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     A Bi-Weekly News Bulletin for CBAI Members                   February 20, 2013 Graphic
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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois
  • Staff Visit to Washington Reinforces Support for Illinois Community Bank Issues
  • Bill Introduced to Eliminate Future Mega Bank Bailouts
  • Cam Fine: “TBTF Is No Laughing Matter”
  • George Will: “Break Up the Big Banks”
  • The “Geithner Doctrine” Exposed
  • Fed Governor Duke Supports Tiered Regulations
  • Senators Johnson and Crapo Urge Regulators to Address Basel III Concerns
  • Comptroller of the Currency Testifies on Regulatory Reform
  • FDIC: Few Economies of Scale Past $100 Million
  • CBAI/ICBA-Opposed Credit Union Bill Reintroduced in Congress
  • Baker Market Update
  • Net Farm Income Forecast to Increase 14 Percent in 2013
  • Rural Mainstreet Economy Report for February Released
  • CFPB Adopts Mortgage-Servicing Rules
  • Watch for CBAI's Call on Washington Registration Information!
  • Capital Conference Registration Opens! Early Bird Ends April 6! New LOW Price!
  • “Does Your Community Bank Have Adequate D&O Insurance?”
  • New CBAI Service Reduces Bank Expense and Improves Efficiency
  • CBSC, Continuity Control, and Young & Associates Partner to Modernize Regulatory Compliance for Illinois Community Banks
  • CRM Success Requires Commitment from Bank Management
  • CBAI Announces Opening Breakfast Speaker at 2013 Convention & Expo
  • How Does Your Bank Stack Up?
  • 2013 Community Banking Week in Illinois is April 1 – 6
  • Deposit Documentation Scheduled for February 25-28, 2013
  • Banking Leadership for the Future to be Held February 28, 2013
  • Community Bank Directors’ Workshop Set for March 5-6, 2013


  • Staff Visit to Washington Reinforces Support for Illinois Community Bank Issues

    CBAI's David Schroeder, Vice President of Federal Governmental Relations, called on lawmakers in Washington, D.C. at the beginning of the 113th Congress to highlight the key issues which are vitally important to Illinois’ community banks. Schroeder welcomed the newest members of the Illinois delegation and urged their support for our positions.
    Read More.

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    Bill Introduced to Eliminate Future Mega Bank Bailouts

    As clear evidence that Congress will address the vexing and unresolved too-big-to-fail problem in this session, last week U.S. Representative John Campbell (R-Ca) introduced the Systemic Risk Mitigation Act which guarantees taxpayer protection from mega bank bailouts. Campbell is Chairman of the Financial Services Subcommittee on Monetary Policy and Trade.

    Upon introducing the measure, Chairman Campbell stated, “The ‘Too Big to Fail’ problem has not been fixed and remains a serious threat to our future prosperity.” The measure requires banks larger than $50 billion to maintain a secondary layer of capital to minimize the economic impact of failure.

    CBAI and ICBA advocate downsizing the mega banks so that, in the event of failure, they can be resolved without a government bailout. Other proposals to resolve TBTF are anticipated in session.
    See Release.

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    Cam Fine: “TBTF Is No Laughing Matter”

    In his recent blog posting, ICBA President Cam Fine comments on JP Morgan Chase CEO Jamie Dimon who got some laughs during a speech when he acknowledged in an understatement that big banks have made some mistakes. Fine said, “It’s easy to get up on a stage and talk about fairness and accountability in financial regulation. But if you are one of the beneficiaries of favorable treatment, actions speak louder than words.”
    See Fine’s Blog Post.

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    George Will: “Break Up the Big Banks”

    World-renowned conservative columnist, journalist and Pulitzer-prize winner George Will recently published an article in the Washington Post expressed his support for breaking up the mega banks because they are unhealthy for the financial system even when they are healthy. That’s because there’s “… a silent subsidy -- an unfair competitive advantage relative to community banks – inherent in being deemed by the government, implicitly but clearly, too big to fail.” Will decried the pernicious practice of socializing losses while keeping profits private.

