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CBAI Past Chairman Robin Loftus to Chair CFPB Council

September 13, 2012

Robin Loftus, Executive Vice President and Chief Operating Officer of Security Bank, S.B., in Springfield, and Past Chairman of CBAI, will serve as chairman of the Consumer Financial Protection Bureau’s Community Bank Advisory Council.

The CFPB was created by the Dodd-Frank Wall Street Reform Act and supervises depository institutions and credit unions with total assets of more than $10 billion. As a result the Bureau does not have regular contact with institutions with assets of less than $10 billion. The Council is intended to ensure that the unique perspectives of community banks are shared with the Bureau. The Council will provide the CFPB with recommendations to influence its policy development, research, rulemaking, and engagement functions. The Council will convene public meetings, and members serve two year terms.

CBAI congratulates Robin Loftus on this important appointment.

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Regulators Extend Basel III Comment Period

August 8, 2012

The federal banking regulators announced on August 8, 2012, that they have extended the comment period on the Basel III regulatory capital proposals from September 7, 2012 to October 12, 2012. CBAI and ICBA advocated for an extension of the comment period to allow community banks the time needed to study and fully determine the impact of the proposed rules on community banks. Read FDIC Announcement. Read CBAI’s Comment Letter.
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FASB Issues Community Bank Exemption

August 9, 2012

At the urging of CBAI and ICBA, the Financial Accounting Standards Board (FASB) decided that nonpublic entities will not have to disclose the fair value amounts for financial assets and liabilities measured at amortized cost.

In a comment letter to FASB the CBAI stated that the fair value accounting change applied to community banks is more likely to mislead financial statement users than to provide them with a clearer picture of financial condition. The change would also be expensive for community banks to implement by requiring new accounting policies and practices.

The community bank business model is to make loans and hold them to maturity not actively buying and selling loans. Fair value or mark-to-market determinations are more appropriate for trading assets not community bank loans.

Community bank loans have unique risk profiles and are not readily marketable making them difficult if not impossible to determine realistic valuations. These loans would certainly be at a below-par or liquidation value from the very day they are made if FASB imposed this requirement.

The impact of aggressively discounted loan values would be devastating to community bank capital and surely jeopardize the very existence of many community banks. Read CBAI Comment Letter

The FASB said that it would discuss at future meetings other disclosures (i.e. demand deposits) required of nonpublic entities.

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CBAI Supported ATM Fee Disclosure Bill Passes the U.S. House

July 10, 2012

H.R. 4367 eliminates the unnecessary and duplicative disclosure of ATM fees and helps prevent frivolous lawsuits against community banks.

The Electronic Funds Transfer (EFT) Act requires ATM operators to provide two separate notices regarding ATM fees (i.e., a placard placed on the ATM machine and a separate disclosure on the video screen). The video screen fee disclosure requires the user to accept the fee - or not. If the user accepts the fee the transaction proceeds. If the fee is declined the transaction is cancelled and the fee is not charged. Community banks fully support the consumer protection of video screen fee disclosure.

Issues however have arisen with the placard on the ATM machine. Penalties for not displaying the placard are severe (i.e., the lesser of $500,000 or 1% of the net worth of the ATM operator) and have unfortunately provided an incentive for ATM vigilantes to remove the placard and file frivolous lawsuits. During the last 18 months these lawsuits have increased, and if the situation is left unchecked ATM operators may be forced to remove ATMs which will result in reduced consumer convenience. Several CBAI members have reported these problems, and more such instances will likely occur in the future unless this common sense legislation is passed.

The House Financial Services Committee recently reported this legislation to the entire House of Representatives by a voice vote. Yesterday, the House approved this legislation by a wide bipartisan margin (371 “yea”, 0 “nay” with 60 members “not voting”).

CBAI thanks the Illinois members who voted in favor of passage and particularly those members who were proactive and cosponsored this important legislation: Dan Lipinski (D-3rd), Luis Gutierrez (D-4th), Mike Quigley (D-5th), Peter Roskam (R-6th), Robert Dold (R-10th), Judy Biggert (R-13th), Don Manzullo (R-16th), and John Shimkus (R-19th).

CBAI encourages the U.S. Senate to quickly pass this important legislation.

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FDIC Information Session on the Proposed Basel III Capital Rules

July 24, 2012

The FDIC will be conducting a Chicago regional information session (July 31st) and a national conference call (August 3rd) to discuss how the proposed Basel III capital rules are likely to affect community banks.

Chicago session attendees must register in advance by accessing http://www.regonline.com/RegCap-Chicago. The registration deadline is Friday, July 27, 2012.

The FDIC has made available a PowerPoint presentation which is accessible here.

The national conference call will be on Friday, August 3, 2012, at 1:00p.m. (Eastern). The toll free number to call is 1-888-455-0408 and the pass code is 8824839#.

CBAI encourages all Illinois community banks to become familiar with these proposed new capital rules.