears spun off Dean Witter, Discover & Co. Morgan Stanley eventually acquired Dean Witter and later spun off what is now Discover Financial Services. Today Allstate is independent, Coldwell Banker is part of Realogy Corp. and what was once Sears Mortgage is, after a series of mergers, part of JPMorgan Chase & Co.

After merging with Kmart Holding Corp. in 2005, Sears' network of stores grew by nearly a third (it has 3,900 stores today), and it gained exposure to a broader spectrum of consumers. Sears' flagship department stores sell big-ticket goods like appliances, tools and electronics; Kmart is a classic discount store, with a focus on everyday items.

"They have a different retail operation today than they did 20 years ago," Strumello said.

Both Sears and Kmart offer store-branded credit cards, prepaid gift cards and layaway programs. But testing financial centers in Kmart stores shows a bigger commitment to financial services, akin to Wal-Mart's.

It's also much different from the route Sears took with Dean Witter. "They are more fee-based businesses as opposed to businesses that earn money on managing funds," Strumello said. "The more volume you can push, the more money you make."

This approach makes the most sense when dealing with underbanked consumers, Strumello said. "The notion of the underbanked model [is] you do the one transaction … and boom, you're done," he said. "There's not necessarily the ongoing relationship."

However, if a company can offer services at competitive prices, chances are those customers will return often, he said.

A clerk who answered the phone in one of the Chicago Kmart stores Wednesday said the fee for check cashing is $3. Next-day bill pay is $1.50, while same-day bill pay is $2.

These fees are competitive with what Wal-Mart charges in its MoneyCenter locations, where check cashing also costs $3. The standard bill-payment fee is 88 cents, for delivery within three business days; next-day bill pay is $1.88. Wal-Mart also offers an express bill payment through MoneyGram International that costs $4.50, and which sends a biller notification of a payment within 10 minutes.

Ehrlich is no stranger to marketing financial products. She joined Sears in 2006 from Washington Mutual Inc., where she headed marketing strategy and planning of the company's $20 billion credit card portfolio. Before that she managed new product development at Providian Financial Corp. before it was bought by Wamu. She was also a vice president in the cards unit at Citigroup Inc.'s Citibank, overseeing the high-risk portfolio.

As Ehrlich sees it, aside from the "disenfranchised" the underbanked category includes immigrant consumers who have no credit history, or a very thin credit file; and consumers with damaged credit who are trying to restore their creditworthiness.

9: AMERICAN BANKER - U.S. Bank Sets a New Standard in Overdraft Pricing…

…Implements Reduced Fees and Emphasizes Consumer Choice

U.S. Bank has introduced a new overdraft policy that complements changes it made earlier this year and builds on the company's commitment to provide customers a range of choices in how they manage their accounts. The new policy includes a reduced fee of $10 for transactions that are $20 or less and drawn on an account that has a negative balance. The $10 fee is far lower than what is currently offered by any other major bank. The change takes effect in August.

"U.S. Bank is committed to doing what's right for the customer. We began implementing changes last fall based on what we heard from customers, all of which were centered on giving them the power to choose what's right for them," said Richard Davis, chairman, president and chief executive officer of U.S. Bancorp. "This approach is very consistent with how we approach our customer relationships. Customer service is part of who we are, and we are confident this policy will increase customer satisfaction."

The new overdraft policy is part of the on-going review of deposit product offerings that U.S. Bank began last year and that is expected to continue as the industry landscape is recast.

In September 2009, prior to proposed regulatory changes, U.S. Bank announced measures to curb the impact of overdraft fees, including capping the number of overdraft fees to three in one day, waiving fees if the account is overdrawn less than $10 and expanding same-day availability for most deposited items.

This summer, customers will have the power to choose whether they want their bank to decline transactions made with their debit cards or at the ATM if their account is overdrawn or would create a negative balance (referred to as "opt in" or "opt out.")

Now, in addition to the changes already in effect, U.S. Bank customers who make a transaction on an account that is overdrawn (including checks, automatic withdrawals, ATM and check card transactions), will see a reduced fee of $10 for transactions $20 or less, $33 for anything over $20. The $10 price point is far lower than any other major bank in the industry.

U.S. Bank provides customers with multiple ways to avoid overdrafts, including its industry-leading set of overdraft protection options, such as linking another deposit account, credit line or credit card to the checking account to cover overdrafts when they happen. U.S. Bank also encourages customers to use the free text or email alerts that it offers to better monitor account balances and to know when certain size transactions move through their accounts.

