Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois Community Bankers Association of Illinois
     A Bi-Weekly News Bulletin for CBAI Members                      July 29, 2009 Graphic
Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois

  • CBAI Urges Congressional Contacts During August Recess
  • Community Banks Portrayed as Powerful Lobbying Force
  • Bernanke Makes Pitch for Community Bank-Backed Reforms
  • House Committee Exempts Community Banks from Pay Restrictions
  • Economy Sending Mixed Signals
  • BAKER Market Update
  • Division of Banking’s Solis and Clarke Meet with CBAI Staff
  • CBAI Board Member To Address Small-Business Banking Conference
  • School District Bank Accounts Become Fraud Targets
  • Register Today for the CBAI Community Bank Directors’ College
  • ICBA Supports Congressional Report on Farm Lending
  • USDA Announces Availability of Stimulus Funds
  • More Farm News
  • SHAZAM to Pilot Internet PIN Debit Technology
  • Agencies Release Revisions to Q & A Regarding Flood Insurance
  • Member Implements SecureCARE for Desktop Data-loss Prevention
  • CBAI’s Banking Essentials Series Offers New Format
  • IRS Promotes Income Verification Express Service

  • CBAI Urges Congressional Contacts During August Recess

    Congress will soon adjourn for the August recess, and many lawmakers will be accessible in their respective districts. Community bankers are encouraged to contact their congressmen to discuss the significant financial restructuring and other issues that await them when they return to Washington.

    Here are some talking points on the key issues that you can provide to your congressman:

    H.R. 3126, the Consumer Financial Protection Agency Act of 2009
    H.R. 2897, the Bank Accountability and Risk Assessment Act of 2009, and CBAI’s Letter to Congressmen urging support and co-sponsorship
    Regulatory Restructuring
    Congressional Contact Information

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    Community Banks Portrayed as Powerful Lobbying Force

    In a
    Washington Post article dated July 28, 2009, community banks were touted as a powerful lobbying force that could determine the fate of the financial restructuring debate. The article indicates that, despite enormous sums expended by the large Wall Street firms on political influence, their reputation has been tarnished by their role in the economic meltdown, and Congress is listening to the concerns and recommendations of community banks. The article cites community bank opposition to the proposed Consumer Financial Protection Agency that would undermine community banks and cause more harm than good. For example, the Administration’s proposal would separate consumer protection from safety and soundness supervision, thereby increasing costs and complexity. See ICBA’s Editorial and Letter to the Editor. These resources can be used by community banks in their respective markets.

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    Bernanke Makes Pitch for Community Bank-Backed Reforms

    testimony before the House Financial Services Committee on the Fed’s semiannual Monetary Policy Report to the Congress, Federal Reserve Chairman Ben Bernanke advocated several regulatory reforms supported by ICBA and CBAI and told Congress consumer protections should stay with current regulators. Bernanke said comprehensive regulatory reform should include more stringent capital and liquidity standards for the largest financial firms, consolidated supervision of systemically dangerous firms and an enhanced resolution regime for these financial institutions.

    “If I were writing it, I would keep the consumer protection with the federal banking agencies, with additional measures to ensure a strong commitment,” he said during the question-and-answer session.

    Bernanke said coordinated policy action had likely averted the collapse of the global financial system and led to improved financial conditions, and the Fed will maintain a “highly accommodative” monetary policy for an extended period. He also said economic improvements are automatically unwinding liquidity facilities. Repeating a point he made on the Wall Street Journal editorial page, Bernanke said Fed credit extended to banks has more than halved since the end of 2008, reflecting improvements to the financial system.

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    House Committee Exempts Community Banks from Pay Restrictions

    On July 28, 2009, the House Financial Services Committee amended
    H.R. 3269, the Corporate and Financial Institution Compensation Fairness Act of 2009 to exempt community financial institutions with less than $1 billion in assets from incentive-based pay restrictions and reporting requirements. This provision would favorably impact about 95% of the nation’s community banks.

    The bill was also amended to allow the SEC to exempt small issuers and publicly traded community banks from requiring nonbinding shareholder votes on executive compensation. These measures are backed by both ICBA and CBAI.

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    Economy Sending Mixed Signals

    As economists, regulators, and analysts review economic indicators, mixed messages emerging.
    Consumer confidence fell this month as employment concerns persist amid increasing job cuts and growing skepticism about the government stimulus plan.

    Regionally, the Midwest Manufacturing Output continued to fall in June. However, according to participants in the Chicago Federal Reserve’s annual Automotive Outlook Symposium, the nation’s economic decline is expected to bottom out this year with solid economic growth in 2010. The Federal Reserve also said most of its 12 district banks detected a slower pace of economic decline in June and July, indicating that the worst U.S. downturn in at least five decades is closer to an end. However, its Beige Book business survey provided few signs of economic growth.

