A Bi-Weekly News Bulletin for CBAI Members May 19, 2010
 URGENT ACTION ALERT ON FINANCIAL REFORM! YOUR INVOLVEMENT IS NEEDED TODAY! The Senate is continuing debate on S. 3217, the financial regulatory reform bill. Please contact Senator Durbin and Senator Burris and urge them to support pro-community bank measures as contained in this customizable letter that you can email directly to their Washington offices. Several weeks ago, CBAI member banks joined community bankers nationwide in Washington, D.C., to lobby our congressional delegation on these issues. Now is the time to get involved and make a difference. Thank you for your particpation. CBAI will keep you informed as the debate progresses. Back to top CBAI's Ohlendorf Testifies Before House Subcommittee On May 17 in Chicago, Greg Ohlendorf, President of First Community Bank & Trust in Beecher, Illinois, testified before a House Financial Services Subcommittee on behalf of CBAI and ICBA. The hearing addressed the causes of the commercial real estate crisis and ways to resolve them. Ohlendorf said regulators have “moved the pendulum too far in the direction of overregulation at the expense of lending.” He also urged quick adoption of three proposals to enable community banks to survive the financial crisis and stimulate small business lending: 1) allow community banks to amortize CRE loan losses over a period of 10 years, 2) create a small business lending fund that will inject capital into community banks that need it, and 3) include the entire amount of the allowance for loan and lease losses (ALLL) as part of a bank’s risk-based capital. See Full Report. See Sun-Times Article. Back to top $30 Billion Small Business Lending Fund Approved by House Committee One of CBAI’s key federal priorities was approved today by the U.S. House Financial Services Committee that will create a $30 billion fund for small business lending through community banks. The fund will allow banks with less than $1 billion in assets to receive capital investments from Treasury up to 5 percent of their risk-weighted assets. Banks between $1 billion and $10 billion in assets could receive up to 3 percent. Increased lending to small businesses would result in lower interest rates for participating banks. CBAI and ICBA are working to put this legislation on a fast track and to insure that CAMEL 3 and 4 rated banks are eligible for the program . See ICBA Release. See Article. Back to top Senate Preserves Fed Exam Authority for Community Banks The U.S. Senate has approved an amendment to the financial reform bill that preserves the Federal Reserve's authority to examine state chartered community banks. This measure is one of CBAI's federal policy priorities. See ICBA Statement. Back to top ICBA and CBAI Back Amendment To Preserve Role of FHLBanks ICBA and a coalition of financial services groups including CBAI urged senators to approve an amendment to S. 3217 preserve the ability of the Federal Home Loan Banks to continue to provide much-needed liquidity to the economic system. In a joint letter, ICBA voiced support for Amendment 3978, sponsored by Sen. Tim Johnson (D-S.D.), which would exclude the FHLBanks from a provision in the bill prohibiting institutions from lending an amount to any unaffiliated company that exceeds 25 percent of the capital stock and surplus of the lending institution. ICBA said that the prohibition would force many community banks to reduce their advance positions to comply with the cap. The letter noted that some institutions would experience more than an 80 percent reduction in FHLBank advances, while the system as a whole would see its total outstanding 2009 third-quarter advances reduced by $316.7 billion, or nearly 50 percent. Back to top CBAI Opposes Credit Union Power Grab In a letter today, CBAI urged the Illinois members of the House Financial Services Committee to oppose any effort to expand the commercial lending powers of credit unions. We were notified that the credit union industry may attempt to include their amendment in Wednesday mornings mark-up of H.R. 5297 - Small Business Lending Fund Act of 2010. While CBAI strongly supports the proposed $30B Small Business Lending Fund , we vigorously oppose expanding the business lending powers of tax-subsidized credit unions. If their amendment is not included in this legislation, it may be included in other legislation in the very near future. We will keep CBAI members informed in the event we need bankers in the congressional districts of House Financial Services Committee members to contact their representatives. Back to top St. Louis Fed Chief Urges Downsizing TBTF Banks In a recent question and answer session, St. Louis Federal Reserve Bank President James Bullard advocated downsizing the giant banks by placing hard caps on size that would require divestiture of assets above the cap. He indicated that recent events have proven that the largest banks are too big to manage and regulate. CBAI applauds President Bullard for his support of this position which is another policy priority of CBAI and ICBA. See Video Interview. Back to top Economic News of the Day Consumer Prices Fall Unexpectedly The cost of living in the U.S. unexpectedly dropped in April for the first time since March, 2009. The lack of inflation is a primary reason why the Federal Reserve has pledged to keep the benchmark interest rate near zero in coming months. See Article. U.S. Solvency Dependent on Low Rates Michael Pento, chief economist at Delta Global Advisors, offers a compelling argument as to why our nation’s continued solvency depends on low interest rates. He noted that, if rates rise significantly, the country will face an unprecedented liquidity and solvency crisis. He also indicated, however, that the Fed must soon move away from its 0% interest rate policy because inflation could otherwise ravage the country. See Article. Mainstreet Economy Continues to Struggle For the second time in three months, the Rural Mainstreet Index declined in April, marking the 26th consecutive month that the RMI has remained below growth neutral. In Illinois, farmland prices advanced for the third straight month, and farm equipment sales were healthy. See Full Report. Back to top Baker Market Update Even after mixed results from this week’s $78 billion auctioned notes and bonds, Treasuries prices are generally higher on the week with most of the gains coming from today. Burgeoning fears about the cohesiveness of the eurocurrency and the effectiveness of the European Central Bank to stem the sovereign debt contagion from the PIIGS(Portugal, Ireland, Italy, Greece, and Spain) have sent