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CFPB Adopts CBAI Recommendations in Final Payday Lending Rule

On October 5, 2017, the Consumer Financial Protection Bureau CFPB or Bureau) finalized its payday lending rule. While the complete analysis of the 1,700 page Final Rule continues, it does include Community Bankers Association of Illinois (CBAI) and Independent Community Bankers of America (ICBA)-advocated exemptions from the onerous full-payment test and the principal-payoff option for lenders that make 2,500 or fewer covered short-term or balloon-payment loans per year and derive no more than 10 percent of their receipts from such loans. These exemptions benefit hundreds of Illinois community banks.

Exactly one year ago, in a comment letter to the CFPB, CBAI urged the Bureau to broadly exempt community banks from their proposed payday lending rules. CBAI recommended the proposed rules be directed at the unfair and abusive practices of other lenders and not community banks. CBAI expressed concern that the rules, as proposed, would harm community bank small-dollar consumer lending and provided the Bureau with numerous recommendations to mitigate the harmful impact of the proposed rules on community banks. Read Comment Letter.

CBAI is encouraged by the Bureau’s recognition in the Final Rule that community banks treat their customers honestly and with respect. The Rule will take effect 21 months after it is published in the Federal Register. Read More.

October 10, 2017

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CBAI Urges Exemption from CFPB Small Business Data Collection Rule

In a September 12, 2017 comment letter to the Consumer Financial Protection Bureau, the Community Bankers Association of Illinois (CBAI) urged an exemption for community banks from the upcoming small business data collection rule. CBAI acknowledged that Section 1071 of the Dodd-Frank Act requires financial institutions to report information concerning credit applications made by women-owned, minority-owned, and small businesses in part to facilitate the enforcement of fair lending laws, and that the Bureau is currently focused on outreach to further its understanding of the small business lending market.

Community banks currently control less than 20% of the nation’s deposits yet make approximately 50% of the small business loans. This large percentage of lending activity clearly indicates a high level of satisfaction by small businesses with community banks whose hallmark is treating their customers and communities fairly and with respect. This exemplary behavior by community banks in small business lending clearly requires that the Bureau focus its attention on the bad actors and the wrongdoers – not community banks.

CBAI called on the Bureau to use its authority under the Dodd-Frank Act to exempt any class of entity from its rulemaking. Community banks are deserving of broad exemptions that the Bureau is able to grant to them under the law and CBAI urged the Bureau to exempt all community banks under the forthcoming small business data collection rule. Read Comment Letter.

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CBAI Urges Community Bank Exemption to the Volcker Rule

In a September 21, 2017 comment letter to the Office of the Comptroller of the Currency (OCC), the Community Bankers Association of Illinois (CBAI) urged the agencies to completely exempt community banks from the Volcker Rule. CBAI appreciated the OCC’s statement that there is broad recognition that the final Volcker Rule should be improved both in design and application, and that many [including the U.S. Department of the Treasury] have argued that the final rule is overly complex and vague. CBAI stated that the community bank business model does not include the risky practices now prohibited by the Volcker Rule; it was the risky behavior of the largest banks and financial firms that led to the financial crisis; and a complete exemption for community banks is justified. Read Comment Letter.

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CBAI Attends AdvocacyTech Conference in Chicago

The Community Bankers Association of Illinois (CBAI) joined with the National Association of Home Builders, American Bar Association, American Medical Association, Consumer Technology Association, the Chicagoland Chamber of Commerce, and others to attend the AdvocacyTech Conference in Chicago on September 20, 2017. AdvocacyTech is a premier event for advocacy professionals to receive information on the latest and most innovative technologies designed to engage grassroots support and move their organization’s agenda forward.   

AdvotechConf1                                    AdvotechConf2               

The AdvocacyTech conference was hosted by the Grassroots Professional Network (GPN). The GPN was founded by the Independent Community Bankers of America’s (ICBA) Vice President of Advocacy, Joshua Habursky, and is a community of public affairs professionals who exchange innovative ideas. The GPN encourages advocacy executives at all levels to work together in shaping their profession; and with the common goal of providing professional development and networking opportunities, the group has quickly grown to hundreds of participants.

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CBAI Participates in Congressman Hultgren’s (R-14th) Housing Finance Roundtable

On September 18, 2017, Anthony Sisto, CBAI’s First Vice Chairman and Chairman & CEO of STC Capital Bank in St. Charles, and David Schroeder, CBAI’s Vice President Federal Governmental Relations, participated in a housing finance roundtable discussion hosted by Illinois Congressman Randy Hultgren (R-14th). Reform of the housing Government Sponsored Entities (GSEs) will hopefully be revisited by Congress in the coming months. This roundtable, which was also attended by several other stakeholders, provided an opportunity to discuss a variety of priorities, objectives, and concerns so that reform efforts result in appropriate support for affordable home ownership and protect American taxpayers from unnecessary risks.

Hultgren SistoHousing finance reform has been a CBAI Federal Policy Priorities (FPP) since housing GSE were placed into conservatorship. CBAI stated in its 2017 FPP:

    “As it considers reforms to the housing GSEs, Congress should recognize that community banks and our economy need the continued existence of an impartial secondary market for residential mortgages that is financially strong and reliable. Fannie and Freddie may not survive in their current form; however, the financial crisis demonstrated the need for some level of government involvement in the secondary market to ensure the continued flow of credit and market liquidity during periods of severe economic stress.”

CBAI supports the Independent Community Bankers of America’s (ICBA) Principles for GSE Reform which include the following:

  • The GSEs must be allowed to rebuild their capital buffers.
  • Lenders should have competitive, equal, direct access on a single loan basis.
  • The GSEs must be adequately capitalized, liquid, and reliable enough to effectively serve the entire mortgage industry in all markets, at all times, including challenging economic circumstances.
  • Credit risk transfers must meet targeted economic returns.
  • An explicit government guarantee on GSE MBS is needed.
  • The TBA market for GSE MBS must be preserved.
  • Strong oversight from a single regulator will promote sound operation.
  • Originators must have the option to retain servicing, and servicing fees must be reasonable.
  • Complexity of structure and operations should not force consolidation.
  • GSE assets (automated underwriting technology, loan delivery portals, Common Securitization Platform, and multi-family housing businesses) must not be sold or transferred to the private market.
  • The purpose and activities of the GSEs should be appropriately limited and must be focused on supporting residential and multifamily housing. They must not be allowed to compete with originators at the retail level, where they would enjoy an unfair advantage.
  • GSE shareholder rights must be upheld.

CBAI appreciated the opportunity to provide input during Congressman Hultgren’s roundtable discussion on these important issues and looks forward to working with Congress and the agencies as GSE reform measures progress through legislation.

September 20, 2017