Community Bankers Association of Illinois
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     A Bi-Weekly News Bulletin for CBAI Members                      April 4, 2012 Graphic
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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois

  • It's Time to Contact Senators Durbin and Kirk During Spring Recess
  • Senate Procedural Trick Catapults Credit-Union Bill Forward
  • CFPB Clarifies Compensation Rules for Loan Originators
  • Congress Sends CBAI-supported JOBS Act to the President
  • Regulators/Public Call for End of Too-Big-To-Fail Banking
  • Regulators Approve Rule to Identify Nonbanks That Pose Systemic Risk”
  • Update on Regulating Derivatives
  • Bank Trends: Call Report Analysis Made Easy!
  • CBAI Supports Confidential Treatment of Privileged Information
  • Baker Market Update
  • Stanford Economist: “Worst Recovery in History”
  • Bank-to-Business Newsletter for CBAI Members”
  • New ICBA Chairman Gerhart Pens First “From the Top” Column
  • ICBA President Fine on the Economic Recovery
  • Fannie Mae Insurance Updates from CBIS
  • School “Career Days” Coming Up?
  • Countdown Is On: Help People Switch to Electronic Federal Benefit Payments
  • Deadline for Completing CBAI Compensation Survey Nears
  • Loan Review for Managers Scheduled for April 16-17
  • Compliance Institute – Lending Compliance Set for April 17-19
  • Advanced Operations Conference Scheduled for April 25
  • Register Now for Early-Bird Pricing at CBAI’s 38th Annual Convention!


  • It's Time to Contact Senators Durbin and Kirk During Spring Recess

    In preparation for CBAI's 30th-annual Call on Washington in late April, CBAI needs all Illinois community bankers to voice opposition to an increase in credit unions' member business lending authority and support for extension of full FDIC insurance coverage for non-interest bearing transaction accounts (TAG program).

    Congress has just begun a two-week spring recess. It is vital that Illinois community banks remain at the forefront of the political discussion on important issues throughout the extended recess.

    CBAI asks members to contact Senators Durbin and Kirk at their local offices.
    See Contact Information.

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    Senate Procedural Trick Catapults Credit-Union Bill Forward

    Senate Majority Leader Harry Reid (D-Nev.) has used a Senate procedural maneuver to rapidly advance the tax-exempt credit unions’ controversial bill to double their credit-union business-lending cap. While a Senate vote on the bill is not yet scheduled, it can now get a vote quickly on the Senate floor. Therefore, it is more important than ever for all senators to
    hear from community bankers on just how damaging and controversial this credit union bill really is. ICBA and CBAI and the nation’s community banks have fought hard against this unfair power grab for the past several weeks. Now is the time to dig deep with calls to senators to ensure it doesn’t advance—especially under this new expedited process. Community bankers have responded in overwhelming opposition to the Small Business Lending Enhancement Act (S. 2231/H.R. 1418), which would increase the lending cap from 12.25 percent to 27.5 percent of total assets. With nearly 5,000 credit union members on Capitol Hill last month, community banks nationwide pulled out all the stops to oppose the measure. The threat of passage has now reached a new level. Community bankers from the board room to the front desk should let their senators know the negative impact of this controversial and unfair push for community bankers’ small-business customers. Don’t hesitate or it will be too late. Call Your Senators Now!

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    CFPB Clarifies Compensation Rules for Loan Originators

    In response to questions from community bankers and the ICBA, the CFPB has clarified that employers can contribute to Qualified Plans with profits derived from loan originations.
    See CFPB Bulletin.

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    Congress Sends CBAI-supported JOBS Act to the President

    Congress passed and sent the Jumpstart Our Business Startups (JOBS) Act to President Obama. This legislation will ease reporting and regulatory requirements for small businesses trying to raise capital and make it easier to hire workers and help boost the economy. One section of the legislation specifically impacting community banks raises the threshold that triggers SEC registration from 500 to 2,000 and raises the deregistration threshold from 300 to 1,200. These SEC reforms will make it easier for community banks to raise capital without incurring costly registration requirements and will also allow some banks to more easily deregister. Easing these thresholds were part of the ICBA's Communities First Act and CBAI applauds its inclusion in the JOBS Act.
    Read More.

