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 22, 2008 Graphic
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Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois


  • Current Information on Treasury Capital Purchase Program
  • Agencies Announce Capital Impact of GSE Preferred Stock
  • FDIC Issues Details on Guarantee Opt-outs and Coverage Limits
  • ICBA Responds to Interagency Guidance on Fannie and Freddie Losses
  • Bernanke Says Too-Big-To-Fail a Problem; Praises Community Banks
  • Too Small to Fail – The Beauty of Community Banking
  • ICBA Leaders Meet with President Bush and Secretary Paulson
  • President Bush Praises Community Banks
  • Prosecutors Investigate Role of Credit-Default Swaps in Crisis
  • Federal Reserve and Bush Administration Consider New Stimulus Plan
  • Baker Market Update
  • Mortgage Rates Spike
  • Leading Indicators Rise in September
  • Experts Believe Recession Could Be Deep
  • McCain vs. Obama Comparison
  • Progress Report on Farm Bill Implementation
  • Legislation and Regulation Initiatives Welcomed
  • Consumer Lending Institute
  • Basic Bank Secrecy Act Institute
  • CDD Fall Meeting
  • Are All of Your Bank Officers Fully Informed?


  • Current Information on Treasury Capital Purchase Program

    The federal agencies
    encouraged all eligible institutions to use the capital purchase program to build capital and enhance market liquidity. The Treasury Department on October 20 provided details regarding the process for banks to apply for funding. Secretary Paulson also issued a statement on the capital purchase program and indicated that banks of all sizes have expressed interest.

    ICBA has prepared a summary of the treasury capital program, and applications are now available. Meanwhile, Hinshaw & Culbertson, a CBAI associate member law firm specializing in banking law, has issued a special alert on the compensation rules for participants in the program.

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    Agencies Announce Capital Impact of GSE Preferred Stock

    The federal banking agencies
    announced last Friday that they will allow banks, bank holding companies, and thrifts to recognize the effect of the tax changes in their third quarter 2008 regulatory capital calculations. Freddie and Fannie preferred stock losses can now be taken as ordinary losses for federal income tax purposes.

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    FDIC Issues Details on Guarantee Opt-outs and Coverage Limits

    The FDIC released a
    frequently asked questions document on its Temporary Liquidity Guarantee Program and has prepared basic information on the recently revised coverage limits for public consumption.

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    ICBA Responds to Interagency Guidance on Fannie and Freddie Losses

    ICBA issued a
    statement on the announcement that implements fair tax treatment for losses on Fannie and Freddie preferred shares. Banks may now recognize the effect of the tax change in their third quarter capital calculations.

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    Bernanke Says Too-Big-To-Fail a Problem; Praises Community Banks

    Last week Fed Chairman Ben Bernanke
    told the Economic Club of New York that the nation is grappling with a “very serious, too-big-to-fail problem” that is “important to address as we go forward.” He also noted that community banks are important to our nation. CBAI and ICBA believe that institutions that are too-big-to-fail should be made smaller. Back to top

    Too Small to Fail – The Beauty of Community Banking

    The following
    article appeared on October 21 in the USA Today. It articulates the virtues of community banking in contrast to the flamboyant risk-taking of the large commercial and investment banks.

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    ICBA Leaders Meet with President Bush and Secretary Paulson

    Last Friday, October 17, ICBA leaders met with the President to discuss the Treasury’s latest stabilization initiatives. They later met privately with Treasury Secretary Paulson to discuss the role of community banks and to express support for the Treasury’s voluntary plan to purchase financial institutions’ preferred stock.
    More information.

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    President Bush Praises Community Banks

    Thanks to a private session last Friday at the White House between President Bush and ICBA leaders, the President this Monday publicly praised community banks after attending a Roundtable Meeting on the Economy in Alexandria, Louisiana. The President said, “I think the people in Alexandria need to know that community banks are strong, and they’ve got good capital ratios, and they’re healthy. One of the things that I have heard around the table… is that regional banks and the community banks, which… are such an important part of many communities, and provide such stability for the country’s financial system, their worried about being labeled with the same broad brush as some of the big banks that have had economic difficulties.”

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    Prosecutors Investigate Role of Credit-Default Swaps in Crisis

    New York state and federal prosecutors are trying to determine if there was manipulation in the largely unregulated market for credit-default swaps (CDS) to drive down the price of financial shares. The CDS market involves guarantees bought by bond investors to protect against defaults.
    See article.

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    Federal Reserve and Bush Administration Consider New Stimulus Plan

    Fed Chairman Ben Bernanke
    told Congress that it should consider passing a new stimulus plan to jump-start the economy. He said the economy needs additional help to avoid a protracted slowdown.