    Meanwhile, the overall index for the Rural Mainstreet economy declined, according to the July survey of bank CEOs in 11 Midwestern states including Illinois. The weak global economy has begun to adversely affect the farm sector. According to the survey, farm income is under growing pressure, and land prices and sales of farm equipment have weakened over the past several months.

    The media is now turning its attention away from the mortgage crisis to credit problems in commercial real estate lending. Community and regional banks in metropolitan areas have been dealing with problem CRE loan issues for months now, and several banks have been adding to reserves and raising additional capital to offset anticipated credit losses. More information.

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    BAKER Market Update

    Fed Chairman Ben Bernanke gave his semiannual address to Congress regarding the Fed’s monetary policy. Last week also produced news that a third of companies in the S&P 500 reported Q2 earnings, with a majority reporting better than expected results. This week, the first indications for Q2 annualized GDP are expected to show contraction of just 1.5 %, which is obviously an improvement.

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    Division of Banking’s Solis and Clarke Meet with CBAI Staff

    Jorge Solis, Director of the Division of Banking within the Illinois Department of Financial and Professional Regulation, and Assistant Director Scott Clarke visited CBAI headquarters July 16 to discuss recent developments and to look forward on a number of topics affecting Illinois financial institutions. For details,
    click here.

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    CBAI Board Member To Address Small-Business Banking Conference

    American Banker and RMA have announced that Matt Gambs, president and CEO of Diamond Bank, FSB, Chicago will present the keynote address entitled, Community Bank’s Role in Recovery on Monday, October 19 at this year’s 14th Annual Small-Business Banking Conference.
    Reserve your seat now to attend the nation’s leading small-business banking event on October 18-20 at the Sheraton Chicago Hotel & Towers in Chicago. According to Gambs, “Community banks have a natural connection to small business and the entrepreneurial spirit that comes with people who choose the path of independence. This exists because the bankers themselves are more than employees. In many cases they have ‘skin in the game’ and a vested interest in the success of the enterprise. We must highlight to our stakeholders, clients, and communities that we are truly on this journey together, on good patches and bad ones as well.”

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    School District Bank Accounts Become Fraud Targets

    The law firm of Hinshaw & Culbertson LLP, a CBAI associate member, has advised CBAI of recent thefts from school district accounts in Illinois banks. The thefts have resulted from electronic transfers that were fraudulently initiated by someone who apparently gained access to the account numbers and routing numbers needed to conduct the transfers.

    Illinois financial institutions should consider working with their school district depositors to take reasonable precautions aimed at preventing additional incidents of fraudulent transfers. A financial institution may choose to be on alert for any unusual or suspicious transactions on, or attempts to access, such accounts and may choose to exercise additional measures to confirm the authenticity of any transfer requests.

    For further information, feel free to contact CBAI General Counsel Jerry Cavanaugh at 800/736-2224 from within Illinois or by e-mail at

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    Register Today for the CBAI Community Bank Directors’ College

    Community Bank Directors’ College was developed in close conjunction with both state and federal regulators, and is designed to teach individuals how to become a more effective, capable, and supportive member of a bank’s board of directors. Its goal is to graduate directors who return to the bank more active, more knowledgeable, and more decisive. The Directors’ College is offered once every two years and provides a thorough understanding of bank operations and bank directors’ responsibilities. The college is recommended for both new and seasoned bank directors. It is structured as two, two-day sessions offered on an annual basis. The next session, which may be attended as a stand-alone course, is being held at the Hilton Hotel in Lisle, IL, on August 11-12.

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    ICBA Supports Congressional Report on Farm Lending

    ICBA voiced support for a Congressional Oversight Panel report that indicates there is no immediate need for a mandatory farm-loan restructuring proposal for banks that utilized TARP funds. The Special Report on Farm Loan Restructuring points out that there are already several federal programs currently available that could provide targeted assistance to farm sectors that demonstrate signs of stress. “We agree with the panel’s suggestion that Congress look to existing programs before creating any new burdens on community banks,” ICBA Chairman Mike Menzies said in a statement.

    ICBA supports the report’s findings that an agricultural restructuring requirement may be premature, administrative costs could be passed on to borrowers and mandatory modifications might not be the most effective policy.
    Read ICBA Statement.