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    Regulators/Public Call for End of Too-Big-To-Fail Banking

    Harvey Rosenblum, the head of the Dallas Federal Reserve Bank’s research department, stated in the bank’s annual report that, despite the financial crisis and subsequent Wall Street reforms, “…a cartel of megabanks is still hindering the economic recovery and the institutions remain too big to fail.” He also noted that, having seen the giant banks make risky bets that devastated the economy and then get bailed out leaves “a residue of distrust for the government, the banking system, the Fed and capitalism itself.” Concluding that the current reforms are not adequate, the annual report advocates breaking up the nation’s largest banks into smaller and more manageable units. CBAI agrees with this assessment and is encouraging Congress to implement corresponding measures.
    See DealBook Article.

    Bernanke Says Too Big to Fail Era Must End

    Fed Chairman Ben Bernanke also made it clear last week that a primary goal in financial reform is to eliminate too big to fail institutions. Speaking in a college lecture series, Bernanke said TBTF is bad for the financial and economic system, and it would be a major accomplishment to end TBTF. He stated, “Obviously they have an incentive to take big risks because they say, ‘We’ll take big risks. Heads we win, tails you lose. If they don’t pay off the government will save us. That’s a situation we cannot tolerate."

    Bernanke expressed confidence that new regulations will enable regulators to resolve failed mega banks without threatening the entire financial system. CBAI is concerned that the rules will not be sufficient to deal with widespread financial duress as experienced in 2008 without taxpayer intervention, and more measures are needed to eliminate the threat of TBTF including downsizing the mega banks and restoring Glass-Steagall provisions to separate commercial and investment banking.

    Public Sentiment for Reigning in Wall Street

    As Wall Street firms pour vast resources into lobbying Congress to eliminate or neuter reform regulations, public sentiment continues to move against them. A recent Better Markets blog urged readers to support rules to prevent the mega banks from returning to business as usual.

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    Regulators Approve Rule to Identify Nonbanks That Pose Systemic Risk

    The Financial Stability Oversight Council, headed by Treasury Secretary Tim Geithner, yesterday approved a final rule to help determine which nonbank financial firms pose a potential risk to the financial system. The Council will use a three-step process to make its determinations. Under the rule, regulators will evaluate nonbank financial firms with more than $50 billion in assets if they meet any one or more of the following thresholds: a 15-to-1 leverage ratio; $3.5 billion in liabilities on derivatives contracts; $20 billion of outstanding loans borrowed and bonds issues; $30 billion in gross national credit default swaps outstanding; or a 10 percent ratio of short-term debt to assets.
    See Businessweek Article.

    Concerns exists, however, that many potentially risky companies won’t make the list such as hedge funds, private equity firm, or money market mutual fund. See Bloomberg Article.

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    Update on Regulating Derivatives

    Nearly four years after the financial crisis exploded, and almost two years since passage of financial reforms, the multi-trillion dollar derivatives markets is still dominated by a few mega banks, and new regulations have been slow in coming. That means the U.S. economy remains at risk for another meltdown.

    The reform act charged two agencies with writing new rules to reign in derivatives, the Commodities Futures Trading Commission and the Securities and Exchange Commission, and some of the toughest rules are languishing such as the requirement that most derivatives be traded on an open exchange with price transparency. A recent New York Times editorial called on the Administration to get these rules promptly implemented. CBAI fully concurs.
    See Times Article.

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    Bank Trends: Call Report Analysis Made Easy!
    CBAI Members Receive FREE Reports for 30 Days

    Bank Trends, CBSC’s newest partner, makes the tedious task of analyzing your bank’s Call Report data simple by turning your bank’s quarterly financials into interactive, easy-to-use dashboards that drill-down to all areas of your bank. To help introduce this new service, for the next 30 days Bank Trends has agreed to provide CBAI members with
    FREE access to its two most popular reports: Key Metrics and Ratio Trends.