10: AMERICAN BANKER - USB's Davis Sounds Off on Reg Reform

To hear U.S. Bancorp's top executive tell it, a regulatory reform bill looking very much like Senate Banking Committee Chairman Chris Dodd's proposal will pass by Memorial Day, go into effect by July 4 and leave plenty of unanswered questions about the future of banking.

"Lest you think that it will provide more clarity, it will not," Richard K. Davis, the Minneapolis company's chairman and chief executive, said Tuesday at the UBS global financial services conference in New York. "It will simply create the next level of uncertainty. So we'll deal with it, we'll handle it — we can handle anything — but we're not looking forward to it."

U.S. Bancorp already is forecasting a pretax impact of $300 million to $400 million between last year's credit card reform act and more recent plans to crackdown on overdraft fees. In addition to capping accounts to three overdraft fees in a single day, waiving fees on overdrafts of less than $10 and giving customers a choice this summer to opt in or out of overdraft protection, U.S. Bancorp announced Monday it will reduce overdraft fees to $10 for transactions of $20 or less, making the fee "far lower than what is currently offered by any other major bank."

Davis said he expects consumer protections to figure strongly into the reform bill. "We're hoping that policy and politics intersect well here. If they don't, then we'll just have to react to what could be a very overzealous consumer protection agency," he said.

11: AMERICAN BANKER - Why Free Checking Isn't Dead

With the new regulatory changes, banks are scrambling to protect their overdraft revenue and to find replacement income for any of it they may lose. Consultants are offering a variety of ideas-including resurrecting regular service charges-but most share a common assumption: Many frequent overdraft customers will be unprofitable without these fees.

Before changing products and pricing, however, bankers would be wise to make sure they understand the true profitability of these customers. There will also be an opportunity to grab market share when competitors, especially the big banks, abandon free checking.

What do high-frequency overdraft customers really look like? The customers at issue are the 5 percent that account for 65 percent of overdrafts. They have six to eight overdrafts every month, on average, and are nearly twice as likely to be active debit card users. With about half of overdrafts occurring at the point of sale, these customers could face a situation almost every week where a purchase would be declined if they do not opt in.

Our prediction, supported by the early experiences of our clients, is that many of them will choose to have overdraft protection and pay the fees when this downside is properly explained. Our data indicates that, contrary to the findings of other studies, they value the service and can afford the fees.

Other studies of these customers have used either census tract data or appended demographics. There are problems with both. Census data does not look at the individual households and the appended data can be way off. As a test, we appended household income from two different well-known sources. We saw many differences in income between these two sources for the same households, sometimes as high as $100,000.

So, we looked at actual deposit behavior. The frequent overdraft customer has an average balance of only a few hundred dollars. This, however, is simply because they go below zero so often. They actually deposit much more often and much more in total dollars than any other customer segment. This suggests that those who do opt out will have higher balances than they happen to have now. It also is evidence that these customers may not be as low-income as they have been portrayed.

Another important trend is that for some very coveted behaviors-like direct deposit and bill pay-the frequent overdraft customer is also attractive. The use of these products and services results in customers staying with a particular institution longer and reduces the frequency of chargeoffs. These are the ideal customers in terms of using products and delivery channels that banks like.

The last piece of the puzzle is to look at other products that these customers buy. We found the cross-sell ratios very comparable to the average customer household. They also had just over $8,000 in total household deposits.

This is very different from the picture that has been painted by the media of low-income households that are being taken advantage of by banks. It is also very different from the story told by many industry consultants of customers who will become unprofitable once overdraft income is reduced.

So what does all this mean in the new regulatory environment? Overdraft revenue will take a hit, but not as big as some predict. Many portray overdraft programs as predatory based on anecdotal horror stories from a few big-bank customers. For the customers driving this revenue stream, however, it is a valuable service. They will soon get a chance to cast their votes.

How big banks respond to a reduction in overdraft income, however, may be very different than community banks. Big banks, driven by earnings pressure, will impose service charges to make up lost fees. Some already have.

For them, the economics of eliminating free checking might make sense. Big banks have 4,000 checking accounts per branch versus 1,000 at community banks. They can afford to lose many customers to gain regular service charges from those who stay, whether because of inertia or because of the huge advantage the big banks have in convenience.

