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CBAI Comments on FDIC’s Proposed Assessments for Small Banks

September 11, 2015 - CBAI commented on the Federal Deposit Insurance Corporation’s Notice of Proposed Rulemaking to refine the deposit insurance assessment system for small depository institutions ($10 billion in assets and under). The Federal Deposit Insurance Act requires the FDIC Board to establish a risk-based deposit insurance system applicable to small depository institutions to more accurately reflect risk. CBAI requested the FDIC consider our observations and incorporate our recommendations into the revised assessment system.

CBAI’s observations and recommendations included the following.

  • The greatest risk to the Deposit Insurance Fund disturbingly remains the largest too-big-to-fail banks, and addressing that risk should be the FDIC’s number one priority.

  • Every opportunity needs to be embraced that reduces the massive and growing regulatory burden on community banks. The FDIC and other banking regulators must recognize that their current regulatory reform efforts are insufficient to stem the harmful tides of consolidation and concentration, and much more needs to be done.

  • CBAI remains concerned about FDIC picking winners and losers in the financial system, and the potential for harmful consequences of the proposed assessment system on residential mortgage, C&D, C&I, and Lease lending, particularly where community banks now have a natural competitive advantage in originating and servicing these loans in their communities.

  • CBAI recommended the FDIC incorporate the proposed core deposit/asset ratio in the assessment system, but continue separate treatment for reciprocal deposits from traditional brokered deposits by defining core deposits to include reciprocal deposits.

  • CBAI recommended that a formal review, outreach and modification process be included in the rule, after several quarters of actual experience with the new system, so that community banks are aware of the FDIC’s recognition of the potential for, and that there is a mechanism to raise and for the FDIC to address, harmful consequences.

  • Finally, CBAI recommended a period of restrained enforcement for banks significantly impacted by the new system so they will have time to address and the resolve the issue of raising additional capital to maintain their capital ratios. Read Comment Letter.
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CBAI Calls on the NCUA to Withdraw its Misguided Member Business Lending Proposal

In a comment letter to the National Credit Union Administration (NCUA), the Community Bankers Association of Illinois (CBAI) expressed its unequivocal objection to their unprecedented proposal, which would comprehensively rewrite the credit union member business lending (MBL) rule, and recommended its withdrawal.

The NCUA proposal would circumvent the plain language of the Federal Credit Union Act, strip away critical prudential safeguards, and create new exceptions to the MBL cap. The NCUA proposal amounts to an end-run around Congress by a “cheerleader” regulator that is captive to the most aggressive, multi-billion dollar credit unions.

Credit union MBL powers are highly controversial. Any sweeping changes to the MBL rule should invoke vigorous Congressional oversight, including hearings. If any form of this proposal is enacted it should trigger an immediate review of the credit union tax exemption. Read Comment Letter.

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CBAI Meets with Senate Banking Committee Member Joe Donnelly (D-IN)

CBAI Vice President Federal Governmental Relations, David Schroeder, participated in an outreach meeting with U. S. Senate Banking Committee member Joe Donnelly D-Aug15-Joe DonnellyIndiana) on August 12, 2015.

The meeting was arranged by CBAI member William Smith, General Counsel of HomeStar Bank and Financial Services in Manteno, and attended by Shawn O’Brien, Director of the National Bank of St. Anne. During the constructive meeting O’Brien and Schroeder emphasized the dire need for immediate and meaningful community bank regulatory relief, discussed the state of the current regulatory environment, and cited the importance of authorizing de novo banking charters to maintain a vibrant and growing community banking sector of the financial services profession.

CBAI thanks Senator Donnelly for meeting to discuss these topics of great interest to Illinois community banks.

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CBAI Attends FDIC’s Cybersecurity Awareness Presentation

Powerpoint Presentation Available

Members of the CBAI staff participated in the Federal Deposit Insurance Corporation’s Cybersecurity Awareness Presentation in Chicago on August 11. This informative two hour presentation is being conducted at various FDIC regional offices around the country to inform bankers about cybersecurity from the regulator’s perspective. See FDIC PowerPoint Presentation.

The presentation revealed that cyber threats climbed 48% in 2014 to 24.8 million incidents, a nefarious campaign of just 10 e-mails will yield a greater than 90% chance that at least one person will become prey to cyber criminals, and in 2014 there were 7,945 security vulnerabilities identified which is more than 22 per day – nearly one an hour!

The specific objectives of the presentation were to:

CBAI thanks the FDIC for offering this outreach meeting which provided important information to Illinois community banks to assist them in protecting their institutions from cybersecurity threats and complying with regulatory requirements.

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CBAI ACTION ALERT - Urge Congress and the NCUA to Halt the Latest Credit Union Power Grab

August 3, 2015

The National Credit Union Administration (NCUA), in an unprecedented move, recently proposed to significantly loosen constraints on member business lending for tax-exempt credit unions, completely sidestepping the statutory cap of 12.25 percent established by the United States Congress.

CBAI urges community bankers to send a customizable letter to Congress and the NCUA to express opposition to this plan, which would expand credit union more business lending authority and siphon loans from taxpaying community banks. Contact Congress and the NCUA Today.