    He concluded, “By breaking up the big banks, conservatives will not be putting asunder what the free market has joined together. Government nurtured these behemoths by weaving an improvident safety net and by practicing crony capitalism. Dismantling them would be a blow against government that has become too big not to fail.” CBAI wholeheartedly agrees.
    See George Will’s Column.

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    The “Geithner Doctrine” Exposed

    Neil Barofsky, former head of The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), offered his
    comments on Tim Geithner who resigned as Treasury Secretary last month. “The ‘Geithner doctrine’ made the preservation of the largest banks, no matter the consequences, a top priority of the US government. … The U.S. faces a two-tiered system of justice that, if left unchecked by the incoming Treasury and regulatory teams, all but assures more excessive risk-taking, more crime and more crises.”

    CBAI has often expressed concern over the egregious double standard that exists between the treatment of mega banks and community banks, and our efforts will not diminish until this grave inequity is eliminated.

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    Fed Governor Duke Supports Tiered Regulations

    In a speech earlier this month, Federal Reserve Bank Governor Elizabeth Duke expressed her belief that the future of community banking is bright, but community banks need and deserve relief from many burdensome regulations. She recommended implementing more tiered regulations and outright exemptions. She encouraged community bankers to continue making the case against “one size fits all” regulation. A top priority for ICBA and CBAI is expansion of tiered regulations to reduce the compliance burden on community banks.
    See Duke Speech.

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    Senators Johnson and Crapo Urge Regulators to Address Basel III Concerns

    Senate Banking Committee Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) sent a letter last week to the primary federal regulators urging them to carefully consider the impact of the Basel III proposals on community banks, and to avoid unintended consequences.
    See Senators’ Letter.

    Both CBAI and ICBA have communicated with the regulatory agencies about the deleterious impact of implementing Basel III as proposed and urged an outright exemption for community banks. Late last year regulators delayed implementation of Basel III for further consideration.

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    Comptroller of the Currency Testifies on Regulatory Reform

    Comptroller of the Currency Thomas J. Curry last week discussed the status of efforts to implement the regulatory reforms required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 during a hearing before the Committee on Banking, Housing, and Urban Affairs of the U.S. Senate.
    See Remarks. Read Testimony.

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    FDIC: Few Economies of Scale Past $100 Million

    In an analysis of the FDIC’s Community Banking Study published in December, Tom Bengston, editor of Northwestern Financial Review, found that greater efficiencies really are not achieved at community banks after $100 million in assets. He also noted that, for agricultural lenders, there is even less evidence of economies of scale between the largest and smallest banks, and there are no statistically significant cost advantages beyond $100 million in assets.

    These findings refute the claims of some banking consultants who have contended that banks must be larger than $100 million to survive. The findings are also consistent with other analyses on economies of scale periodically conducted by the Federal Reserve over the past few decades.
    See Blog.

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    CBAI/ICBA-Opposed Credit Union Bill Reintroduced in Congress

    U.S. Representative Ed Royce (R-CA) last week reintroduced legislation to increase the business-lending cap for tax-exempt credit unions. The Credit Union Small Business Jobs Creation Act (H.R. 688) would increase the cap from 12.25 percent of total assets to 27.5 percent of total assets.

    At a
    House Ways and Means Committee hearing, the Business Coalition for Fair Competition cited the budget impact of the credit union tax exemption as costing the U.S. Treasury $2 billion annually, while the community banks that “are the lifeblood of towns across the country” contribute $4 billion in taxes each year.

    In related news, Representatives Peter King (R-NY) and Brad Sherman (D-CA) reintroduced CBAI/ICBA-opposed legislation (H.R. 719) to allow the National Credit Union Administration to authorize qualified credit unions to accept supplemental capital. The legislation requires the supplemental capital to be uninsured and subordinate to other claims against a credit union. The measure also would authorize the NCUA to set maturity limits on it.

    CBAI and ICBA continue to strongly oppose the credit union power grab for community banks’ small-business customers. A study conducted by the Capital Analytics Group and authorized by the ICBA released in November found that additional business-lending powers for tax-exempt credit unions would reduce tax revenues and pose new risks to the health of the credit union industry and financial system as a whole. See Credit Union Study.