This will present an opportunity for community banks. If they keep offering products customers want-like free checking-and resist the urge to copy the big banks' fee strategies, they can pick up market share. They will have the opportunity to capture many customers that have been perceived incorrectly as unprofitable, as well as many others who will be angry that they are suddenly faced with service charges or complicated products.

12: ANNOUNCEMENTS - Chase To Add 90 Bank Branches in California in 2010...

...Investment to add more than 1,200 jobs, expand network to more than 800 branches

Chase announced today that it will continue its investment in California by opening about 90 new branches and adding more than 1,200 new jobs to better serve California bank customers in 2010.

13: ANNOUNCEMENTS - J.P. Morgan Selected by Transatlantic Holdings...

...to Provide Global Custody Services

NEW YORK--(BUSINESS WIRE)--J.P. Morgan Worldwide Securities Services, a leading provider of global custody and fund services, today announced that it has been appointed by Transatlantic Holdings, Inc., a leading international reinsurance organization, to provide global custody for the majority of its invested assets worldwide. Assets under custody total approximately $11 billion.

“We are pleased to add Transatlantic Holdings, Inc. as a new client to our North American insurance franchise. As such, the mandate is an excellent example of our ability to service the global custody needs of reinsurers.”

14: ANNOUNCEMENTS - U.S. Bank Sets a New Standard in Overdraft Pricing...

...Implements Reduced Fees and Emphasizes Consumer Choice

U.S. Bank has introduced a new overdraft policy that complements changes it made earlier this year and builds on the company's commitment to provide customers a range of choices in how they manage their accounts. The new policy includes a reduced fee of $10 for transactions that are $20 or less and drawn on an account that has a negative balance. The $10 fee is far lower than what is currently offered by any other major bank. The change takes effect in August.

15: ANNOUNCEMENTS - Weiss Buys Back Bank and Insurance Ratings from TheStreet.com

Weiss Ratings Resumes Role as Nation’s Leading Independent Rating Agency of Financial Institutions

(Jupiter, Fla., May 6, 2010) -- Weiss Group, LLC, a leading provider of independent research and ratings since 1971, has announced today that it has bought back the bank and insurance company ratings which it had sold to TheStreet in 2006, restoring the business to its wholly owned subsidiary, Weiss Ratings.  

Unlike most other rating agencies, Weiss Ratings accepts no compensation of any kind from the companies it rates, deriving its revenues exclusively from the sale of ratings and data to consumers and others via public libraries and the Internet. 

LINK TO FULL ARTICLE: http://insurancenewsnet.com/article.aspx?id=187888&type=newswires

16: BANKINSURANCE.COM - ACLI Opposes Proposed 0.15% “Fee” On Large Life Insurers

NEWS IN BRIEF - MAY 10 - 16, 2010

AEGON USA Chairman Patrick Baird, expressing the position of the American Council of Life Insurers (ACLI), told the Senate Finance Committee in hearings last week that the committee's proposed 0.15% tax on certain liabilities of large life insurers that own broker-dealers would put those insurers at a competitive disadvantage.  Because life insurers are required to have large reserves and statutory surpluses in order to operate, Baird informed the senators, “not only publicly-traded companies, but also mutuals, fraternals and reciprocals would be swept into the tax” on financial institutions with $50 billion or more in assets.  The “financial responsibility fee” needn't be levied on life insurers, Baird said, because state laws already prevent them from risky leveraging.  When confronted with the AIG example, Baird said, “AIG should not be used as a benchmark for the life insurance industry” because it is “a multifaceted entity with many business units in addition to its insurance business.”

BankInsurance.com News in Brief" is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

17: BANKINSURANCE.COM - CT JUDGE Rules Wells Fargo Insurance...

...Engaged in Unfair and Deceptive Practices

NEWS IN BRIEF - MAY 3 - 9, 2010

Connecticut Superior Court Judge Kevin Dubay has ruled that San Francisco-based, $1.24 trillion-asset Wells Fargo & Co. subsidiary Acordia, now Wells Fargo Insurance Services, engaged in deceptive trade practices and breached its fiduciary duty by failing to disclose a contingent commission agreement it had with five insurers that participated in the Millennium Partnership program Acordia set up in 1999.  Atlantic Mutual, Chubb, The Hartford, Royal Sun Alliance and Travelers agreed to pay an extra 1% commission on each of their policies sold through Millennium, which Acordia set up to help fund the installation of a new agency management system.

