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                  October 8, 2008 Graphic
Graphic
Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois


  • Federal Reserve and Other Central Banks Lower Rates
  • FDIC Announces Proposed 2009 Premium Hikes
  • Federal Reserve Creates Facility to Buy Commercial Paper
  • Agencies Seek Comment on Proposal to Lower Risk Weights for Claims on Fannie and Freddie
  • Regulators Proceed with Implementation of Stability Plan
  • Fall Out from the Bailout: Community Banks Manage the Economic Environment
  • CBAI offers Seminar on Major FDIC Insurance Changes
  • Bair Addresses Possible Regulatory Changes
  • FDIC Updates Online Insurance Tools
  • More Resources on New FDIC Coverage Available
  • Baker Market Update
  • FREE AUDIO CONFERENCE: The Baker Group's Investment Strategies
  • Excess Deposit Insurance Coverage Available From CBIS
  • Register Now for Community Bankers for Compliance (CBC)
  • Legislative and Regulatory Initiatives Welcomed
  • SEC Charges Five Brokers with Fraud
  • AG Madigan Announces Settlement in Countrywide Litigation
  • Auction Rate Securities and the Credit Crisis
  • Global Selloff in Grains and Financial Markets
  • Illinois Corn 10% Harvested/Crop Report
  • State Treasurer Says Illinois Investments are Safe
  • Women in Banking Conference set for November 18-19
  • OCC Issues Revised Exam Procedures for Regulation Z
  • Consumer Lending Institute Set for October 27-29
  • Is Your Bank a Real Community Bank?


  • Federal Reserve and Other Central Banks Lower Rates

    In a coordinated action, several Central Banks throughout the world lowered policy interest rates over night in an effort to ease global monetary conditions. The Federal Open Markets Committee last night (October 7) unanimously voted to lower its target for the federal funds rate 50 basis points to 1.5 percent. The Board of Governors also unanimously approved a 50 basis point decrease in the discount rate to 1.75 percent. See
    Joint Statement.

    Back to top

    FDIC Announces Proposed 2009 Premium Hikes

    In an effort to increase deposit insurance reserves, the FDIC proposed raising premiums by seven basis points during the first quarter of 2009, followed by a series of further risk-based adjustments that would take place in the second quarter. The FDIC will receive comments from the public for a 30-day period.

    Premiums for Risk Category I banks will increase from five to seven basis points to 12 to 14 basis points respectively. Risk Category II, III, and IV banks would pay 17, 35, and 50 basis points respectively. After the first quarter, the base rates for all Risk Category I banks (about 90% of all banks) would be set at 10 to 14 basis points. The current premium average of 6.3 basis points would increase to 13.5 basis points, and Risk Category I banks would pay an estimated average of 11.6 basis points. For further details about the proposal, please
    click here.

    The FDIC projects bank failures to cost the Fund $40 billion through 2013, including $11 billion incurred this year. The agency projects that the proposed change in rates will restore the DIF reserve ratio to 1.26 percent by 2013. Both CBAI and ICBA plan to submit comments.

    Back to top

    Federal Reserve Creates Facility to Buy Commercial Paper

    The Fed has established the Commercial Paper Funding Facility (CPFF) to buy commercial paper to help restore liquidity to financial markets. The facility will provide a liquidity backstop to U.S. issuers of commercial paper by purchasing short-term corporate debt that companies use to fund day-to-day operations. The Fed expects that, by eliminating much of the risk that eligible issuers will not be able to repay investors by rolling over their maturing commercial paper obligations, this facility should encourage investors to again engage in term lending in the commercial paper market. See
    Press Release.

    Back to top

    Agencies Seek Comment on Proposal to Lower Risk Weights for Claims on Fannie and Freddie

    The federal regulatory agencies yesterday (October 7) announced they are seeking comment on a proposed rule to permit banks to assign a 10 percent risk weight to claims on, and portion of claims guaranteed by, Fannie Mae and Freddie Mac. Claims include all credit exposures such as senior and subordinated debt and counterparty credit risk exposures, but do not include preferred or common stock.
    See Release.

    Back to top

    Regulators Proceed with Implementation of Stability Plan

    The Treasury announced its process for
    hiring asset managers to coordinate the $700 billion program and measures to avoid conflicts of interest with outside contractors. Treasury also revealed its regulatory to engage private firms to accomplish its goals and posted three solicitations for financial agents to provide needed services to implement the Troubled Asset Relief Program (TARP).

    The Fed also announced a plan to encourage lending that includes increasing the size of 28-day and 84-day Term Auction Facility auctions to $150 billion and begin paying interest on required and excess reserve balances.

    The new law includes many measures backed by ICBA and CBAI: increase in deposit insurance coverage; inclusion of community banks in the TARP; fair tax treatment for GSE preferred losses; prohibition on future money market mutual fund guarantees; and authorization for the SEC to suspend “mark-to-market” accounting rules.

