Community Bankers Association of Illinois
Community Bankers Association of Illinois    Community Bankers Association of Illinois CBAI E-Newsletter Sponsor - SHAZAM
     A Bi-Weekly News Bulletin for CBAI Members                         November 2, 2011 Graphic
Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois

  • CBAI ACTION ALERT - Oppose HUD's Efforts to Approve FCA Lenders for FHA Mortgage Programs
  • Committee Advances ICBA-Backed Reg-Relief Bills
  • CBAI and ICBA Urge Members to “Go Local!”
  • Hoenig Hailed as Great Choice for FDIC Vice Chairman
  • ICBA Efforts Help Derail Cuts to Rural Development Program
  • Taking the Economic Temperature
  • How the Eurocrisis Will Impact the U.S.
  • Sheila Bair Offers Advice on Eurozone Crisis
  • FOMC Keeps Benchmark Rate Steady
  • Baker Market Update
  • Mock Resolution Panel Can’t Resolve Too-Big-to-Fail
  • Periodically Evaluate Your D&O Coverage and Carrier
  • Federal Regulators to Host Community Bankers Symposium
  • OCC Booklet on Revised Examination Procedures Available
  • Chicago Fed Ag Conference Examines Rising Farmland Values
  • Reminder about Weather-Related Emergency Closings
  • Fed Announces Fee Schedules Effective January, 2012
  • Essential Functions of Human Resources Set for November 7 & 8
  • Women in Community Banking Conference Scheduled for November 15 & 16
  • Safe-Deposit Fundamentals Set for November 29 – December 1
  • Consumer Credit Reports and Scores on November 29 – December 1

  • CBAI ACTION ALERT - Oppose HUD's Efforts to Approve FCA Lenders for FHA Mortgage Programs

    The Department of Housing and Urban Development (HUD) is proposing a rule to enable Farm Credit System (FCS) lenders to participate in the Federal Housing Administration (FHA) mortgage insurance programs. HUD is proposing this rule even though they have recently required costly and unnecessary control and compliance audits for community banks that have forced many community banks to leave the program. CBAI believes this rule would undermine community banks serving rural communities at the expense of tax-payer subsidized FCS lenders and should be withdrawn. CBAI has written a
    comment to HUD on this issue, but we are also urging community banks to comment on the proposed rule.

    Please click here to register your opposition to this misguided proposed rule.

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    Committee Advances ICBA-Backed Reg-Relief Bills

    House Financial Services Committee advanced ICBA-advocated legislation to help small businesses access capital and to reduce regulatory burdens on community banks. The panel marked up H.R. 1965, sponsored by Reps. Jim Himes (D-Conn.) and Steve Womack (R-Ark.), which would raise the Securities and Exchange Commission shareholder registration threshold for banks and bank holding companies from 500 shareholders to 2,000. The committee also passed H.R. 2167, introduced by Rep. David Schweikert (R-Ariz.), which would raise the threshold to 1,000 for all companies and would not count “accredited investors” against the threshold. In a letter to the committee, ICBA expressed its strong support for the measures. The association also supports S. 556, which is sponsored by Sens. Kay Bailey Hutchison (R-Texas) and Mark Pryor (D-Ark.) and is similar to the Himes/Womack bill. These reforms and other regulatory-relief measures are included in the ICBA-advocated Communities First Act (H.R. 1697/S. 1600), which is gaining bipartisan support. ICBA urges community bankers to use custom resources on CBConnect to press their members of Congress to support the legislation.

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    CBAI and ICBA Urge Members to “Go Local!”

    Join community banks nationwide with the “Go Local” campaign to urge consumers to switch their accounts from the mega-banks to community banks and show them the reasons why. CBAI has prepared a customizable sample letter to the editor, newspaper or statement stuffer artwork, and a sample poster that you can order for your bank. If you would like to order posters, please contact the CBAI Department of Communications at Sample Letter to the Editor. Newspaper Ads. Poster.