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    CBAI Supports Confidential Treatment of Privileged Information

    The 2010 Dodd-Frank Act did not explicitly address the confidential treatment of privileged information provided to the Consumer Financial Protection Bureau (Bureau) but did grant the Bureau the ability to promulgate rules addressing this important issue. The Bureau has now proposed a Rule that would codify protections for privileged information submitted to it by the financial institutions it regulates.

    In a comment letter CBAI supported the confidential treatment of privileged information provided to the Bureau. CBAI also encouraged the Bureau to eliminate any ambiguity or confusion in the Rule and protect all information provided to the CFPB from institutions the Bureau directly supervises (those with assets in excess of $10 billion) and community banks with assets of $10 billion and under.
    Read CBAI Comment Letter.

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    Baker Market Update

    The Treasury market caught a bid this week as the 10Yr T-Note yield pushed down another 12bps to 2.14%, a signal that perhaps the mid-month sell off was an early April fool’s joke. Since the bellwether 10Yr yield shot up 40bps to its 2012 high of 2.39%, we have now come back more than 25bps, edging towards the seemingly range-bound home of around 2%.
    Read More.

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    Stanford Economist: “Worst Recovery in History”

    According to Standord economist Edward Lazear, the U.S. is experiencing the worst economic recovery in history thanks to excessive regulations and punitive taxes. A former economic advisor to President George W. Bush, Lazear said, “Threats of higher taxes, the constantly increasing regulatory burden, the failure to pursue and aggressive trade policy that will open markets to U.S. exports, and the enormous increase in government spending are all growth impediments.”
    See Moneynews Article.

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    Bank-to-Business Newsletter for CBAI Members

    As promised in an e-mail sent to you from CBAI last Wednesday, the April 2012 issue of Your Business, a bank-to-business electronic newsletter, is
    enclosed for distribution by your marketing department to all of your small-business clients and prospects. By special arrangement with the publisher, there is no fee for the first two editions of this newsletter. It is hoped that you will wish to send it to your business customers and to all business prospects in your marketing area. It is a very cost-effective way to connect with small-business owners in your community. Please click here for more information about the program!

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    New ICBA Chairman Gerhart Pens First “From the Top” Column

    Jeff Gerhart, Chairman of ICBA and Chairman of Bank of Newman Grove, NE has released his initial column titled, "On the Road, Again."
    Read Column.

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    ICBA President Fine on the Economic Recovery

    Since the “Great Recession” began, Congress has urged community banks to keep up their vital lending to small businesses to help spur America’s economic recovery. Throughout these difficult and uncertain times, community banks have stepped up to the challenge. To this day, community banks still provide more than 60 percent of all startup and small-business loans.
    Read Comments.

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    Fannie Mae Insurance Updates from CBIS

    John Immordino of Community BancInsurance Services (CBIS) has prepared a report on Fannie Mae’s updates to Lender-Placed Property and Hazard Insurance Claims Processing. Servicers will be required to implement the revised requirements no later than June 1, 2012. The Servicing Guide, Part II, Chapter 6: Lender-Placed Property Insurance, requires servicers to ensure that adequate hazard insurance coverage is in place at all times.
    Read Report.

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    School “Career Days” Coming Up?

    CBAI has purchased Career Day Power Point demonstrations suitable for three grade levels: fifth grade, eighth grade, and high school. They are customizable for your bank and are $50 each, or $100 for all three. If interested, please contact the CBAI Department of Communications at 800/736-2224 or
    bobbiw@cbai.com.

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    Countdown Is On: Help People Switch to Electronic Federal Benefit Payments

    Everyone who receives SOCIAL SECURITY/SUPPLEMENTAL SECURITY INCOME or other federal benefit payments by paper check is required by the U.S. Department of the Treasury to switch to an electronic payment option by March 1, 2013. This move will save taxpayers $1 billion over 10 years, while ensuring all federal benefit recipients receive their money in the safest, most reliable way possible.
    Read More About Transition.