Judge Dubay found that “Connecticut did not prove that Wells Fargo Insurance brokers did anything other than act in their clients' best interests” and noted that both client and broker testimony indicated just the opposite, with Millennium insurers receiving no preferential treatment and with customers paying no more for insurance than if Millennium had not existed.  Judge Dubay, however, ordered Wells Fargo Insurance to determine how much Connecticut customers had paid the company in undisclosed Millennium Partners' commissions, so he could determine the penalty Wells Fargo should pay for “unfair and deceptive business practices … under the Connecticut Unfair Trade Practices Act.”

Connecticut Attorney General Richard Blumenthal, who prosecuted the case against Wells Fargo, said, “This case is a significant victory for insurance consumers and honest, competitive businesses that were illegally shut out of the market by Wells Fargo's exclusive pay-to-play club.”  Wells Fargo spokesperson Kathryn Ellis described Blumenthal's comments as a mischaracterization of the court's decision and described the verdict as a misinterpretation of the law.  Ellis said, “We plan to appeal and are confident the decision will be reversed.”  She added, “No customer was hurt or suffered monetary loss.”

BankInsurance.com News in Brief" is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

18: BANKINSURANCE.COM - Increased Wealth Management Income...

...a Bright Spot At Marshall & Ilsley

NEWS IN BRIEF - MAY 3 - 9, 2010

Milwaukee, WI-based, $56.6 billion-asset Marshall & Ilsley Corp. (M&I) reported wealth management income in the first quarter increased 8.7% to $68.1 million, up from $62.7 million in first quarter 2009, and comprised 29.9% of noninterest income, which climbed 28.8% to $227.6 million, up from $176.7 million, driven by a $48.3 million gain on the sale of the company's merchant processing portfolio.  The net interest loss of $49 million compared with a $69.1 million loss a year ago, reflecting a $19.8 million drop in loan loss provisions, but the company's overall net loss of $140.5 million increased over with the net loss of $116.9 million in first quarter 2009.  Marshall & Ilsley President and CEO Mark Furlong said, “Our first quarter results reinforce our confidence that a credit quality recovery is underway at M&I.”

In 2009, M&I Corp. reported $254.4 million in wealth management fee income, which comprised 38.9% of its noninterest income and 11.4% of its net operating revenue.  The company ranked 18th in wealth management earnings among all BHCs, according to Michael White's Wealth Management Fee Income Report.

BankInsurance.com News in Brief" is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

19: BANKINSURANCE.COM - Morgan Keegan Gets October Hearing On SEC And FINRA Charges

NEWS IN BRIEF - MAY 3 - 9, 2010

Memphis, TN-based Morgan Keegan, Morgan Asset Management and four of the companies' employees have been granted an administrative hearing regarding Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) charges that Morgan Keegan, et. al. overstated the value of six funds backed by subprime mortgages.  According to the regulators, Morgan Keegan made material omissions and misrepresentations in marketing materials, regulatory filings and sales training, gave preferential treatment to some customers but failed to make suitable recommendations to others, failed to adequately supervise employees and obstructed the due diligence process.  Morgan Keegan, a subsidiary of Birmingham, AL-based, $142.4 billion-asset Regions Financial Group, requested the hearing, which will cover Morgan Keegan's dealings in Mississippi, Alabama, South Carolina and Kentucky and be held on October 5, 2010, at the offices of the Alabama Securities and Exchange Commission in Montgomery, AL.  To read the request for the hearing, click here.  To read the order, click here.

BankInsurance.com News in Brief" is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

20: BANKINSURANCE.COM - Online Insurance Research And Purchases On The Upswing

NEWS IN BRIEF - MAY 3 - 9, 2010

More Americans (32%) say they are going online to research their insurance options, and 59% say that when they receive an insurance offer in the mail they go to the insurance company's website to learn more, according to the 2010 Insurance Customer Interactive Media Usage Survey conducted recently by Atlanta, GA-based AIS Media.  Unfortunately, 31% of respondents said they were dissatisfied with the usability of the insurers' websites, but the rest were somewhat (49.5%) or extremely (19.5%) satisfied.  With 33% of the consumers surveyed saying they would consider purchasing insurance online, AIS Media CEO Thomas Harpointner said, “Integrating an effective marketing strategy to existing direct mail campaigns can provide insurance companies the potential for immediate increases in marketing ROI and measurability.”