    President Bush said he is open to the idea of another stimulus plan.

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    Baker Market Update

    Last week, the Federal Reserve helped orchestrate another substantial injection of funds with other central banks to provide liquidity to the interbank lending market. This injection caused the 3-month Libor rate to fall about 40 basis points to 4.42%, indicating a loosening of bank-to-bank lending activity. Headline wholesale prices fell 0.4% in September; crude oil dropped nearly 13% for the month; core wholesale prices increased at a 0.4% rate; and retail prices remained flat in September, while core prices rose just 0.1%. To learn more,
    click here.

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    Mortgage Rates Spike

    Mortgage rates experienced the largest weekly increase since April of 1987 as the 30-year fixed-rate mortgage hit 6.46% last week, up from 5.94% the previous week. More details from
    CNN Money and Freddie Mac.

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    Leading Indicators Rise in September

    The economy’s health improved in September for the first time in five months, according to the Conference Board, a New York-based private research group. Its monthly forecast of future economic activity rose 0.3 percent. Experts conclude, however, that the trend is still downward, and the index will decline in October. See articles
    One and Two.

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    Experts Believe Recession Could Be Deep

    Many economists, including former Fed Chairman Paul Volcker, have
    concluded that the U.S. will likely experience a severe and prolonged recession. The current slump began with the collapse of the housing market that was followed by sharp restrictions on credit.

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    McCain vs. Obama Comparison

    The 2008 Presidential election is rapidly approaching. In response to requests from several of our members, CBAI has prepared a
    comparison of the current positions of Senators McCain and Obama on economic issues.

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    Progress Report on Farm Bill Implementation

    Since enactment of the Farm Bill in June, 2008, the USDA has begun delivering program benefits. For more information about the Farm Bill’s 15 titles and 600 provisions,
    click here.

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    Legislation and Regulation Initiatives Welcomed

    CBAI’s Legislation and Regulation Committee is meeting November 18 to discuss and propose a legislative agenda to pursue during the 2009 legislative session of the Illinois General Assembly. As always, the CBAI Department of Governmental Relations is soliciting your ideas. Since 1988 our remarkable success in initiating over 50 bills 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.

    The Legislation and Regulation Committee, now more than ever, plays a vital role to ensure the wellbeing of community banking in Illinois. If you have any recommendations for legislation, please contact Kraig Lounsberry at (800) 736-2224 or
    kraigl@cbai.com. Each and every suggestion for legislation will be considered by the Committee. Your participation is what makes CBAI a great organization!

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    Consumer Lending Institute

    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.

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    Basic Bank Secrecy Act Institute

    This one and one-half day program, led by Bryan Bradley of Young & Associates, Inc., Kent, OH, provides a thorough grounding in the basics of the BSA for those that are just beginning to work with this regulation. The course assumes that the attendee has a limited knowledge of BSA requirements, and focuses on BSA basics. Attendees leave the program with a basic understanding of the four pillars of an effective BSA compliance program, as well as an understanding of all appropriate reporting standards for the program. For more details and a registration form,
    click here.

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    CDD Fall Meeting

    The CDD Annual Fall Meeting is geared toward honing professional and banking skills, as well as providing an opportunity for networking. The Fall Meeting begins with the popular Networking Session where bankers have an opportunity to engage in a roundtable discussion with other bankers sharing their job responsibilities. This is followed by a general session by Charles Williams entitled, "Turning Lemons into Lemonade: How to Make Our Economy Work for Your Bank." Following the Business Meeting Luncheon, a representative of the FDIC conducts a session to answer important questions on FDIC Deposit Insurance Coverage. The afternoon agenda also features three breakout sessions: "The Examiners are Coming and I Feel Good About My Loan Review and ALLL Process;" "ACH Origination and the Risks Your Bank Should Consider;" and "Don't Panic!" The Fall Meeting concludes with a general session by Charles Williams entitled, "Always Leave' em Laughing!” For more details and a registration form,
    click here.

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    Are All of Your Bank Officers Fully Informed?

    Your officers, both in the main bank and branch offices, make crucial operations decisions daily. Are they as well informed as they should be? CBAI continually provides materials that can help these individuals keep up with current issues, regulations and trends in banking today. Additionally, CBAI educational offerings, public relations programs and group discount opportunities help all of your officers to be more efficient, knowledgeable and effective. The CBAI Add-An-Officer Subscription Program allows designated officers in your operation to receive important data from CBAI that will enable them to become better informed. For more information and a registration form,
    click here.

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