Governor Quinn approved two CBAI initiatives on August 16, 2013:
HB 1335 (PA 98-0387) allows financial institutions and title companies that know each other and agree to use cashier’s checks, teller’s checks and certified checks as settlement funds in transactions greater than $50,000. While the bill is permissive in nature, the title insurance industry still opposed the legislation. At the request of Senator Don Harmon (D-Oak Park), the bill was amended in the Senate to make it clear the parties will address the issue of delivery of the check to the title company in sufficient time for the check to be deposited to the title company’s account before any disbursement of funds is made by the title company. As part of the compromise, a January 1, 2015 sunset was also included in the bill. Senator Harmon inserted the sunset and committed to repeal it next year if there is no proof that that this legislative change negatively impacts the title insurance industry. CBAI plans to continue to work with the General Assembly on this issue and to repeal the sunset.
HB 2432 (PA 98-0415) removes the requirement for banks to disclose ATM fees with a physical sign on the terminal, when the fee is shown electronically on the terminal screen. Last year, Congress removed this physical signage requirement in federal law, and this bill makes state law consistent with that change. Both bills are effective immediately.
CBAI thanks Representative Ron Sandack (R-Downers Grove), Representative Lou Lang (D-Skokie) and Senator John Mulroe (D-Chicago), for their hard work on these bills. CBAI also thanks Governor Quinn for approving these initiatives.
Third Anniversary of the Dodd-Frank Wall Street Reform Act – Unfinished BusinessJuly 21, 2013 On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. The intent of the Act was to prevent a recurrence of the events that led to the 2008 financial crisis and address the issue of too-big-to-fail. This legislation was directed primarily at the nation’s largest banks and financial firms and marked the greatest change to regulation in the financial service industry in decades. With the passage of the 848-page bill, it became the responsibility of the federal agencies to begin writing the rules to turn Congress’ law into detailed implementing regulations. More than 10 federal agencies have been mandated to implement aspects of the Dodd-Frank Act, but the majority of the rules are being written by just six agencies: the Federal Reserve, the FDIC, the OCC, the CFPB, the Commodity Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC). In certain cases the rule-writing requires coordination among several autonomous federal regulatory agencies which is proving to be more challenging and time-consuming than expected – leaving much that remains to be done. July 21, 2013 marked the third anniversary of the Dodd-Frank Act. The law included a total of 398 federal rulemaking requirements. Of the 398 required rules –
- 158 rules have been finalized,
113 rules have been proposed (but not finalized), and
127 rules have not been proposed. *
Staff Visit to Washington D.C. Reinforces Support for Illinois Community Bank Positions and InitiativesJuly 22-25, 2013 CBAI's David Schroeder, vice president federal governmental relations, recently called on the offices of every member of the Illinois Congressional delegation and federal regulators to urge support for positions and initiatives which are vitally important to Illinois’ community banks. Support resolving the issue of too-big-to-fail (TBTF) Support regulatory relief contained in ICBA’s Plan for Prosperity and tiered regulation for community banks Oppose expanded powers for tax-exempt credit unions Oppose expansion of the Farm Credit System (FCS) Support for our positions and initiatives will allow community banks to encourage additional small business lending, fuel job creation, help create economic stability, and more fully serve their communities. Support resolving the issue of too-big-to-fail (TBTF)
CBAI urges the continue reform of our financial system to significantly reduce the probability and severity of a future financial crisis. The taxpayer bailout of big banks and financial firms must never happen again! Support for resolving too-big-to-fail is growing among banking regulators, a bipartisan group of legislators, and distinguished thought leaders. This chorus has been fueled by the taxpayer-funded bailouts of the mega banks and also by their numerous misdeeds. No financial institution, its directors, officers, or employees should be too-big-to-manage, too-big-to-regulate, too-big-to-fail, too-big-to-prosecute, too-big-to-jail, and should certainly not be too-big-to-change. Senator Sherrod Brown (D-OH) joined with Senator David Vitter (R-LA) in introducing the Terminating Bailouts for Taxpayers Fairness Act of 2013 (S. 798). This legislation will help eliminate the threats posed by too-big-to-fail financial institutions with capital guidelines appropriately scaled to the size, scope and risks of the institutions, and offers much-needed regulatory relief to community banks. CBAI thanks Illinois Senator Richard Durbin for taking a leadership position by co-sponsoring this important legislation. Support regulatory relief contained in ICBA’s Plan for Prosperity and tiered regulation for community banks
