Banking Industry

A ruling yesterday from the state's highest court over prepayment mortgage charges could make it more expensive for some to obtain home equity loans, the banking industry's trade association warned. The Maryland Court of Appeals found that state-chartered Provident Bank assessed a "prepayment charge" that's not allowed under state law. The bank had waived $680 in closing costs on a $17,000 loan to Andrew Bednar in 2003 but collected the money after the loan was paid off early when he refinanced with another lender two years later.

Consumers have a plethora of borrowing and saving options, from traditional banks to online-only banks to credit unions and investment brokerages. And while Internet-only banks can offer the most competitive rates for saving and borrowing, credit unions offer a mix of favorable rates and personal service. They're often a good alternative to traditional banks, which still dominate the market. Credit unions are affiliated groups of people who pool their money and lend it to each other. They don't have divided loyalties; they're not trying to serve a customer at the same time as boosting profits and the stock price for shareholders.

This is an edited excerpt of a San Francisco Examiner editorial, which was published Tuesday.THE BANKING industry is proving to be its own worst enemy in the aftermath of a losing election campaign over excessive automated teller machine fees.Earlier this month, San Francisco voters approved a measure that prohibits banks from charging non-customers a second fee for using their ATMs. Instead of being gracious losers, the banks obtained a temporary injunction.The banks have a public relations disaster on their hands.

After several years of rising profits and stock prices, the banking industry is heading for tougher times this year, experts say.Competition is intensifying with cutthroat pricing, finding good loans is becoming more difficult, and a downturn in the economy could sap earnings."

WASHINGTON -- Earlier this year, Sen. Paul S. Sarbanes won applause from consumer advocates for drafting a bill to bar banks from selling their customers' financial data to other companies without the customers' consent.Now, with the senior Maryland Democrat playing an active role in shaping separate legislation dear to the banking industry, Sarbanes is facing criticism from an unexpected source: those same consumer advocates.Intent on preserving requirements that banks expand lending in low-income neighborhoods, Sarbanes appears ready to yield to industry demands that the bill exclude the very consumer protections that the senator had pushed for earlier.

Wise and Burke promoted at Union National BankJames C. Wise has been named vice president, director of marketing and a member of the management team at Union National Bank.He joined the bank Oct. 13. He has 36 years' experience in the banking industry, many of those in Carroll County.Wise has a bachelor of science degree in business administration from Upper Iowa University in Fayette, Iowa. He also is a graduate of the School of Bank Marketing at the University of Colorado and the Maryland/Virginia School of Bank Management at the University of Virginia.

POLITICAL stability was achieved but the economic crisis ignored when Japan's Liberal Democratic Party (LDP) chose Foreign Minister Keizo Obuchi as its chief. He will be elected prime minister by the lower house of parliament tomorrow.Mr. Obuchi, who has been foreign minister for a year but has no major economic experience, won because he is the boss of the biggest faction of the party.That's how things have always been done by the LDP, which has learned nothing during the current crisis.

First Annapolis Consulting Inc.'s success can be measured by the size of its offices.Shortly after Frederick A. White and William J. Westervelt Jr. quit their jobs to start the company in early 1991, they worked out of a cramped 10-foot-by-10-foot bedroom office, made smaller by the two computers, laser printer, copy machine and a couple of desks. They worked in the din from a constantly whirring large fan.Today, they walk on soft carpeting and gaze at brightly colored paintings in spacious offices in Linthicum that are more than sufficient for the company's 80 employees and the 20 more that will be hired by the end of the year.

EVER SINCE April's mega-merger frenzy that resulted in the marriages of Travelers Group with Citicorp and NationsBank with BankAmerica, an eerie silence has fallen over the banking industry.But fund manager Gilbert R. Giordano is betting that the quiet is only a prelude to a storm of mergers and acquisitions.Giordano, portfolio manager of the Titan Financial Services Fund, which invests heavily in banks and savings and loans, sees merger mania picking up again as banks, brokerages and insurance companies finish retooling their computer systems for the year 2000.

Banks and mortgage companies in the Baltimore area rank 12th among the nation's top 20 cities in lending money to minorities.The finding was revealed yesterday at a special hearing of the City Council, which has expressed concern about the lack of small business and mortgage lending for minority and low-income populations in Baltimore.John E. Taylor, president of the National Community Reinvestment Coalition, told council members that Baltimore banking institutions should rank higher.A majority of Baltimore residents -- 60 percent -- are African-American, according to 1990 U.S. Census figures.