    Back to top

    Fall Out from the Bailout: Community Banks Manage the Economic Environment

    This telephone/webcast is designed for CEOs, CFOs, and community-bank board members. It will be held Friday, October 17, 2008 from 2 – 3:30 p.m. and presented by Jeffrey Gerrish, chairman of Gerrish McCreary Smith Consultants, LLC and a member of the Memphis-based law firm of Gerrish McCreary Smith, PC, Attorneys. The two firms have assisted more than 1,200 community banks in 48 states.

    This fast-paced session examines the direct impact of the economic rescue package. It addresses issues specific to community banks for dealing with the financial crisis and examines your bank’s opportunities to take advantage of the positive benefits of the bailout. What the session covers:
         • Understand how to thrive in the current environment;
         • Taking advantage of the bailout provisions impacting community banks;
         • Taking advantage of opportunities during the current financial crisis;
         • Raising capital;
         • Maintaining liquidity; and
         • Hot-button regulatory issues.

    For a registration form,
    click here.

    Back to top

    CBAI offers Seminar on Major FDIC Insurance Changes

    "Major FDIC Insurance Changes To Deposit Coverage & Formal and Informal Trust Account Beneficiaries: What You Must Know Now!"
    Click here to register for this must-attend telephone/webcast seminar.

    Back to top

    Bair Addresses Possible Regulatory Changes

    FDIC Chairman Sheila Bair said in a
    speech on Tuesday that financial institutions may not need more regulations, but smarter regulations. She called for better safeguards to prevent leveraging from getting out of hand. She also noted that, concerning derivatives, there must be more liquid trading of standardized products, more reporting by large traders, more prudent margin requirements, stronger anti-fraud and anti-manipulation provisions; and greater government oversight and enforcement.

    Back to top

    FDIC Updates Online Insurance Tools

    The FDIC updated its Web page providing resources about the new deposit insurance coverage limits authorized Friday by the passage of the Emergency Economic Stabilization Act of 2008. On Friday, FDIC deposit insurance increased from $100,000 to $250,000 per depositor through Dec. 31, 2009.

    The agency
    said it will provide insured institutions with information regarding any changes to the official FDIC sign and instructions for ordering new signage if changes are made. Several online informational guides, such as Insuring Your Deposits and Your Insured Deposits, also include the new guidelines.

    Back to top

    More Resources on New FDIC Coverage Available

    insured accounts were immediately guaranteed by the federal government for up to $250,000 per depositor per institution through December 31, 2009. In a
    letter to financial institutions, the FDIC authorized a specific statement to update signage and materials. Banks can post the statement or display a sticker with the statement next to their official FDIC sign.

    The FDIC also issued an updated summary on the new coverage rules. The agency is also conducting free telephone seminars this month regarding the changes.

    The ICBA also offers excellent public relations resources for community bankers on its Safety of Community Bank Deposits Campaign web page.

    Back to top

    Baker Market Update

    The Labor Department indicates that the US. Economy lost 159,000 jobs in September, revealing further strain on an already beleaguered labor market. Personal spending halted in August, while incomes rose 0.5%. The S&)/Case-Shiller housing index showed continued declines in prices for the month of July, sliding down 16.4% from the year earlier.
    Click here to read more.

    Back to top

    FREE AUDIO CONFERENCE: The Baker Group's Investment Strategies

    Join our Quarterly Conference Call - Thursday, October 9, 2008 11:00 am CDT. Topics include:

         Economic Overview - Comments from Dr. Lacy Hunt
         Market Conditions & Strategy Update - Coping with Volatility
         Relative Value in Agencies & Municipals - Risks, Rewards & Credit Analysis
         Sector Focus - Mortgage-Backed Securities - Where to Find Value

    Click here to register.

    Back to top

    Excess Deposit Insurance Coverage Available From CBIS

    For more information,
    click here.

    Back to top

    Community Bankers for Compliance (CBC)

    Now in its 20th year, the Community Bankers for Compliance program is the most successful and longest running compliance-training program in the country. It provides up-to-date information on compliance issues and developments in bank regulations, as well as proven techniques for maintaining your in-bank compliance program. The CBC program consists of quarterly seminars, a monthly newsletter, the compliance hotline, and a CBC members-only web page.

    For more information about the CBC program and a registration form,
    click here.

    For information on the First Quarterly CBC Meeting entitled “The Final Regulation Z Changes,” click here.

    Back to top

    Legislative and Regulatory Initiatives Welcomed

    We need your help! CBAI’s Committee on Legislation and Regulation, which is comprised of community bankers, meets this fall to discuss and propose a legislative agenda to pursue during the 2009 legislative session of the Illinois General Assembly. As always, we are soliciting your ideas.

    Our remarkable success in initiating over 50 bills since 1988 which ultimately became law has benefited all community banks in Illinois. Many of these laws began with this process. Each year, ideas for changes in Illinois law submitted by bankers are reviewed by the Legislative Committee and evaluated in terms of the breadth of their application to CBAI’s member banks, and the likelihood of mounting a successful campaign for their passage.