    Further, ICBA recently called on the Congressional Budget Office and Joint Committee on Taxation to calculate revenue cost estimates of increasing the business-lending cap. A 2010 CBO report of legislation to increase the cap to 25 percent estimated a revenue impact of $354 million over 10 years. See ICBA Letter.

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    Baker Market Update

    If you’re a Labrador Retriever, you were probably disappointed to learn this week that you and your kin are now “0-137” when it comes to winning the Westminster Kennel Club Dog Show. If you’re the U.S. Treasury, you were probably disappointed to learn this week that not as many people wanted to buy your bonds.
    Read More.

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    Net Farm Income Forecast to Increase 14 Percent in 2013

    Ten-year Projections Also Positive

    According to the USDA, net U.S. farm income is expected to increase by 13.6 percent to $128.2 billion in 2013, which would be the highest inflation-adjusted amount since 1973. The value of corn production is expected to reach an all-time high this year, and farm financial risk indicators are expected to continue at historically low levels in 2013.

    In addition, the USDA’s Interagency Agricultural Projections Committee released a long-term projections report last week that concludes that net farm income will remain historically high to 2022.
    See USDA 2013 Projections. See USDA Long-term Projections.

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    Rural Mainstreet Economy Report for February Released

    The most recent results of a monthly survey of Midwestern community bank CEO’s were released last week and revealed that the Rural Mainstreet economy in January remained above growth neutral for the fifth straight month. The results indicate that the rural economy continues to expand at a moderate pace. However, concerns exist about the fate of the overall economy and its impact on the farm economy. For Illinois, the Rural Mainstreet Index (RMI) remained above growth neutral for the fourth consecutive month.

    Community bank CEOs in a 10-state region including Illinois are surveyed each month as part of an ongoing assessment of the farm economy by economics professor Ernie Goss of Creighton University.
    See Mainstreet Economy Report.

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    CFPB Adopts Mortgage-Servicing Rules

    On January 17, 2013, the Consumer Financial Protection Bureau ("CFPB") issued final Rules establishing national mortgage-servicing standards. The Rules cover nine major topics and implement the mortgage-servicing provisions set forth in Title XIV of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("Dodd-Frank Act"). These changes will go into effect on January 10, 2014.
    Read Client Alert.

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    Watch for CBAI's Call on Washington Registration Information!

    Registration information for CBAI's Call on Washington will be e-mailed the week of March 4th. PLEASE PLAN TO JOIN US APRIL 23-26, 2013.

    Call on Washington is CBAI's annual lobbying trip to our Nation's Capital. Now in its 31st year, scores of community bankers from across Illinois will join with their colleagues from throughout the nation to meet with Members of Congress and federal bank regulators to express their opinions on important bank issues. Now is the time to get involved. YOUR VOICE CAN MAKE A DIFFERENCE!

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    Capital Conference Registration Opens! Early Bird Ends April 6! New LOW Price!

    Mark your calendar to attend the Community Bankers Association of Illinois’ 29th Annual Capital Conference. This important event will be held Wednesday, April 17 at the State House Inn, across from the Capitol in downtown Springfield. Registration begins at 11 a.m. Lunch begins at 11:30 a.m.

    As an additional incentive to participate, Early Bird Registration is now only $99 per bank ($150 after April 6). Bring as many officers, directors and employees as you would like for just one low price. In addition to lunch, a legislative reception with heavy hors d oeuvres is also included. A block of rooms has been reserved at the State House Inn at $89.99 per night. To make reservations, contact the State House Inn at 217/528-5100 and indicate that you are with CBAI.
    Register Today!

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    “Does Your Community Bank Have Adequate D&O Insurance?”

    By Patti Tobin of Community BancInsurance, Powered by Nicoud

    The concern lies with individual directors’ and officers’ personal assets being at risk in the event D&O limits become exhausted as a result of defense costs, allegations, claims, and expenses. How do you know in advance of any incident what will be adequate?
    See Nicoud Article.

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    New CBAI Service Reduces Bank Expense and Improves Efficiency

    Community BancService Corporation (CBSC), the business services subsidiary of Community Bankers Association of Illinois (CBAI), the only Illinois trade association that exclusively represents community banks, announced today that it has partnered with Systemax and Midwest Office, two nationally-recognized leaders in the bank supply industry, to offer
    FUSE, an e-procurement solution that helps community bankers more effectively manage their supplies and printed inventory. Learn More.