shockwaves around the globe. More. Back to top FDIC Proposes Rules on Safe Harbor Protection for Securitizations The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) has approved a Notice of Proposed Rulemaking (NPR) to clarify the safe harbor protection in a conservatorship or receivership for financial assets transferred by an insured depository institution (IDI) in connection with a securitization or participation. This action was necessitated by the changes adopted by the Financial Accounting Standards Board in June 2009 to the accounting standards on which the FDIC's prior rule, 12 C.F.R. Part 360.6, was based. Back to top CBAI Spring Group Meetings Under Way with Strong Attendance CBAI leaders and executive staff are visiting 11 locales on the 2010 Group Meeting tour. The primary objectives of Group Meetings are to learn more about the needs of CBAI members, as well as to share information on key community-banking issues and activities. Consisting of an optional golf outing and meeting, Group Meetings also provide an excellent opportunity to catch up with friends and peers. The opening portion of each Group Meeting focuses on critical legislative and association issues. CBAI President Bob Wingert provides updates on Association projects and community banking in general; and Senior Vice President of Governmental Relations Kraig Lounsberry offers an up-to-the-minute report of banking-related legislative activities. The after-dinner speaker is David Schroeder, CBAI vice president of federal governmental relations. During this informative presentation titled “CBAI Federal Grassroots Advocacy: Get Involved and Make a Difference.” Back to top Speakers Confirmed for ICBA Bancard Conference Attend ICBA Bancard's Card Conference & Expo September 26-28, 2010 in St. Louis, Mo. and hear from industry leaders on payments issues impacting your business. Recently confirmed speakers include Visa economist Wayne Best, ICBA regulatory expert Karen Thomas and Fiserv marketing strategist Mark Sievewright. Share your challenges and ideas by completing a brief survey and help set the agenda. Surveys submitted by May 14 will be entered into a prize drawing for one of two $25 gift cards. More Information: • Learn more about the ICBA Bancard Conference & Expo • Take the survey Back to top Reward Checking Can Help Bankers Recover Lost NSF Revenue Experts predict that changes to Reg E will likely decrease bank NSF revenue 40 to 60 percent. As banks search for new revenue streams to offset the expected decline in NSF income, many bankers are turning to fee-based checking account programs. However, there is another alternative: Reward Checking is a free checking account that offers CD-like interest rates, requires no minimum balance, and provides ATM fee refunds. To receive these benefits, customers must meet monthly qualifications designed to boost fees and cut costs for the bank. More. Back to top “Hackers” as Facebook Friends Facebook wasn’t so friendly to a midsized bank, which was recently hacked on purpose as part of a test by hired security experts who used the social media site as part of their “attack,” the security firm said last week, painting a frightening picture of how easily a bank’s infrastructure can be compromised. More. Back to top Management Success Seminar Set for June 1 If you are charged with increasing income, reducing costs, and selling more with fewer people while providing excellent customer service, then you need to attend “Winning Management Techniques: The Essential Requirements to Succeed in Management” to be offered by CBAI in Springfield on June 1. Winning Management Techniques will equip individual managers and management teams to exceed the demands of the 21st Century. Learn how to maintain a cost effective balance between “under and over staffed”; understand the realities of staff motivation in 21st-century banking; identify myths of successful selling and spotlight building a desirable sales culture; establish necessary steps to assure excellent customer service from every corner of the bank; and develop a step-by-step process to assure success and avoid disasters in branching. Leading this seminar is Helen R. Short, whose expertise comes from 30 years as a banker and more than 20 years in management. Back to top Regulation E Toolkit Scheduled for June 2 & 3 Is your financial institution ready for the July 1st and August 15th implementations of Regulation E? Recent amendments have created scores of compliance, operational, system, and training implications. The Reg E changes also pose challenging questions for your frontline team which will be bombarded with questions about the benefits, forms, and basic information. The frontline will need to deal with confused, unhappy, and sometimes angry customers who see their debit card purchases denied in mid-August because they ignored the mail. CBAI is pleased to offer A Reg E Toolkit in two locations. Participants will receive practical tips, examples of other financial institutions' implementation strategies, and tools to use when preparing to meet the timelines for implementing the changes to Regulation E. Leading this seminar is Dianne Barton, founder and president of Performance Solutions, Inc., Kennesaw, GA, a training and consulting company that specializes in providing solutions to the key challenges facing community banks today in attracting, selling, and servicing their customers. Back to top Ag Lenders’ Conference To Be Held June 9 As a result of declining farm incomes, depressed repayment rates, and raised delinquency and charge-off rates on agricultural loans, commercial banks have tightened credit standards by maintaining elevated collateral requirements and stringent loan terms. Attend CBAI’s 2010 Agricultural Lenders Conference to develop the skills and tools to better understand the issues affecting our farm and agribusiness customers and to meet their credit needs. A mini-expo featuring the latest in products and services for ag lenders will also highlight the day. This year’s Conference features such top-notch speakers as Dr. David Kohl, professor emeritus in the department of agricultural and applied economics at Virginia Tech, on the mega trends in agriculture and the latest in credit analysis; Larry Aker, founder and editor of 3F Forecasts, on current weather and season forecasts; and Matthew Roberts, associate professor in the department of agriculture, environmental and development economics at The Ohio State University, on the six businesses that comprise a modern grain farm and an energy update for 2010. Back to top |
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