    ICBA has also developed new custom resources on its “Go Local” website and posted sample tweets and Facebook updates to help community bankers participate in ICBA’s nationwide “Go Local” campaign. CBAI members can also use the sample social media messages, located on ICBA’s “Go Local” webpage, to draw attention to the benefits of community banks. The “Go Local” campaign already has attracted media buzz, especially with the social media–based “Bank Transfer Day” scheduled for this Saturday. Following a series of media reports on the campaign that linked to ICBA’s Community Bank Locator, traffic to the site has more than doubled in the past month.

    Many community bankers have used the customizable “Go Local” press releases, and both CBAI and ICBA encourage to participate in this successful consumer campaign.

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    Hoenig Hailed as Great Choice for FDIC Vice Chairman

    Former President of the Kansas City Federal Reserve Bank Tom Hoenig has been widely praised as an excellent candidate to serve as FDIC Vice Chairman by various advocates of community banking including the ICBA and CBAI. President Obama recently nominated Hoenig for the FDIC position. Now well-known economist Simon Johnson has also expressed his support for Hoenig as a strong voice for financial reform including resolution of the too-big-to-fail issue.
    See Baseline Scenario Article.

    Of course the mega banks on Wall Street are not supportive of Mr. Hoenig’s positions on financial reform and would rather maintain the status quo or loosen new restrictions as evidenced by a recent front cover of The New Yorker magazine (see below).

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    ICBA Efforts Help Derail Cuts to Rural Development Program

    The Senate defeated an amendment offered to the fiscal 2012 agricultural appropriations bill (H.R. 2112) that would have cut rural development programs by 40 percent, or $1 billion. The amendment lost on an 85-13 vote. ICBA urged senators to vote “no” on the amendment and noted that the cuts could threaten thousands of rural jobs. ICBA also noted that guaranteed loan programs are an efficient use of government funds that leverage private-sector financing by community banks.
    Read ICBA Letter.

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    Taking the Economic Temperature

    Rural Mainstreet Index Rises Slightly

    The Rural Mainstreet Index rose in October above 50.0 for a second straight month according to a monthly survey of bank CEOs in a 10-state region of the Midwest. The results were indicative of anemic growth, according to Creighton University economist Ernie Goss. For more economic details,
    See Survey Results.

    Midwest Growth Slowed in September

    The Midwest Economy Index (MEI) was –0.35 in September, down from –0.24 in August. See Release.

    U of I September Economic Review Shows Stagnant Jobs Growth

    According to the September Illinois Economic Review, compiled by IGPA Economist Geoffrey Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois at Urbana-Champaign:

      • Illinois added 3,100 jobs in Aug 2011 at a rate of 0.05%, compared with a revised 20,600 job loss in July 2011; the three-month moving average of jobs, a more stable measure of labor market, was down by 8,300 jobs per month.
      • The nation remained unchanged in jobs, compared with a revised 85,000 job gain in July.
      • Since the beginning of the recession in December 2007, Illinois has posted negative job changes 29 times and positive job gains 15 times; Illinois now has a net loss of 325,100 jobs since then.
      • Since January 2010, when Illinois employment growth resumed after the national recession, Illinois has added 79,600 new jobs.
      • The 12-month-ahead job recovery forecasts show that the recovery will slow down through July 2012.
      • The shadow unemployment rates for Illinois, RMW and the Nation were 12.7%, 14.3% and 12.6%, compared to official unemployment rates of 9.9%, 9.1% and 9.1%. Compared to last month, Illinois’ unemployment rate increased by 0.4%. This is the highest official unemployment for Illinois since September 2010.
    See Full Report.

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    How the Eurocrisis Will Impact the U.S.

    The daunting debt crisis in Europe will also likely have a major impact on the U.S. government and U.S. mega banks. The Federal Reserve has already engaged in currency swaps with the European Central Bank to support the dollar needs of European Union banks. However, as a former vice president of the Federal Reserve Bank of Dallas points out, the Fed has a serious counterparty risk, and losses on the Fed’s balance sheet would hit the U.S. taxpayer. Large U.S. banks are exposed to EU banks through funding operations, issuance of credit default swaps, and unknown exposure in derivative markets. In addition, the International Monetary Fund will likely be involved in the event of further bailouts and need significant funding from its members, which means the U.S. taxpayers.
    See Wall Street Journal Article.