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    CBSC, Continuity Control, and Young & Associates Partner to Modernize Regulatory Compliance for Illinois Community Banks
    Compliance Partnership Sets New Standard for Community Banks Nationwide

    Community BancService Corporation (CBSC) has partnered with Continuity Control, the only complete compliance platform for community banking. Together with CBAI’s long-term partner Young & Associates, a nationally-recognized compliance consultant to community financial institutions, the three organizations have created a reference model for community banks, fundamentally changing the economics of compliance.
    Read More.

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    CRM Success Requires Commitment from Bank Management

    A wise and very successful banker in Alaska once said about the bank’s sales and service culture, “If I leave it alone for one day we stop making progress. If I ignore it for even two days we begin to slide backward.”

    Read the
    article from CBAI associate member Jack Henry on the importance of, and methods to achieve, CRM excellence.

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    CBAI Announces Opening Breakfast Speaker at 2013 Convention & Expo

    CBAI is excited to announce that the convention Opening Breakfast Speaker is
    11-time Olympic medalist Mark Spitz. Once considered the greatest Olympic athlete of all-time, the globally renowned Spitz is synonymous with excellence. Voted “Athlete of the Century” in water sports and one of the six greatest Olympians ever by Sports Illustrated in 2000, he remains one of the most-recognized faces in the world today. You won’t want to miss CBAI’s 39th Annual Convention & Expo, “Community Bankers: Illinois’ Treasure,” scheduled for September 26-28, 2013, at the Crowne Plaza in Springfield, IL. Look for early-bird registration information in March!

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    How Does Your Bank Stack Up?

    The 24th Annual CBAI Officer Compensation is now underway. Results are categorized by asset size and geographical location and are FREE to CBAI members that participate!
    Access Survey Now!

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    2013 Community Banking Week in Illinois is April 1 – 6

    For FREE materials to help your bank celebrate this special week, contact Bobbi Watson at 800/736-2224 or
    bobbiw@cbai.com.

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    Deposit Documentation Scheduled for February 25-28, 2013

    CBAI is offering “
    Deposit Documentation” in four locations this month. Each of the regulations, laws, and guidelines pertaining to deposit documentation have aspects that relate to the initial disclosures, but the emphasis of this class is on the how and why. Many things tellers and customer-service representatives do are driven by these regulations, but too often circumstances make it difficult for those employees to apply the regulations because they don't know the details. This seminar describes the requirements, explains in a straight-forward manner the basic principles, and then draws on real-life experiences to explore how to apply those principles. Among the challenges covered are error resolutions, new-card issuance, replacement cards, delay of funds, honoring checks, split deposits, NSF checks, credit card checks, two-party checks, CD penalties, partial withdrawals, who can open an account, how can it be titled, who can I talk with about the account, identity theft, suspicious activity, and more. Tim Tedrick, CRCM, CRP, and executive officer at Wipfli LLP in Sterling, leads this seminar.

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    Banking Leadership for the Future to be Held February 28, 2013

    CBAI is pleased to offer the
    second session of “Banking Leadership for the Future” in Springfield on February 28th. This session, entitled Engagement Leads to Accountability, teaches what engagement is, how to measure it, how to create it, and how to move teams into true accountability. Participants learn the key mistakes that leaders make that lead to the destruction of engagement and what they can do to put things back on track. Once full engagement is attained, participants learn what to do to maintain and perpetuate full accountability. This program is presented by Elaine Hand, president of Innerview, Inc., and Jody Holland, founder of Holland Training & Development, Inc., which does business as MuRF Systems.

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    Community Bank Directors’ Workshop Set for March 5-6, 2013

    High-performing financial institutions have learned to effectively manage risk. Recent events show the need for bank management and their boards of directors to fully understand the current and potential future risk consequences of strategy and business decisions made today. To succeed and thrive in the future, directors and management must focus on managing strategic as well as operational risk. This
    seminar covers topics including managing compliance risk, managing credit risk, and succession planning. Leading this seminar is Ken Proctor, Abound Resources’ director of risk management.

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