The steady increase in regulations threatens community banks and their communities. CBAI supports regulatory relief and tiered regulation for community banks. The financial crisis clearly demonstrated that the material risks of Wall Street mega banks are very different from those of community banks, and they should not be treated the same way. CBAI has joined 37 state and regional community bank associations in endorsing ICBA’s Plan for Prosperity, a policy platform for the 113th Congress that promotes a regulatory environment in which community banks can thrive and lend more robustly to small businesses and residents, thereby helping their communities grow and thrive. Many Plan for Prosperity provisions have made their way into legislation, the most encompassing to-date is the Community Lending Enhancement and Regulatory Relief Act of 2013 (H.R. 1750 and S. 1349). CBAI thanks Illinois Senator Mark Kirk for taking a leadership position by co-sponsoring this important legislation. Oppose expanded powers for tax-exempt credit unions
The original credit union model has become outdated as credit unions have long since strayed from their founding purpose of serving individuals of modest means and with a common bond. Their federal tax-exempt status, in exchange for serving their original mission, is clearly no longer justified. Their tax subsidy should be eliminated and they should all pay their fair share. Credit unions are seeking to expand their commercial lending powers by increasing the percentage of assets cap on member business lending (H.R. 688 and S. 968). If authorized, any growth will likely come at the expense of tax-paying community banks. In addition, credit unions are seeking to raise capital from outside investors (H.R. 719), discarding their longstanding reliance on retained earnings. This change would fundamentally alter the exclusive member-focused character of credit unions – a condition for their original tax exemption. Credit unions should not be granted these or any additional powers as long as they remain exempt from taxation. Oppose expansion of the Farm Credit System (FCS)
CBAI opposes the expansionist agenda of the Farm Credit System (FCS) which would allow FCS lenders to become the equivalent of commercial banks while retaining their Government Sponsored Enterprise (GSE) status. The FCS’s funding advantage as a GSE constitutes an unfair competitive advantage over rural community banks. The FCS should follow its historical mission of serving bona fide farmers, ranchers, and young, beginning and small farmers and their farmer-owned cooperatives. If it chooses not to follow this mission, it should be subject to taxation and should also face regulatory safeguards, disclosures and controls equal to community banks, including CFPB oversight.
July 29, 2013
U.S. Senator Mark Kirk (R-IL) joined with fellow Senate Banking Committee members Jerry Moran (R-KS) and John Tester (D-MT) in introducing the Community Lending Enhancement and Regulatory Relief (CLEAR) Act (S. 1349). This legislation would provide much-needed regulatory relief for community banks, enabling them to focus on lending, helping small businesses and communities grow, and creating jobs.
David Schroeder, CBAI VP of federal governmental relations, personally thanked Senator Kirk for introducing this legislation during his recent quarterly visit to Washington D.C.
Senator Kirk said, “In an era of new regulations that hamper community banks’ ability to meet the needs of their communities, I am proud to join Senators Moran and Tester in this bipartisan bill that aims to address the unique differences between mega global financial institutions and community banks.”
The CLEAR Act includes four provisions that would:
Exempt community banks with assets of less than $1 billion from the Sarbanes-Oxley 404(b) internal-controls assessment mandates. Community banks’ internal-control systems are monitored continually by bank examiners which should not have to incur the unnecessary expense of paying an outside audit firm for attestation work.
Require the Federal Reserve to revise the Small Bank Holding Company Policy Statement by increasing the qualifying asset threshold from $500 million to $5 billion. The increased threshold would ease capital requirements for small banks.
Exempt community banks with assets of less than $10 billion from escrow requirements for any first mortgage held by the lender. This exemption will help support the still-struggling housing recovery.
Provide “Qualified Mortgage” status under the Consumer Financial Protection Bureau’s ability-to-repay rules for any mortgage held in portfolio for at least three years by community banks with less than $10 billion in assets.
U.S. Congressman Blain Luetkemeyer (R-MO) has already introduced the CLEAR Act (H.R. 1750) in the House which similarly seeks targeted regulatory relief for community banks.