BankInsurance.com News in Brief" is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

21: BANKINSURANCE.COM - Worksite Insurance Sales Rise In 2009

NEWS IN BRIEF - MAY 10 - 16, 2010

Voluntary/worksite sales of insurance products rose 3.3% in 2009 to $5.397 billion, up from $5.225 billion in 2008, according to an Eastbridge Consulting Group survey of 60 voluntary carriers that Eastbridge estimates account for 90% of worksite sales.  In force premiums grew 8% to between $18.8 billion and $24.7 billion, the consulting group's U.S. Worksite Sales Report estimates.  Eastbridge Vice President Bonnie Brazzell said, “I don't know that I would say that the industry is recession-proof, but, historically, there have been factors other than the economy that have an impact on voluntary sales.”  Brazzell pointed to broker attitudes and employee interest.

BankInsurance.com News in Brief" is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com .

22: K@W - Crisis, Contagion and Bailouts: What's Next for the European Union?

In the run-up to this week's announcement of the European Union's $960 billion stabilization plan, Wharton management professors Mauro Guillén and Saikat Chaudhuri, and Jean Salmona, founder and chairman of the editorial board of ParisTech Review, participated in an interview with Knowledge@Wharton on likely outcomes from the financial crisis facing Greece, some of its sister countries and the European Monetary Union more generally. How did events spin so out of control? How will the politics of the crisis affect the Eurozone's economic performance? Guillén, Chaudhuri and Salmona addressed these and other questions on May 7, just before the huge financial support package was announced.

LINK TO FULL ARTICLE: http://knowledge.wharton.upenn.edu/article/2489.cfm  

23: K@W - Not a Positive Signal The Economic Impact of Arizona's New Immigration Law

Arizona's controversial new immigration law reflects a sharp political response to long-simmering conflict over immigration policy in a nation that takes pride in its history as a society built with the help of people from many lands. Wharton faculty say the timing of the legislation is in part a reaction to stress brought on by the economic downturn, even as declining demand for labor has slowed immigration into the United States. They and others debate the economic effects of the legislation on employers, employees and future immigration policy.

LINK TO FULL ARTICLE: http://knowledge.wharton.upenn.edu/article/2485.cfm

Reproduced with permission from Knowledge@Wharton (http://knowledge.wharton.upenn.edu), the online research and business analysis journal of the Wharton School of the University of Pennsylvania. All materials copyright of the Wharton
School of the University of Pennsylvania. http://knowledge.wharton.upenn.edu 

24: M&A - J.P. Morgan To Acquire Schroders PLC'S

J.P. Morgan Worldwide Securities Services (WSS), a leading provider of global custody and fund services, has signed an agreement to acquire the private equity administration services business of Schroders PLC (Schroders), subject to regulatory approval. Based in Guernsey and Bermuda, the private equity administration services business currently has $6.2 billion in committed capital under administration.

LINK TO FULL ARTICLE: http://www.businesswire.com/news/home/20100429006001/en/J.P.-Morgan-Acquire-Schroders-PLC%E2%80%99s-Private-Equity

25: MISCELLANEOUS - DTCC Continues Expansion of Public Data on OTC Credit Derivative

NEW YORK--(BUSINESS WIRE)--The Depository Trust & Clearing Corporation (DTCC) expanded its public release of data in the Trade Information Warehouse’s global repository to include a breakout of outstanding credit default swap (CDS) contract values in their currencies of denomination. This added information is expected to help provide greater transparency into the risk exposure of a particular currency to the CDS market.

Because nearly all credit derivatives transactions are maintained centrally in the Warehouse's global repository, the industry and regulators worldwide are able to get a consolidated view of risk in the market place, which is critical especially in times of crisis”

LINK TO FULL ARTICLE: http://www.businesswire.com/news/newyorkcity10/20100506006494/en/DTCC-Continues-Expansion-Public-Data-OTC-Credit

26: PERSONNEL CHANGES - Bank of America Merrill Lynch Names Robert Arth...

...President of Bank of America Business Capital

Industry Veteran Will Lead One of the World's Largest Asset-based Lenders

Bank of America Merrill Lynch today announced that Robert Arth has been named president of Bank of America Business Capital, based in New York.

