ABA Banking Journal - October 2008 - (Page 63)

briefing Veteran ABA BJ editor Joe Kizzia dead at 85 oe Kizzia, longtime ABA Banking Journal editor and founding editor of ABA Bank Directors Briefing, died in August, after a long illness, at 85. A veteran of the Normandy invasion and the Battle of the Bulge, Kizzia served in the 744th Railway Operating Battalion during World War II. He graduated from Northwestern University’s Medill School of Journalism after the war, and began his business journalJoe Kizzia ism career as a railroad business writer at Simmons-Boardman Publishing, advancing to Executive Editor of Railway Age magazine. Later, when Simmons-Boardman began publishing ABA Banking Journal for ABA under contract, Kizzia became this magazine’s Managing Editor. In 1979 he became Executive Editor. He founded the monthly newsletter, ABA Bank Directors Briefing, in 1979. He retired from the magazine and the newsletter in 1993. Kizzia grew up in small towns in Arkansas farm country. While he became a suburbanite, he could still revert to his Arkansas accent when talking banking or farming. In later years he specialized in community banking issues. He surprised more than one banker with his expert hog call, but his command of Civil War history was still more impressive. J In later years, Kizzia played mentor to current staff members of the magazine. He stressed reporting on people and places, not just dry data. He didn’t hold back on criticism, but tended to be low key about it. “You might have written that story a bit too fast,” was heard more than once. He wrote in simple, clear prose, the kind that is deceptively easy-looking to the reader, and painstaking to actually produce. As he would often say, “I wrote a long story, because I didn’t have time to write a short one.” Joe Kizzia didn’t go in much for gimmicks, in his writing nor in his personal dealings. He was essentially an old-school newspaperman, down to his Marlboros and the occasional lunchtime martini. His favorite medium for most anything, from taking interview notes to typing stories, was cheap yellow 8 1/2 by 11 sheets of “copy paper.” Though he wrote his share of automation articles, he personally didn’t care at all for computers, always writing on a beat-up manual typewriter, painted in battleship gray. Joe Kizzia is survived by his wife, Peggy Toncray Kizzia, daughter Carol Kizzia Gross, and sons Michael and Tom, and numerous grandchildren. —Steve Cocheo, executive editor issuer has been posited for the U.S. Whether the conduit issuer in the U.S. would be a private bank or a government agency remains to be seen. Perhaps this could be a useful role for a restructured Fannie Mae or Freddie Mac. Early resolution of the future role of Fannie and Freddie would certainly assist the development of a covered bond market in the U.S. Capital relief for U.S. banks investing in covered bonds would also help. Consider that European banks are only required to maintain half the capital against a AAA covered bond that they would be required to hold against an unsecured AAA bank obligation. It makes sense that a secured bank obligation should attract less capital. More reaching yet would be statutory protection for the cover pool, similar to European legislation. If the cover pool could simply be set aside for payment of outstanding covered bonds, the market risk and reinvestment risk in current U.S. covered bonds would be eliminated. That would present a much simpler investment story, and the bonds would be less gimmicky. BJ COVERED BONDS continued from p. 12 ing accounting environment. Current proposals will make it more difficult for banks to obtain capital relief through the accounting sale treatment that has been available with residential mortgage securitization. In the future, these securitized mortgage loans are much more likely to remain on the bank’s balance sheet. That means one of the disadvantages of covered bonds—that the cover pool is retained on balance sheet—will be largely eliminated. Bank capital rules are also changing. Under the proposed new rules that would implement the Basel II international capital standard, the capital to be held against residential mortgages would decrease from 100% of the standard capital charge to 50%. (See page 46.) This change will make it easier to retain mortgage loans on balance sheet, facilitating financing through covered bonds. The regulatory environment is also likely to change in response to the perceived evils of the “originate-to-sell” banking model. That model is viewed as lacking the necessary discipline in the underwriting process, resulting in the huge losses from subprime mortgage loans. It is proposed that banks should be required to retain some form of interest in the mortgage loans they sell to induce them to apply higher underwriting standards. A substantial retained interest, however, is likely to make it more difficult to obtain accounting sale treatment even under the existing rules. Securitized mortgage loans would therefore remain on the balance sheet, subject to the bank’s capital requirements. Since cover pools for covered bonds have to be on the bank’s balance sheet, this change would eliminate a competitive disadvantage for covered bonds. A conduit would help The covered bond market in Europe is largely a jumbo market with typical issuances of one billion euros, providing a liquid secondary market for investors. Small to medium sized U.S. banks are unlikely to be able to issue in this size. But a pooling technique has been developed in Spain for the issuance of covered bonds by smaller banks through a conduit issuer. Some form of conduit Subscribe at www.ababj.com ABA BANKING JOURNAL/OCTOBER 2008 63 http://www.ababj.com

Table of Contents for the Digital Edition of ABA Banking Journal - October 2008

ABA Banking Journal - October 2008
Contents
Editor’s Column
A Banker's View of FHA's "Hope for Homeowners" Program
Snapshot: Branch Sales Sag to Ten-Year Low
Covered Bonds Gain Interest after GSE Takeover
ABA Chairman’s Position
ABA Resources
Hot, Web, and Green
Rethinking Segmentation
Still Pushing the Envelope
Keep Regulation Functional
Capital Windfall?
Mortgage IT: Not This Year's Hot Property
Case in Point: Looking for Sales in All the Right Places
Put Your BSA/AML Program into Shape
Mailbox
Banker’s Mart
To Advertise/Index of Advertisers
Remembering Joe Kizzia, Veteren Editor of ABA Banking Journal
100th Anniversary: Then & Now
The Economy

ABA Banking Journal - October 2008

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