CBAI Attends the FDIC Community Banking De Novo Outreach Meeting

The Community Bankers Association of Illinois (CBAI) Vice President Federal Governmental Relations, David Schroeder, attended the Federal Deposit Insurance Corporation (FDIC) Community Banking De Novo Outreach Meeting in Chicago on May 31, 2017. Approximately 50 interested individuals attended this meeting, which was the fifth of six outreach meetings across the country, to learn about the various FDIC initiatives to encourage newly chartered (de novo) bank formation.


CBAI has consistently stated that de novo community banks are vitally important to maintaining a strong, growing, evolving and vibrant banking profession. While CBAI is disappointed by the declining number of community banks and the lack of new banking charters, recent remarks by FDIC’s Chairman Martin Gruenberg, and these outreach meetings, are encouraging signs that the FDIC will favorably act on applications for deposit insurance for de novo charters.


The day-long outreach meeting included opening remarks by the FDIC’s Anthony Lowe (Regional Director), Doreen Eberley (Director, Risk Management Supervision) and James Watkins (Senior Deputy Director, Risk Management Supervision). An Application Process Panel included representatives from the Federal Reserve Bank of Chicago, Illinois Department of Financial and Professional Regulation, Office of Comptroller of the Currency and the FDIC. Presentations on the Business Plan Development Process, Management/Board Selection, Community Reinvestment Act (CRA) and Compliance Management Systems (CMS) were made by the FDIC. Also included was a banker panel which included CBAI member Steven Van Drunen who is the President and CEO of Providence Bank & Trust of South Holland. The panel members spoke about their insightful experiences with the application process and the organization of their community banks.

CBAI looks forward to seeing rapid and tangible results from these initiatives and a resumption of many de novo charters being approved by the FDIC.

June 5, 2017


CBAI Urges the CFPB to Ease Community Bank HMDA Requirements

In a May 25, 2017 comment letter to the Consumer Financial Protection Bureau (CFPB), CBAI urged the Bureau to ease the HMDA requirements for community banks. The CFPB finalized the new HMDA rules in October of 2015, but has proposed technical corrections to clarify certain requirements.

In addition to several new recommendations, CBAI also renewed its prior recommendations for the Bureau to scale back the number of additional data fields and not go beyond the Dodd-Frank requirements. CBAI also recommended that the Bureau at least double the error thresholds given the greater number of data fields and the resulting increased likelihood that unintentional errors will occur; and urged an increase in the loan-volume threshold for HMDA reporting to 1,000 closed-end mortgages and 2,000 open-end lines of credit.

Other recommendations included adopting guidance similar to the CFPB’s TRID implementation whereby examiners initially should not find fault in compliance so long as the bank is making a good faith effort to comply with the new regulations; urging the Bureau to be especially mindful of the Government Monitoring Information challenges for community banks and apply the good faith effort standard in determining the initial compliance for community banks; and increasing the implementation period by one year for those banks that require extra time for implementation, but those banks that are fully prepared and implement sooner should be permitted to do so without fear of penalty for earlier compliance if errors occur after good faith efforts to comply. Read CBAI Comment Letter.


CBAI Urges NCUA Not to Proceed with Alternative Capital Rulemaking

In a comment letter to the National Credit Union Administration (NCUA), CBAI urged a halt to their rulemaking regarding supplemental capital for credit unions. Read Comment Letter.


CBAI found fault with the reasoning that because of a lack of specific statutory authority the NCUA is permitted to promulgate capital rules and authorize alternative capital instruments for credit unions. Congress should decide whether the actions contained in the NCUA’s proposal are permissible, but this authority has not been given. Absent such authority, the proposed rulemaking represents an abuse of the NCUA’s authority, a blatant expansion of powers, and a costly and unfair increase in the credit union industry tax subsidy.


In the comment letter, CBAI urged the NCUA to focus on the founding mission of credit unions: enabling people of modest means and with a common bond to pool their resources to meet their basic deposit, savings and borrowing needs through a mutual ownership structure. Yet, CBAI noted that credit unions have long since strayed from their founding mission and the supplemental capital proposal would result in credit unions having an ownership structure similar to most taxpaying banks with a category of investors whose interests are inconsistent with those of its mutual owners.


CBAI recommended the credit union industry’s tax subsidy should be eliminated and credit unions should pay their fair share of income taxes. Read Comment Letter.


CBAI Member Bankers Meet with President Trump

CBAI member bankers Bill Wubben, president of Apple River State Bank, and Mike Estes, president of The Fisher National Bank, joined with 100 community banking colleagues in a meeting with President Trump, Vice President Pence, and other top administration officials at the White House as part of the 2017 ICBA Capital Summit. In an exclusive meeting with ICBA leadership bankers, Trump said the administration is focused on addressing regulatory burdens to help community banks lend to small businesses. Read More.


CBAI Again Urges the OCC to Delay Moving Forward in Chartering New Fintech Companies

The Community Bankers Association of Illinois (CBAI) again called on the Office of the Comptroller of the Currency (OCC) to delay moving forward with considering applications for charters for fintech companies. In the OCC’s continuing effort to charter fintechs it published for comment a Licensing Manual Supplement for Evaluating Charter Applications From Financial Technology Companies (“Supplement”). However, the Supplement falls far short of successfully addressing the many concerns raised by CBAI as well as the Independent Community Bankers of America (ICBA), the Conference of State Bank Supervisors (CSBS), and influential Members of Congress on the House Financial Services and Senate Banking Committees. Read CBAI Comment Letter.

CBAI’s observations and recommendations were enumerated in an April 13, 2017 comment letter to the OCC and included the following: the issue of OCC's authority to issue special purpose national bank charters (which was first raised by the CSBS) must be resolved; all of the banking regulators must be involved in public outreach meetings about fintechs and formal rulemaking; fintechs must not be regulated through non-public operating agreements but through specific, established and transparent rulemaking to ensure clear guidance and consistent application of rules and regulations; community banks should not be financially responsible for the OCC developing the skills needed to regulate fintechs; and the OCC must guarantee that fintechs will comply with all banking laws, rules and regulations, and be held to the same rigorous safety and soundness, supervision, regulation and enforcement standards which are required of community banks and bank holding companies.

The bottom line: Fintechs cannot and must not have the advantages of being a national bank with more limited requirements, regulations and liability. Read CBAI Comment Letter.

April 14, 2017