LINK TO FULL ARTICLE: http://newsroom.bankofamerica.com/index.php?s=43&item=8693

27: PERSONNEL CHANGES - BNY Mellon Announces...

...Leadership Transition for Asset Management

Jonathan Little and Mitchell Harris Named Interim Co-Heads

Mellon announced today that Jonathan Little and Mitchell Harris will co-head the company's asset management business on an interim basis following the departure of Ronald P. O'Hanley, president and chief executive officer of BNY Mellon Asset Management.  Mr. O'Hanley is leaving to accept a new opportunity in the financial services industry.

28: PERSONNEL CHANGES - Harris Names Kathy Weber & Andrea Ward...

...to Key Rockford Leadership Positions

Harris today announced the appointments of Kathy Weber to Managing Director of Harris Private Bank-Rockford and Andrea Ward to Regional President-Rockford as it continues to fill key leadership positions following its recent acquisition of AMCORE.

29: PERSONNEL CHANGES - Holliday Elected Bank of America Board Chairman

The Bank of America Board of Directors elected Charles "Chad" O. Holliday, Jr. as chairman, succeeding Dr. Walter E. Massey.

30: PERSONNEL CHANGES - Union Bank Announces Three Executive Promotions

Chief Risk Officer Mark Midkiff and Chief Retail Banking Officer Tim Wennes Advanced to Vice Chairman

Branch Banking Head Pierre Habis Promoted to Senior Executive Vice President

UnionBanCal Corporation and its primary subsidiary, Union Bank, N.A., today announced the promotion of two key executives to vice chairman status. Chief Risk Officer Mark W. Midkiff was named Vice Chairman as was Chief Retail Banking Officer Timothy H. Wennes. Midkiff is based in Union Banks San Francisco headquarters. Wennes is based in Union Bank's Los Angeles headquarters. Both report to Union Bank President and Chief Executive Officer Masaaki Tanaka.

LINK TO FULL ARTICLE: http://www.businesswire.com/news/home/20100429006484/en/Union-Bank-Announces-Executive-Promotions

31: PERSONNEL CHANGES - Wells Fargo & Co. Names Karen Wimbish Head...

...of Retail Retirement Group

CHARLOTTE, N.C.--(BUSINESS WIRE)--Wells Fargo & Company (NYSE:WFC) today announced that Karen H. Wimbish has been named the new leader of Wells Fargo Retail Retirement, part of Wells Fargo Retirement.

“I am truly excited about the opportunity to help our broad range of customers achieve their retirement dreams through proactive planning. At Wells Fargo, we have many resources to help customers with retirement, and I look forward to helping customers succeed financially”

LINK TO FULL ARTICLE: http://www.businesswire.com/news/home/20100505005962/en/Wells-Fargo-Names-Karen-Wimbish-Head-Retail

32: PERSONNEL CHANGES - Wells Fargo Stockholders Elect Directors...

...Vote on Proposals at Annual Meeting

Stockholders of Wells Fargo & Company (NYSE: WFC) yesterday elected 16 nominees to the Company's board of directors and ratified the appointment of KPMG LLP as the Company's independent auditor for 2010. Stockholders also approved the compensation of the Company's executives named in its proxy statement, and an amendment to the Certificate of Incorporation to increase the Company's authorized shares of common stock.

33: PRODUCTS - TD AMERITRADE Launches Breakthrough...

...“DVR-like” Paper Trading Technology

Users can now go back in time to practice trading actual market-influencing events

OMAHA, Neb.--(BUSINESS WIRE)--TD AMERITRADE Holding Corporation (NASDAQ: AMTD) today announced that it has launched thinkOnDemand, a new, innovative way for retail traders and investors to paper trade, or trade using simulated cash and positions.

“This is a tremendous breakthrough for traders and one of the most innovative tools we have ever developed”

LINK TO FULL ARTICLE: http://www.businesswire.com/news/home/20100506005155/en/TD-AMERITRADE-Launches-Breakthrough-%E2%80%9CDVR-like%E2%80%9D-Paper-Trading

34: REGULATORY - A Bankstocks.com Classic:

...Why the Proposed Consumer Protection Agency Is a Terrible Idea

It will raise the cost of consumer credit and make it more scarce, and weaken the financial system, as well

As Congress seems set to put the finishing touches on its financial reform bill any day now, this is as good a time as any to highlight one of the bill's most objectionable features, its creation of the Consumer Financial Protection Agency. Back in December here, I explained what a dumb idea the CFPA really is. It will make consumer credit more scarce and expensive and will, at the margin, weaken the financial system at the very time the system needs strengthening. Re-reading what I wrote back in December, I wouldn't change a word.