The financial crisis of 2007-2009, has tilted the playing field against community banks and has raised a general danger for all banks that they will face steeper regulatory burdens than other kinds of financial firms. This is not only bad for the banking industry but for the American economy. Regulatory anomalies create economic inefficiencies that translate into less safe and sound financial institutions and less sound credit being made available to the marketplace. Once the financial crisis was at a full boil, the Treasury, Federal Reserve and financial regulatory agencies rightly, through a variety of mechanisms, kept many larger institutions from failing.

As he has done on Saturday for several years, Steve Ricker went to Suburban Federal Savings Bank in Crofton yesterday to get change for his convenience store a few blocks away. "This bank has always met my needs," Ricker said. "They gave me my first mortgage 30 years ago." Though by all appearances it was business as usual, yesterday was no ordinary day. After seizing Suburban Federal the night before, federal officials were on the scene yesterday with the bank's staff, paving the way for Suburban's sale to a Virginia-based bank.

As the Bush administration moved to rescue the nation's largest two mortgage companies, confidence in the banking sector spiraled downward yesterday. In Southern California, lines snaked around branches of IndyMac Bancorp, the large lender seized by federal regulators Friday, while customers hurried to withdraw their money. As the anxiety spread through the financial markets, two other big banks, one in Ohio and another in Washington state, felt compelled to assert that they were sound.

A ruling yesterday from the state's highest court over prepayment mortgage charges could make it more expensive for some to obtain home equity loans, the banking industry's trade association warned. The Maryland Court of Appeals found that state-chartered Provident Bank assessed a "prepayment charge" that's not allowed under state law. The bank had waived $680 in closing costs on a $17,000 loan to Andrew Bednar in 2003 but collected the money after the loan was paid off early when he refinanced with another lender two years later.

Consumers have a plethora of borrowing and saving options, from traditional banks to online-only banks to credit unions and investment brokerages. And while Internet-only banks can offer the most competitive rates for saving and borrowing, credit unions offer a mix of favorable rates and personal service. They're often a good alternative to traditional banks, which still dominate the market. Credit unions are affiliated groups of people who pool their money and lend it to each other. They don't have divided loyalties; they're not trying to serve a customer at the same time as boosting profits and the stock price for shareholders.

WASHINGTON -- The Bush administration is considering requiring banks, for the first time, to inform the government of all their customers' international wire transfers, regardless of possible terrorist ties, a Treasury Department official said yesterday. Such mandatory reporting would mark a major expansion of the government's efforts to comb financial data to fight terrorism and other international crimes. Depending on how the program is structured, it could mean that banks would be forced to turn over data on millions of transactions that they are now required to keep secret.

In the not-too-distant future, small cargo planes such as the one that crashed in Ferndale last week, killing its pilot, might no longer embark on such journeys. Or at least, the planes might not carry checks. Backed by federal legislation called the Check Clearing for the 21st Century Act, banks are making plans to send checks by electronic imaging rather than by ground or air transport. Industry experts predict banks eventually will save more than $2 billion a year through the transition.

William W. Simpson Jr., a retired banking executive and accountant, died Sunday of kidney failure at Stella Maris Hospice. The Timonium resident was 80. Born and raised in Baltimore, he was a 1940 graduate of Polytechnic Institute. He earned a business degree from the University of Baltimore and a master's in business administration from Loyola College, and became a certified public accountant in 1952. In 1946, he started work as a teller at the old Baltimore Federal Savings and Loan Association, and in his 34 years with the institution rose through the ranks to become senior executive vice president and chief administrative officer.

Maryland's banking sector could experience some solid growth this year, but it may require higher interest rates and less economic uncertainty for that industry to truly rebound, local banking executives and other experts predict. "It's been a good environment for all Maryland banks," said J. William Knott, regional president for Wachovia Corp., a Charlotte, N.C.-based bank with a growing presence in Maryland. "We've seen good deposit growth, and still-good loan growth." Nationally - and locally - last year's headlines above stories about banking scandals tended to obscure what was actually one of the banking industry's best years ever, said Arnold G. Danielson, chairman of Danielson Associates Inc., a Rockville-based consulting firm.

Working to clean up the damage to its finances and its image left behind by an alleged "rogue trader" who cost it $750 million, Allfirst Financial Inc. has enlisted a former Clinton banking official with the more staid reputation as a "rogue regulator." Eugene A. Ludwig was once the top banking regulator in the nation. From 1993 to 1998, he implemented broad reforms and rewrote the country's community banking regulations. And showing a quality that no doubt led to his latest endeavor, Ludwig did so while remaining in the banking industry's good favor.