CBAI Attends OCC Central District Office - Trade Association Executives Meeting

April 4, 2013

CBAI’s David Schroeder, Vice President Federal Governmental Relations, participated in an Office of Comptroller of the Currency’s (OCC) Central District Office - Trade Association Executives Meeting. This day-long meeting was the second in a series where the OCC Central District banking trade association executives had the opportunity to discuss a variety of banking industry issues and concerns.

Representatives from the OCC included –

    Bert Otto – District Deputy Comptroller (Chicago)

    Dan McKee – Associate Deputy Comptroller (Chicago)

    Jennifer Kelly – Senior Deputy Comptroller for Midsize and Community Bank Supervision (Washington D.C.)

    Larry Hattix – Senior Deputy Comptroller for Enterprise Governance and Ombudsman (Washington D.C.)

    Gregg Golembe – Director of Banking Relations (Washington D.C.)

    Cheryl Petty – Acting Senior Thrift Advisor (Chicago)
The OCC addressed the topics of cross certification of examiners (bank/thrift), exam timeliness, consumer complaints, a Central District profile, Matters Requiring Attention (MRAs), problem bank review, their Risk Committee Radar Screen, the OCC’s appeals process, and regulations including the Dodd-Frank (cumulative regulatory burden, mortgage rules (QM and QRM).

Schroeder raised several issues of importance for Illinois’ community banks.

    Our strong opposition to Basel III capital and risk-weight requirement even being applicable to community banks. A discussion ensued regarding tiered regulation, the expected rule release date, and an assessment of the necessary regulatory relief community banks can expect in the final rules.

    The United States Attorney General Eric Holder, in a refreshing but disturbing moment of candor, admitted that Equal Justice Under the Law does not apply when it comes to the largest too-big-to-fail banks and that the U.S. apparently has a two-tier system of justice. CBAI registered strong objection to this preferential treatment of too-big-to-fail banks which is made even more egregious by their steady stream of misdeeds including: massive screw-ups in mortgage origination and servicing, securities fraud, anti-money laundering lapses, manipulation of LIBOR, JPMorgan Chase’s London Whale trading losses, and excessive executive pay packages.

    There is tension between community banks and the intangibles they consider in their lending decisions on the one hand, and regulators considering only documented evidence on the other. A discussion ensued regarding the regulators giving the proper weight these intangibles deserve in the community bank lending process. If this does not happen there will be no difference between the community bank lending model and that of the large banks who put purely quantitative information into one end of the a decision matrix and a decision comes out the other.

    As a result of the closing of 450+ community banks since 2008, industry consolidation, and virtually no new banking charters being approved since then, the number of community banks has been on the decline. This is not a healthy situation. There has been finger pointing at the regulators for not approving new banking charters. CBAI urged that there be a necessary new wave of de novo charters.
Schroeder also discussed several issues of particular importance to CBAI’s thrift members. These issues included the following.

    There are concerns about the level of understanding the OCC has for mutual chartered institutions. Specifically, the OCC needs to better understand that smaller thrifts are much simpler operations than the OCC has been accustomed to.

    The lack of understanding of the mutual charter comes into play particularly at this point in time, when many mutual executives are treading water, or living off healthy capital, which is actually a bona fide strategy given today’s environment. Yet, the OCC has an earnings mantra which may force mutuals to either exit the business or engage in riskier practices to seek yield at this dangerous point in time.

    There is a concern that the imposition of accounting concepts of commercial lending into the residential lending arena is questionable and often without true FASB or GAAP guidance. This exacerbates residential woes without commensurate benefit. Commercial versus residential lending has many distinctions. The commercial template is often not applicable to residential, where time truly does heal matters.
CBAI appreciates these Central District outreach meetings as well as individual association meetings to discuss issues of importance to Illinois community banks and thrifts.

CBAI Leadership Meets with House Financial Service Committee Member - Congressman Randy Hultgren (R-14th)

March 23, 2013

CBAI Chairman Rick Jameson, (Morton Community Bank) and Group Director Diana Torman, (Prairie Community Bank) joined with other bank and thrift members at a meeting hosted by the Federal Home Loan Bank of Chicago to introduce Congressman Hultgren (R-IL-14) to the FHLB-C and to discuss community bank issues.

At the beginning of the 113th Congress, Randy Hultgren was named to the House Financial Service Committee and the HFSC Subcommittee on Capital Markets and Government Sponsored Entities. This is a welcome appointment to an important committee and builds on Congressman Hultgren’s prior service on the Illinois Senate’s Financial Institutions Committee. The Congressman explained to the group that a local community bank financed his family funeral home in Chicago suburban Wheaton. As a result, he has an appreciation for and clear understanding that community banks are vital to the economic health and well being of consumers, small businesses, and their communities.

The community bankers highlighted regulatory relief as their single greatest area of concern. The cumulative effect of regulation is particularly oppressive and an impediment to community banks serving their communities. Congressman Hultgren was very supportive of regulatory relief and he committed to maintaining an open dialogue with community bankers.

CBAI thanks the Federal Home loan Bank of Chicago for hosting this meeting and leadership bankers Rick Jameson and Dianna Torman for their participation.

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CBAI to Attend OCC Central District Office Meeting

CBAI will attend an OCC Central District Office Meeting with District Deputy Comptroller - Bert Otto, Senior Deputy Comptroller - Jennifer Kelly, Ombudsman - Larry Hattix and other senior OCC officials in Chicago on Thursday, April 4, 2013.

The formal agenda includes discussing the OCC/OTS integration, supervisory appeals, bank failure cause overview, Dodd-Frank update, and will also include District and trade association roundtables. Please contact David Schroeder via email at davids@cbai.com or (847) 909-8341 if you have other areas that you would like to have discussed or you can offer any comments that would strengthen the value of our conversation. Any comments provided by you will be kept strictly confidential

For your information, here is the link to the December 2012 - OCC Central District Radar Screen.

CBAI is looking forward to representing Illinois’ community banks at this OCC Central District Office Meeting.

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Illinois House Approves Bill to Remove Duplicative ATM Signs

Last Thursday, the Illinois House of Representatives approved HB 183 (Lang/Mulroe) and sent the bill to the Senate. CBAI introduced HB 183 to amend the Electronic Fund Transfer Act to remove the requirement to disclose fees on a physical sign on an ATM terminal. Last December, Congress passed and President Obama signed H.R. 4367 to delete the duplicative signage requirement from the Federal Electronic Fund Transfer Act. CBAI introduced HB 183 to mirror the federal action.

HB 183 passed the House Financial Institutions Committee 12-0-0 on February 19, and passed the House Floor 102-13-1 last Thursday. Senator John Mulroe will be the chief bill sponsor in the Illinois Senate. CBAI would like to thank Deputy Majority Leader Lou Lang for quickly and successfully moving the bill through the Illinois House.

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CBAI Urges Expanded QM Exemptions for Community Banks

February 22, 2013

The Community Bankers Association of Illinois (CBAI) urged the Consumer Financial Protection Bureau (CFPB) to expand the Qualified Mortgage (QM) exemptions by creating a new category of QMs for community banks which would benefit from a conclusive safe harbor presumption with the ability-to-repay rules. CBAI supports the exemption thresholds being set higher than the proposed levels (to $5 billion in assets and 3,500 transactions) so that some community banks do not confront the loss of the safe harbor. CBAI also supports giving community banks a reasonable amount of time to either fall back below the thresholds or be given a reasonable period of time to prepare for the change. In addition, the definitions of “rural” and “underserved” should be expanded to level the competitive playing field for community banks and to encourage them to better serve low-to-moderate income borrowers and communities. Read Comment Letter