35: REPORTS - Financial Advisors Say Guaranteed Income Products Too Complicated --

Want More ‘Explainable’ Products for Their Clients

WINDSOR, Conn., May 10, 2010 — The majority of financial advisors feel guaranteed income products are too complicated and seek materials and support from wholesalers and companies to help explain the products to their clients, according to a recent study conducted by LIMRA.

“Most advisors said that retirement income planning is taking a more prominent role in their practices,” said Matthew Drinkwater, associate managing director, LIMRA Retirement Research.  “The advisors we talked to expressed a desire for simpler, more transparent products that they could understand and explain to their clients.  They welcomed education and training to learn more about holistic retirement planning but not for the expressed purpose of obtaining another designation.   While they don’t want to be sold to, they were interested in learning how certain products could address the issues facing their clients.”

LINK TO FULL ARTICLE: http://insurancenewsnet.com/article.aspx?id=189267&type=breakingnews

36: REPORTS - Wells Fargo Survey: Small Business Owner Optimism Improves;

...Current Financial Situation Getting Stronger

SAN FRANCISCO--(BUSINESS WIRE)--According to the recent Wells Fargo/Gallup Small Business Index survey, conducted in April, business owners appear to be regaining their footing, albeit at a measured pace. The report indicated improved optimism among business owners, driven by more favorable perceptions of their current financial situation and cash flow.

“As consumer and business spending appeared to pick up pace, this bolstered small business owners’ optimism around their current situation”

LINK TO FULL ARTICLE: http://www.businesswire.com/news/home/20100511005421/en/Wells-Fargo-Survey-Small-Business-Owner-Optimism

37: RESEARCH - Striking the Right Balance:

...Finance Executives Combine Growing Optimism with Continued Financial Discipline

71% of Finance Executives See Economic Expansion in the Next 12 Months, According to Global American Express/CFO Research Survey

Executives Temper Pursuit of Growth With Focus on Profitability and Rigorous Oversight of Discretionary Spending

38: RETIREMENT - Educational Publication “The Truth About Annuities...

...and Retirement Income” Offers Perspective About Financial Choices

The fixed income annuity is a commonly misinterpreted asset. The insurance industry has done a better job at communicating the benefits of annuities than in the past. But the majority of Americans are still not fully aware of today’s annuities -- with their greater flexibility and value to retirees. Given a re-evaluation of retirement portfolios, they can be a formidable asset class to re-dress volatility and hedge downside risk.

Jennifer Warren, author of the publication and managing director of the Retirement Security Institute, says, “In July 2007, the first edition was created as an educational intervention. The fundamental message is still intact in this updated 2010 edition, when knowledge is even more pressing. Presented in a consumer-friendly way, the information and ideas are based on well-researched information.”

LINK TO FULL ARTICLE: http://seniormarketprofessional.com/r/WIRE/d/contentFocus/?adcID=413e59c27ffbbd3fa4d760364b87395a

39: RETIREMENT - Helping Businesses Help Retirees

Whenever I speak with leaders from the business community from all around the country, they all agree on one thing: rising health care costs are making it harder for workers and retirees to get the benefits they deserve.  Increasingly, employers are being forced to choose between staying competitive and honoring the men and women who powered their businesses by providing their retirees with quality benefits.

Americans who retire before they turn 65 and are eligible for Medicare are particularly vulnerable. In 1988, 66 percent of large firms provided health care coverage to their retirees. 20 years later in 2008, the percent of firms offering coverage to retirees plummeted to 31 percent. The lack of coverage from their employer forces many retirees to pay exorbitant premiums or simply go without health insurance.

LINK TO FULL ARTICLE: http://www.whitehouse.gov/blog/2010/05/04/helping-businesses-help-retirees

40: CAST MANAGEMENT CONSULTANTS

ABOUT CAST . SERVICES . CLIENTS . CAREERS . CONTACT

CAST Management Consultants, Inc.
700 S. Flower Street, Suite 1900
Los Angeles, CA 90017
ph. 213.614.8066  fx. 213.614.0760
www.castconsultants.com

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