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CBAI Files Amicus Curiae Brief to Protect Lender Interests

The Community Bankers Association of Illinois (CBAI) filed an Amicus Curiae brief with the United States Supreme Court urging a reversal of an Eleventh Circuit Court of Appeals’ decision to permit wholly underwater junior liens to be stripped-off or voided in bankruptcy. This matter was brought to our attention by CBAI’s Associate Member SmithAmundsen LLC. Attorney John Collen of that firm drafted and submitted the brief on behalf of CBAI. CBAI’s Board of Directors unanimously approved the filing of this brief to protect the lender interests of Illinois community banks.

In this case, the Appeals Court allowed junior mortgages to be voided or stripped-off based on the judicial determination the liens had no monetary value at the time the debtors were discharged in bankruptcy because the real estate was valued at an amount less than the indebtedness that is subject to the first mortgage. The debtors, however, retained their respective properties to which the liens had been previously attached. Accordingly, the secured party lost the ability to recover any of its indebtedness from possible future appreciation of the value of the properties. Had the secured party’s liens been allowed to pass through bankruptcy unaffected, in accordance with century-old practice, the secured party would have had a chance to recover something in the future rather than being judicially sentenced to recover nothing. The secured party was therefore deprived of a valuable right, even though, at a particular moment in time, its liens supposedly would have recovered no value from the liquidation sales.

It is fundamentally wrong to confuse a lien’s liquidation value at a particular moment in time with the value of the property right which the lien represents. This line of reasoning ignores the fact that even a wholly underwater junior lien is a valuable proper right and that a junior lien which is wholly underwater today may acquire value as underwater property values fluctuate (increases) in the future. This line of reasoning also ignores the fact that valuations/appraisals are subjective and can fluctuate widely; so that it is fundamentally unfair to void a junior lien because, for example, at a point in time a judge decides there is a $1,000 underwater value based on one appraisal when another appraisal could state there is $5,000 more in value and that no underwater situation exists. The brief concluded by respectfully urging the Appeals Court decision be reversed.

CBAI appreciates SmithAmundsen bringing this matter to the attention of CBAI and for their valuable efforts in what will hopefully be a reversal of the Appeals Court decision. Read Amicus Brief.

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Greg Ohlendorf Nominated to ICBA’s Board of Directors

Greg Ohlendorf, president and CEO of First Community Bank and Trust in Beecher, has been nominated to ICBA’s new board of directors for 2015-2016. ICBA’s board will Greg Ohlendorfvote on the nominations during the 2015 ICBA National Convention which will be held March 1-5 in Orlando.

Ohlendorf joined FCB&T in 1985 and was named President and CEO in 2001. FCB&T is a $150 million asset bank located southwest of Chicago and has been a long-time member of CBAI and was CBAI Outstanding Member in 2011. Ohlendorf consistently attends CBAI’s Call on Washington and has been joined at this important event by several members of his board of directors. He is also active in the ICBA, and recently served as Chairman of its Policy Development Committee.

CBAI congratulates Ohlendorf on his nomination and we look forward to working with him to represent the interests of Illinois community banks.

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CBAI Meets with FDIC’s New Chicago Regional Ombudsman

On January 27, 2015, CBAI’s Vice President Federal Governmental Relations, David Schroeder, met with Dan Marcotte, the Federal Deposit Insurance Corporation’s new Chicago Regional Ombudsman. The purpose of the meeting was to introduce Marcotte to the Community Bankers Association of Illinois and to learn of his background and experience.FDIC Ombudsman 2015-2

Schroeder highlighted the importance of CBAI’s exclusive representation of Illinois’ community banks and reviewed CBAI's Federal Policy Priorities, which includes the need to address too-big-to-fail and support for tiered regulation for community banks. CBAI’s positions on taxing credit unions and abolishing the Farm Credit System were also discussed.

During his long career at the FDIC Marcotte served as Case Manager, Supervisory Examiner and Bank Examiner. He also served as a compliance and CRA Examiner in Charge. Since 2009, Marcotte was an Assistant Regional Director (ARD in the Chicago Region) in the Division of Risk Management Supervision. As ARD he oversaw the safety and soundness of 418 insured institutions and coordinated the region’s accounting, IT and Capital Markets examination program. His assignments included three rotations at the FDIC’s Washington, D.C. office. Marcotte’s diverse combination of skills and experience will help him perform the important tasks of this new position.

The FDIC’s Office of the Ombudsman was created by Congress in 1994 to serve as a confidential, neutral and independent resource for individuals who have questions, concerns or complaints about the FDIC regulatory process. Ombudsmen are advocates for a fair process and available to help resolve banking issues in an informal and discreet manner.

Marcotte stated, “After 24 years as a bank regulator, I am excited to assist the FDIC in providing this important service to the industry. As the new Chicago Regional Ombudsman I look forward to strengthening communication channels with our bankers, trade groups, and state banking departments and working with them to resolve concerns over regulatory matters.”

Chicago Regional Ombudsman Dan Marcotte can be reached at (312) 382-6908 or at dmarcotte@fdic.gov.

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Weiss Withdraws from Treasury Undersecretary Consideration

January 15, 2015

Wall Street insider Antonio Weiss has withdrawn his name from consideration for Treasury Undersecretary for Domestic Finance. CBAI applauds this development and encourages the Administration to consider qualified community bankers who play an important role in their communities, our financial system and the nation’s economy. Their advice and counsel is desperately needed at the highest levels of this and future administrations.

CBAI made this position clear in a December 10, 2014 article titled, We’ve Had Enough of Wall Street:

“The Obama Administration has chosen yet another Wall Street insider, Antonio Weiss of the global investment banking firm Lazard, for the position of Under Secretary of Treasury for Domestic Finance. CBAI believes that this and previous Wall Street nominees ignore the importance of Main Street community banks to the nation’s financial services profession, small business job creation, and the inconvenient fact that Wall Street greed and abuse caused the financial crisis and the Great Recession. The Administration is ill-advised to exclusively rely on Wall Street insiders who represent a narrow, and often times flawed and biased perspective.”

“CBAI believes that an Under Secretary should have a broad background in financial services, with the critical inclusion of community banking, which is so important to small business creation, job development, and the overall economic vitality of the thousands of communities throughout our great nation. In addition, an understanding of small and mid-market agricultural lending and financing is crucial to the development of sound and balanced financial regulatory policy with regard to the thousands of agricultural banks in rural communities throughout America.” Read CBAI Article.

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President Obama Signs CBAI Supported Law Requiring Community Bank Presence on the Fed Board

CBAI applauds President Obama for signing into law legislation that would require the White House to appoint someone with community banking experience to the Federal Reserve Board. This provision was included in the Terrorism Risk Insurance Act (“TRIA”) and would specifically require that at least one member of the Federal Reserve Board have experience as a community banker or community bank supervisor. TRIA was supported by a wide bi-partisan majority, passing the House by a vote of (416-5) and the Senate by (93-4). The entire Illinois Congressional delegation voted in favor of TRIA (with the exception of Congresswoman Duckworth who is on maternity leave).