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    Deadline for Completing CBAI Compensation Survey Nears

    You have until April 15 to complete your bank’s Officer Compensation Survey. CBAI members receive the results for free when they participate. You’ll receive information on salaries, perqs, directors’ fees, time off, and support personnel pay – but only if you participate!
    Access Survey Now!

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    Loan Review for Managers Scheduled for April 16-17

    CBAI is pleased to offer “
    Loan Review for Managers” in two locations this April. This program is designed for loan-review managers, loan-review officers, senior credit analysts, credit-administration managers, and senior loan officers. It is designed to cover current events impacting loan review such as staffing levels, performance assessments, efficiencies and training techniques, ALLL, technology, and regulatory issues. In today's banking environment, the lending organization's need for early problem-loan detection, adherence to underwriting standards, and examination of the loan portfolio is more critical than ever. Safety and soundness rules set guidelines for the establishment of an independent credit review system and failure to follow these guidelines could result in increased regulatory supervisory action. Leading this seminar is Merrill Reynolds, Jr., founder of the Reynolds Williams Group in New Braunfels, TX, a bank-consulting firm designed to provide services to both commercial and savings financial institutions nationwide.

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    Compliance Institute – Lending Compliance Set for April 17-19

    Community banks are constantly faced with a bewildering array of ever-changing regulations. In response to this training need, CBAI is pleased to present the
    Compliance Institute – Lending this April in Springfield. An introductory course for those compliance officers who are either new to banking or new to their positions, this institute is designed to provide a comprehensive understanding of the major regulatory compliance regulations that have been determined to be “must knows” for all compliance officers. Internal auditors, compliance back-up personnel, and other bank employees who want to be comfortable with the compliance regulations should attend this informative program, as well. Topics covered in this three-day institute include Regulation Z: Truth in Lending, the Community Reinvestment Act, Fair Lending, Regulation B, the Fair Housing Act, the Real Estate Settlement Procedures Act, National Flood Insurance Program, Regulation C: Home Mortgage Disclosure Act, compliance management, privacy, the Fair Credit Reporting Act, and the Customer Identification Program (BSA). Bill Elliott, senior consultant and manager of compliance, and Adam Witmer, CRCM, consultant, both of Young & Associates, Inc., Kent, OH, lead this institute.

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    Advanced Operations Conference Scheduled for April 25

    Advanced Operations Conference” is being presented by CBAI at the Crowne Plaza in Springfield on April 25. This conference is designed for operations and technology officers, CEOs, and anyone involved in the operations of your community bank. Participants benefit from expert speakers, pertinent and informative topics, and peer networking. Additionally, a mini-exposition featuring the latest products and services benefitting the community bank and its marketing efforts also highlight the day. This year’s conference features top-notched speakers such as Jerry Cavanaugh, general counsel for CBAI, who will give a “Legal Update;” John Mills, supervising consultant with BKD, LLP will present “2012 ACH Rules Changes;” Susan Orr, president/owner of Susan Orr Consulting will speak on “Mobile Financial Services;” Sue Kappel, manager at Wipfli, LLP, will present “Bank-Performance Analysis;” Joe Oleksak, manager with Plante & Moran discusses “Hot Topics in Technology Compliance;” and Jim Ghiglieri Jr, senior vice president of corporate communications will present “Surviving & Thriving in a Post-Durbin World: The Future of Your Debit-Card Profitability.”

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    Register Now for Early-Bird Pricing at CBAI’s 38th Annual Convention!

    Early-bird registration is open for CBAI’s 38th Annual Convention & Expo. Scheduled for September 20-22, “Building for Tomorrow,” will be held at the Hyatt Regency at The Arch in St. Louis, MO. The convention features expert general session speakers, 24-break sessions on the hottest issues in community banking, exciting social activities, a 96-booth exhibit hall with the latest in products and services, and countless networking opportunities. Don’t hesitate! The early-bird deadline is April 30, so
    register today!

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    April 17, 2012 – Hilton Hotel, Springfield

    CBAI’s 30th Annual
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    April 24-27, 2012 – Gaylord Resort and Convention Center, National Harbor, Maryland



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