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U.S. House Votes Overwhelmingly to Delay TRID Liability

The United States House of Representatives voted overwhelmingly (303 to 121) in favor of the Homebuyers Assistance Act (H.R. 3192), despite the threat of a Presidential veto. This legislation will provide a reasonable hold-harmless period for enforcement of the of the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures (TRID) regulation for those that make good-faith efforts to comply.

While CBAI appreciates the Bureau’s representation that it will be sensitive to the progress made by those institutions that make good-faith efforts to comply, at the same time, community banks needs more certainty that their good-faith efforts to comply will not expose them to harmful litigation.

CBAI thanks the following Illinois members of the House for voting in favor of this important legislation which now goes to the Senate for consideration - Mike Bost (R-12), Cheri Bustos (D-17), Rodney Davis (R-13), Robert Dold (R-10), Bill Foster (D-11), Randy Hultgren (R-14), Adam Kinzinger (R-16), Darin LaHood (R-18), Dan Lipinski, (D-03), Mike Quigley (D-05), Peter Roskam (R-06), and John Shimkus (R-15).

 October 7, 2015

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Illinois Members of Congress Oppose Fed Reserve Bank Stock Dividend Cut

Illinois Congressman Bill Foster (D-11) is leading a bipartisan letter to leadership of the United States House of Representatives opposing a proposal that would reduce dividend payments on required Federal Reserve Bank stock by 75% until there is greater examination of the issue and an understanding of the implications of such a statutory change on the banking system. A total of 151 U.S. House members have signed this October 20, 2015 letter, including Illinois’ Randy Hultgren (R-14), Mike Quigley (D-05), Bob Dold (R-10), Danny Davis (D-07), Robin Kelly (D-02), and Rodney Davis (R-13). CBAI thanks Congressman Foster and the other co-signing members of the Illinois Congressional delegation for their leadership on this issue. Read Congressional Letter.

On October 9, 2015, CBAI joined a coalition of 43 state banking associations to express their opposition to the Fed dividend cut. Read Coalition Letter.

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CBAI Participates in Chicago EGRPRA Outreach Meeting

CBAI’s Immediate Past Chairman, Todd Grayson, President of South Central Bank in Chicago, was a panelist at the October 19, 2015, Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) outreach meeting at the Federal Reserve Bank of Chicago. Grayson delivered the community bank message regarding overwhelming and counterproductive regulatory burden and the need for community bank regulatory relief and tiered regulation.

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The EGRPRA Act of 1996 requires that regulations prescribed by the Federal Financial Institutions Examination Council, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and Board of Governors of the Federal Reserve System be reviewed by the agencies at least once every 10 years. The purpose of this review is to identify outdated, unnecessary, or unduly burdensome regulations and consider how to reduce regulatory burden on insured depository institutions while, at the same time, ensuring their safety and soundness and the safety and soundness of the financial system. The Chicago Outreach Meeting was attended by approximately 120 bankers, community group members and regulators.

Grayson’s panel was one of four that made presentations to Martin J. Gruenberg (Chairman, FDIC), Thomas J. Curry (Comptroller, OCC), Lael Brainard (Governor, Federal Reserve Board), and Bryan A. Schneider (Secretary, Illinois Department of Financial and Professional Regulation). His panel discussions included Money Laundering and Safety and Soundness. He discussed the increasing cost of regulatory compliance and urged tiered regulation for community banks. Grayson’s specific recommendations included increasing the dollar threshold and revising other requirements for residential real estate appraisals, and he also recommended increasing the dollar threshold for Currency Transaction Reports (CTRs).

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CBAI’s Vice President of Governmental Relations, David Schroeder, also attended the Outreach Meeting. During Audience Comment periods, Schroeder cautioned about unintended consequences of the combined impact of multiple agency rulemaking to address the same perceived issue or concern (i.e., Basel III capital and risk weights, the proposed new FDIC assessments for community banks, and the upcoming FASB expected loss model all impacting commercial and real estate lending) and stated the need for de novo bank formation to maintain a strong, growing, evolving and vibrant banking profession 

CBAI thanks Todd Grayson for participating in this important Outreach Meeting and we certainly hope that this time the decennial review of regulations will produce prompt and meaningful regulatory relief for community banks.

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Bernanke Confirms Reality of Too-Big-To-Jail

Former Federal Reserve Board Chairman Ben Bernanke has released a book, The Courage to Act: A Memoir of a Crisis and Its Aftermath, which is about his experiences at the center of the financial crisis in 2008 and 2009. In a broadcast interview regarding the book, Bernanke responded to the question, “Should somebody have gone to jail?” [regarding responsibility for the crisis] by saying unequivocally, “Yes, I think so.”

Bernanke went on to explain that the efforts of the Department of Justice have been to indict or threaten to indict financial firms. He noted that a "financial firm" can't be put in jail. Bernanke continued, “It would have been my preference to have more investigations of individual actions as obviously everything that went wrong or was illegal was done by some individual not by an abstract firm; and so in that respect there should have been more accountability at the individual level.”

This admission by the former Fed Chairman confirms the long held belief by CBAI and community bankers that the fundamental American constitutional right of ‘equal justice under the law’ is not applicable when it comes to the too-big-to-fail (TBTF) banks and financial firms. The United States apparently has a two-tiered system of justice – one for them and another for everyone else. While this confirming admission by the former Fed Chairman is gratifying, the problem of TBTF has not been solved and remains an enormous threat to our financial system, the economy, and American taxpayers and it must be addressed. The community bank position on TBTF is the right one – these financial behemoths have repeatedly proven they are too-big-to-manage, too-big-to-regulate, too-big-to-behave, too-big-to-prosecute, too-big-to- jail, and must be downsized. CBAI urges the current Fed Chair, Janet Yellen, her fellow banking regulators, and the Department of Justice to take greater leadership positions than have been taken in the past in assuring that equal justice is a truly a reality for all. 

October, 2015

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TRID Implementation Goes Live and CFPB Promises No Punitive Enforcement

October 5, 2015 – Despite the Community Bankers Association of Illinois’ (CBAI) urging for a delayed implementation, the new TILA RESPA (TRID) rule took effect on Saturday, October 3, 2015. In several comment letters to the Consumer Financial Protection Bureau (CFPB or Bureau) CBAI also called for a period of restrained enforcement and liability as vendors and lenders make the complicated transition to the TRID. While these repeated calls did not result in a formal grace period, these efforts none-the-less had a favorable impact on community banks in the implementation of the rule.

CFPB Director Richard Cordray stated that the Bureau is working with other regulators on examination guidance to help ensure that the agencies enforce the new mortgage disclosures in a “corrective’ manner and not a “punitive” one. Cordray pledged lenders making a good-faith effort to implement the disclosures will have “some period of months” to work out any problems. “There will be time for them to get it right. They don’t have to be perfect the first day.” Cordray said.

Cordray stated that during the initial examinations for compliance, the regulators will evaluate the institution’s compliance management program and overall efforts to come into compliance. “Specifically, examiners will consider: the institution’s implementation plan, including actions taken to update policies, procedures and processes; its training of appropriate staff; and its handling of early technical problems or other implementation challenges.”

These concessions are meant to address industry concerns about regulatory enforcement; and while not a perfect solution, CBAI thanks the CFPB for the accommodation and additional guidance. Unfortunately, the CFPB did not sufficiently address concerns about potential liability, in the form of law suits, which could result from noncompliance. As a result, CBAI will continue to support legislation to implement a reasonable hold-harmless period for good-faith efforts to comply with the TRID. Summary of TRID Rules. CFPB’s TRID Implementation Webpage