    Please send us your ideas! Specificity is appreciated (actual language even better) but general ideas for legal changes are welcomed. Each and every suggestion for legislation will be considered by the Committee.

    Please e-mail your suggestions by November 11, 2008 to Kraig Lounsberry, SVP for Governmental Relations, at
    kraigl@cbai.com. Your participation is what makes CBAI a great organization.

    Back to top

    SEC Charges Five Brokers with Fraud

    Last week the Securities and Exchange Commission
    charged five Los Angeles-area brokers with securities fraud, alleging that they put their customers at risk by refinancing their homes with subprime mortgages that they could not afford and then paying themselves high commissions.

    Back to top

    AG Madigan Announces Settlement in Countrywide Litigation

    Illinois Attorney General Lisa Madigan
    announced yesterday an $8.7 billion settlement in the predatory lending litigation against Countrywide. It creates the first mandatory loan modification program in the nation. Approximately 400,000 borrowers are expected to receive loan modifications and help them remain in their homes. Approximately 10,750 Illinois borrowers will receive loan adjustments worth about $185 million.

    Back to top

    Auction Rate Securities and the Credit Crisis

    Auction rate securities are long-term securities, but with time-varying interest rates that are preset periodically at fixed intervals via an auction process. Due to the credit crisis, auctions to reset the rates have failed, resulting in investors unable to redeem their money. Numerous lawsuits have subsequently occurred. The
    Chicago Fed Letter offers an explanation of what happened and reveals the inherently flawed nature of these securities.

    Back to top

    Global Selloff in Grains and Financial Markets

    Prospects of an economic slowdown worldwide threaten demand for U.S. agricultural commodities, triggering a dramatic drop in corn and soybean futures starting the week.
    More information.

    Back to top

    Illinois Corn 10% Harvested/Crop Report

    This fall’s harvest continues to be the slowest in resent years with just 10% of the corn crop harvested, compared to 71% last year at this time.
    See latest Crop Report.

    Back to top

    State Treasurer Says Illinois Investments are Safe

    State Treasurer Alexi Giannoulias said last week that Illinois’ $14 billion investment portfolio avoided taking a hit during the recent market meltdown. He noted that Illinois invests in fixed-income assets and not in stocks.
    See Release.

    Back to top

    Women in Banking Conference set for November 18-19

    CBAI is proud to offer its second annual Women in Banking Conference, scheduled for November 18-19, 2008, at the Crowne Plaza in Springfield. Shaped around the top concerns facing women professionals, as well as pertinent community banking issues, this one and one-half day conference addresses issues including organization to increase your bottom-line, critical conversation skills, successful networking, stress management and wellness, and attracting customers. Closing out this year’s conference is Springfield Appellate Judge Sue Myerscough.
    Click here for more details or to register.

    Back to top

    OCC Issues Revised Exam Procedures for Regulation Z

    The Federal Financial Institutions Examination Council (FFIEC) recently revised the interagency consumer compliance examination procedures for Regulation Z which implements the Truth in Lending Act. The OCC has incorporated the procedures into its Compliance Handbook.
    More Information.

    Back to top

    Consumer Lending Institute Set for October 27-29

    This three-day Consumer Lending Institute, led by the nationally recognized David Kemp of Bankers Management, Inc., College Park, GA, provides your lending staff the training necessary to make sound credit decisions. Lending compliance, taking the loan application and interviewing, investigating the application, risk analysis, lending to self-employed borrowers, business development, loan documentation, and collections and bankruptcy are key topics. For more details and a registration form,
    click here now.

    Back to top

    Is Your Bank a Real Community Bank?

    If you’re a CBAI member, you’re A Real Community Bank®!. Download ads, articles, and the Real Community Bank logo. Go to the CBAI Members Only section of
    www.cbai.com. If you do not already have a member name and password, click here to register.

    Back to top

    CBAI

           

    CBAI's PROFESSIONAL DEVELOPMENT PROGRAMS THROUGH 11/15/08


    TELEPHONE/WEBCASTS THROUGH 11/15/08



    OTHER EVENTS


    CBAI Career Development Division Fall Meeting, Embassy Suites Hotel & Conference Center,
    East Peoria 11/13



    CBAI’s Women in Banking Conference, Crowne Plaza Hotel, Springfield 11/18 - 11/19









    CBAI
    PRODUCTS AND SERVICES



    CBAI
    INSURANCES



    CBAI
    FOUNDATION



    CBAI
    PUBLICATIONS

    800.736.2224 (IL) | 217.529.2265 | www.cbai.com

    DISCLAIMER:The association is not responsible for and has no control over the subject matter, content, information, or graphics when viewing links attached to this association's site. If you do not wish to receive e-mails from Community Bankers Association of Illinois (CBAI), 901 Community Drive, Springfield, IL 62703, through CBAI in the future, please click here. - OR - If you would like to be removed from the CBAI e-mail database, please click here.

    © 2008 Community Bankers Association of Illinois. All Rights Reserved.