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    USDA Announces Availability of Stimulus Funds

    This week the USDA said it has several billion dollars for its Business and Industry Loan Program as well as other rural development programs. The USDA will provide up to 90 percent guarantees for eligible loans using the stimulus money, reduce the guarantee to one percent (1%) and eliminate the annual renewal fee. These additional funds will expire 9/30/2010.
    More information.

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    More Farm News

    Coolest July Expected for Illinois
    Corn Pollination Half-Completed
    Food Prices Trending Down

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    SHAZAM to Pilot Internet PIN Debit Technology

    SHAZAM, an innovator of electronic funds transfer (EFT) services for 33 years, has agreed to test Acculynk’s PaySecure Internet PIN debit service. SHAZAM, a CBSC Marketing Partner since 2000, will conduct a
    pilot program where interested SHAZAM financial institutions can participate in testing the latest in Internet PIN debit technology. The pilot program will help gauge consumer acceptance of using a debit card with a PIN when making online purchases.

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    Agencies Release Revisions to Q & A Regarding Flood Insurance

    The federal bank, thrift, credit union, and Farm Credit System regulatory agencies have released revised interagency questions and answers regarding flood insurance and requested public comment on several new ones. The Interagency Questions and Answers Regarding Flood Insurance (2009) supersedes the 1997 interagency questions and answers document and supplements other guidance or interpretations issued by the agencies and the Federal Emergency Management Agency (FEMA). The Interagency Questions and Answers Regarding Flood Insurance (2009) consists of 77 questions and answers, which were revised based in part on comments received during the public comment period.

    The agencies are also proposing for public comment five new questions and answers on determining insurable value in calculating the maximum limit of coverage available for the particular type of property and the timing of force placement of required flood insurance by lenders. After receiving and considering public comment on these new proposed questions and answers, the agencies intend to incorporate them into the Interagency Questions and Answers Regarding Flood Insurance (2009).

    The Federal Deposit Insurance Corporation, Federal Reserve Board, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and Farm Credit Administration invite comment on the five proposed questions and answers and, more generally, on other issues and concerns regarding compliance with the federal flood insurance statutes and regulations. Comments specific to the proposed questions and answers regarding determination of insurable value and force placement of required flood insurance are requested by September 21, 2009. The
    Federal Register notice is attached with instructions on how to submit comments.

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    Member Implements SecureCARE for Desktop Data-loss Prevention

    American National Bank of De Kalb County, Sycamore uses SecureCARE, provided by CTH Technologies* to mitigate data loss by preventing accidental information leaks, deliberate data theft and electronic fraud, on laptops, desktops and servers throughout the organization. Jeff Rolczynski, CFO at American National Bank of DeKalb County in Sycamore and a member of the CBSC and CBAI boards of directors, installed SecureCARE in his bank in the fall of 2007. “I was amazed at the volume of information that flows in and out of the bank and who has access to it,” said Rolczynski. He added, “We were able to better monitor personal use of the Internet.” He concluded, “The reports helped us tighten bank security and increase staff productivity. “ SecureCARE provides financial institutions with key ingredients in demonstrating compliance with government regulations such as Gramm-Leach Bliley Act (GLBA), Payment Card Industry Data Security Standards (PCI DSS), Health Insurance Portability and Accountability Act (HIPAA), Sarbanes Oxley (SOX), and State Privacy Laws. Information protection and control is a major security concern for banks and will likely receive additional regulatory focus in the near future. Get ahead of the curve now and contact Bob Eigenbauer at CTH at 630/613-7070 for more information. For the CTH Technologies case study,
    click here.

    *CTH Technologies is a preferred services provider of CBSC.

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    CBAI’s Banking Essentials Series Offers New Format

    CBAI is pleased to present
    “Banking Essentials,” four one-day seminars designed to provide a complete knowledge of banking principles and operations. A must for the newer community bank employee, it is also geared toward veteran employees as a refresher course. New this year, the four quarters of the Banking Essentials Series will be offered in one location and structured as two, two-day sessions. As such, quarters one and two will be offered on consecutive days in August, and quarters three and four will be offered on consecutive days in February, to cut down on travel for your convenience. All seminars are held at the CBAI headquarters in Springfield. Seminar topics and content remain the same as previous years. While it is recommended that the individual attend all four quarters of the series to receive an entire overview of banking, each quarter's material stands alone; one quarter is not a prerequisite for another.

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    IRS Promotes Income Verification Express Service

    The Internal Revenue Service has asked CBAI to notify community bankers of its Income Verification Express Service (IVES) which is used to confirm the income of a borrower during the processing of a loan application. The IRS provides return transcript, W-2 transcript, and 1099 transcript information generally within two business days to a third party with the consent of the taxpayer. For more information,
    click here.

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