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Bernanke Confirms Reality of Too-Big-To-Jail

Former Federal Reserve Board Chairman Ben Bernanke has released a book, The Courage to Act: A Memoir of a Crisis and Its Aftermath, which is about his experiences at the center of the financial crisis in 2008 and 2009. In a broadcast interview regarding the book, Bernanke responded to the question, “Should somebody have gone to jail?” [regarding responsibility for the crisis] by saying unequivocally, “Yes, I think so.”

Bernanke went on to explain that the efforts of the Department of Justice have been to indict or threaten to indict financial firms. He noted that a "financial firm" can't be put in jail. Bernanke continued, “It would have been my preference to have more investigations of individual actions as obviously everything that went wrong or was illegal was done by some individual not by an abstract firm; and so in that respect there should have been more accountability at the individual level.”

This admission by the former Fed Chairman confirms the long held belief by CBAI and community bankers that the fundamental American constitutional right of ‘equal justice under the law’ is not applicable when it comes to the too-big-to-fail (TBTF) banks and financial firms. The United States apparently has a two-tiered system of justice – one for them and another for everyone else. While this confirming admission by the former Fed Chairman is gratifying, the problem of TBTF has not been solved and remains an enormous threat to our financial system, the economy, and American taxpayers and it must be addressed. The community bank position on TBTF is the right one – these financial behemoths have repeatedly proven they are too-big-to-manage, too-big-to-regulate, too-big-to-behave, too-big-to-prosecute, too-big-to- jail, and must be downsized. CBAI urges the current Fed Chair, Janet Yellen, her fellow banking regulators, and the Department of Justice to take greater leadership positions than have been taken in the past in assuring that equal justice is a truly a reality for all. 

October, 2015

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TRID Implementation Goes Live and CFPB Promises No Punitive Enforcement

October 5, 2015 – Despite the Community Bankers Association of Illinois’ (CBAI) urging for a delayed implementation, the new TILA RESPA (TRID) rule took effect on Saturday, October 3, 2015. In several comment letters to the Consumer Financial Protection Bureau (CFPB or Bureau) CBAI also called for a period of restrained enforcement and liability as vendors and lenders make the complicated transition to the TRID. While these repeated calls did not result in a formal grace period, these efforts none-the-less had a favorable impact on community banks in the implementation of the rule.

CFPB Director Richard Cordray stated that the Bureau is working with other regulators on examination guidance to help ensure that the agencies enforce the new mortgage disclosures in a “corrective’ manner and not a “punitive” one. Cordray pledged lenders making a good-faith effort to implement the disclosures will have “some period of months” to work out any problems. “There will be time for them to get it right. They don’t have to be perfect the first day.” Cordray said.

Cordray stated that during the initial examinations for compliance, the regulators will evaluate the institution’s compliance management program and overall efforts to come into compliance. “Specifically, examiners will consider: the institution’s implementation plan, including actions taken to update policies, procedures and processes; its training of appropriate staff; and its handling of early technical problems or other implementation challenges.”

These concessions are meant to address industry concerns about regulatory enforcement; and while not a perfect solution, CBAI thanks the CFPB for the accommodation and additional guidance. Unfortunately, the CFPB did not sufficiently address concerns about potential liability, in the form of law suits, which could result from noncompliance. As a result, CBAI will continue to support legislation to implement a reasonable hold-harmless period for good-faith efforts to comply with the TRID. Summary of TRID Rules. CFPB’s TRID Implementation Webpage

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CBAI Urges Senator Kirk to Support Pending Fed Reserve Board Nominations

On October 2, 2015, the Community Bankers Association of Illinois (CBAI) urged Illinois Senator Mark Kirk to support two Federal Reserve Board (Board) nominations pending before the Senate Banking Committee and requested the Committee convene hearings for their consideration at the earliest possible date. The nomination of Allan Landon (former CEO of the Bank of Hawaii) fulfills a new CBAI supported mandate for community bank representation on the Board, and Kathryn Dominguez (University of Michigan Professor of Public Policy and Economics) has impressive experience and knowledge of financial markets and economic policy. These individuals will inform the Board with appropriate input for balanced deliberations and CBAI urges their swift confirmation. Read CBAI Letter.

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CBAI Unanimously Endorses Patty Clarke for St. Louis Fed Board

CBAI’s Board of Directors has unanimously endorsed the nomination of Patricia Clarke (Patty), president and CEO of the First National Bank of Raymond, for election to the Board of Directors of the Federal Reserve Bank of St. Louis.

Patty is a lifelong member of the Raymond community, has successfully guided her bank during her tenure as President and CEO, and has served in various leadership positions within the Community Bankers Association of Illinois. The CBAI leadership believes Patty will do an outstanding job of representing the interests of community banks in the St. Louis Fed District Group 3.

For those banks eligible to vote in this election, please watch for your ballot, and then vote for Patty Clarke. Voting will run from November 10 to the afternoon of November 25, 2015. See CBAI Board Endorsement Letter. See Patty Clarke's Bio.

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Registration Begins for Chicago EGRPRA Outreach Meeting

September 22, 2015 – Registration is now open for the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) outreach meeting in Chicago on October 19, 2015.

The outreach meeting will provide an opportunity for bankers, consumer and community groups, and other interested persons to present their views directly to senior management and staff of the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (the Agencies) on any of the Agencies’ regulations.

The meeting will consist of panels of bankers and consumer and community groups to present particular issues. There will be limited time after each panel for comments from meeting attendees. In addition, there will be a session at the end of the meeting during which audience members may present views on any of the regulations under review.

CBAI encourages Illinois community bankers to attend this important outreach meeting and express their views on regulatory burden directly to the Agencies. Registration Information.