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Appeals Court Rules Against Merchants on Debit Interchange

March 21, 2014

The U.S. Court of Appeals for the District of Columbia Circuit overturned a lower court decision that would have required even lower debit interchange price caps than those promulgated under the Fed’s interchange rule. The lawsuit filed by retail trade groups challenged the Fed’s interpretation of the Dodd-Frank Act which required it to cap swipe fees on debit-card transactions.

Under the Dodd-Frank Act the Fed was charged with setting swipe fees on debit transaction that are “reasonable and proportional” to the cost incurred for each transaction for financial institutions with at least $10 billion in assets. The Fed originally proposed capping the debit interchange fee at 12 cents per transaction, but then raised the cap to 21 cents plus 5 basis points of the transaction value. The three-judge panel ruled that that the Fed’s higher rate cap remain in place, which turns back a challenge by retailers which argued the Fed erred when it raised the rate from an initially proposed 12 cents/transaction.

ICBA and a coalition of trade associations filed a friend-of-the-court brief and participated in oral arguments in the case. John Buhrmaster, ICBA’s Chairman and President of 1st National Bank of Scotia, N.Y. called the ruling a reasonably good result, “But we should not lose sight of the fact that [the] Fed’s interpretation hurts consumers, hands billions of dollars to the biggest merchants, and does absolutely nothing to lower prices.”

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CBAI Calls on FHFA to Increase Loan Limits for the Chicago MSA

March 18, 2014

In response to the Federal Housing Finance Agency (FHFA) request for input on loan purchase limits, CBAI drew the Agency’s attention to the unique nature of the Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Statistical Area (MSA) and how the one-size-fits-all “high-cost county rule” (HCCR) has resulted in Chicago having a $417,000 conforming loan limit, which is an inequity that has negatively impacted the Chicago-area housing market.

Conforming loan limits are calculated based on MSA median home value. MSAs are composed of different counties. If one of the counties has a high enough median home value the entire MSA qualifies for the higher loan limit. Many MSAs contain only one or two small homogeneous wealthy counties that increase the loan limit for the entire MSA. The Chicago area has large heterogeneous counties (Chicago’s Cook County for example is the 2nd most populous county in the nation) and therefore does not qualify for a higher loan limit despite having a large number of high-cost owner-occupied units. Given the similarity of the Chicago housing market to many other high-cost metropolitan housing markets, CBAI requested the FHFA immediately use its discretionary authority to implement higher conforming loan limits for the Chicago MSA.

Planned future efforts to decrease loan limits, to reduce to the government footprint in the mortgage market, when combined with the inequity of the current one-size-fits-all HCCR will result in the worst possible outcome for the Chicago area - future lower limits on a lower base - and will continue to negatively impact the growth and prosperity of the entire region. Read Comment Letter.

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The President Signed Legislation to Help Mitigate Flood Insurance Rate Hikes

March 21, 2014

The President signed bipartisan legislation to protect homeowners from significant increases in flood insurance premiums. The Homeowner Flood Insurance Affordability Act (H.R. 3370) previously passed the U.S. House by a bipartisan majority of 306-91 and the Senate by a bipartisan majority of 72-22. H.R. 3370 would:

  • reinstate grandfathered status for covered properties,
  • create an annual individual property rate cap (18 percent) to prevent year-over-year rate increases for homeowners,
  • repeal the home-sale and new-policy rate-increase triggers,
  • provide a refund for people who have realized large premium increases due to the purchase of a pre-FIRM subsidized home without the full transparency from the Federal Emergency Management Agency as to the new rate structure, and
  • require FEMA to complete an affordability study and to propose an affordability framework to help homeowners cope with dramatically higher premiums.

CBAI and ICBA support a fully authorized, sustainable and fiscally responsible National Flood Insurance Program.

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CBAI Bankers Meet with Congresswoman Robin Kelly

CBAI bankers met with Congresswoman Robin Kelly (D-02) to discuss issues of importance to Illinois community banks. The March 7th meeting took place at the offices of the Economic Alliance of Kankakee County in Kankakee Illinois. The topics of discussion included the uneven playing field between community banks, too-big-to-fail banks and financial firms, credit unions, and farm credit lenders; tiered regulation; the future of the housing GSEs (Fannie Mae and Freddie Mac); safeguarding consumer data (data breaches); specific regulatory relief legislation; and local economic development and housing issues.

CBAI thanks Congresswoman Kelly for meeting with our members to discuss their important issues and concerns.

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Pictured (left to right): Michael O’Brien (EVP and COO - HomeStar Bank, Manteno), Francis Smith (Chairman, HomeStar Financial Group), Catherine Boicken (President - Municipal Bank, Bourbonnais), Congresswoman Robin Kelly, Jeff Hammes (President - Peoples Bank of Kankakee County, Bourbonnais and member of CBAI’s Board of Directors), Edward Meier (President - National Bank of St. Anne), Scott Smith (Vice President - First Bank and Trust of Illinois, Kankakee), and Larry Mulder (EVP - First Bank and Trust of Illinois).

 

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CBAI Urged CFPB to Exempt Community Banks from New Debt Collection Rules

February 18, 2014

In a recent comment letter, which was sent in response to an advanced notice of proposed rulemaking, CBAI urged the Consumer Financial Protection Bureau to recognize that community banks do not abuse consumers with unfair debt collection practices and to exempt community banks from any new debt collection rules.

Regulations already exist regarding fair debt collection practices. More rigorously enforcement of the existing rules against those who are breaking the existing rules is clearly what is needed. The CFPB should demonstrate that these rules are insufficient before proposing any new rules.

CBAI urged the Bureau to not increase the regulatory burden on community banks and unequivocally ensure that any additional debt collection regulation not “trickle down” and be applied to community banks by their prudential regulators. Read Comment Letter