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    Sheila Bair Offers Advice on Eurozone Crisis

    Former FDIC Chairman Sheila Bair blames the European sovereign debt crisis on an all-too familiar source – excessive risk-taking and leverage in the banking sector. She urged European regulators to set higher capital standards for their banks.
    See Fortune Article.

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    FOMC Keeps Benchmark Rate Steady

    The Federal Open Market Committee (FOMC) today voted to keep the benchmark interest rate near zero where it has been since December of 2008. The Committee concluded that economic growth strengthened somewhat during the third quarter but that there remain significant downside risks.

    Economists in a Bloomberg News survey predicted that the Fed will eventually initiate another round of “quantitative easing” by purchasing more U.S. government debt instruments. Since December of 2008 the Fed has bought $2.3 trillion in debt.
    See Bloomberg Article. See FOMC Release. See Economic Projections Chart.

    Baker Market Update

    Initial reaction to the EU summit regarding avoiding a Greek default sent U.S. stocks up about three percent. The annualized GDP jumped from 1.3% in !2 to 2.5% in Q3.
    Read More.

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    Mock Resolution Panel Can’t Resolve Too-Big-to-Fail

    At a recent conference sponsored by The Economist, a mock resolution panel that included former Treasury Secretary Larry Summers, former Comptroller John Dugan, and former Minneapolis Fed President Donald Kohn, attempted to resolve a mega bank failure using the new authorities of the Wall Street Reform Act. Unfortunately, there was ultimately no agreement as to whether regulators, even with the new rules, could do a better job of averting a financial crisis than in 2008.
    See Yahoo Article.

    CBAI continues to call on Congress to address too-big-to-fail by restoring the separation between commercial and investment banking, requiring establishment of a special systemic risk fund borne solely by the mega banks, restricting acquisitions based on size, and developing procedures for the orderly break up of troubled mega banks.

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    Periodically Evaluate Your D&O Coverage and Carrier

    Given the harsh regulatory examination environment today, it is especially important for community bank board members to review their D&O liability insurance policy for adequacy of coverage and the financial condition of the carrier. Community bank boards of directors should hone in, first and foremost, on the credibility and financial integrity of the carrier. As we have learned from the mortgage melt-down, rating agencies don’t always render accurate assessments of financial health. Sometimes it pays to dig a little deeper. The chart in the attached article compares the financial performance of the five largest bank D&O carriers in the country.
    See Complete Article.

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    Federal Regulators to Host Community Bankers Symposium

    On Friday, November 18, 2011, a Community Bankers Symposium will be held in Chicago and feature presentations on current banking developments and key supervision issues. The annual event this year is co-sponsored by the FRB, FDIC, and OCC. For more information and to register, please
    click here.

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    OCC Booklet on Revised Examination Procedures Available

    The Comptroller of the Currency (OCC) is issuing a
    new booklet entitled "Electronic Fund Transfer Act–Regulation E" in the Comptroller's Handbook. This booklet updates examination procedures and incorporates recent changes the Federal Reserve made to Regulation E regarding overdraft services, gift cards, and electronic signatures.

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    Chicago Fed Ag Conference Examines Rising Farmland Values

    During a day-long conference hosted by the Federal Reserve Bank of Chicago titled “Rising Farmland Values: Causes and Cautions,” experts from academia, industry, and policy institutions will present research on the causes of the rapid increase in agricultural land values and cash rents, as well as how the two interrelate. The goals of the conference include analyzing demographic and geographical characteristics of Midwest farmland ownership, understanding the dynamics of farmland valuations, assessing the risks facing agriculture and the banking industry from rising farmland values, and discussing policy implications for agricultural lending stemming from current farmland trends.

    Speakers include:
    • Keynote speaker, Mark Pearson, Host, “Market-to-Market,” Iowa Public Television.
    • Mitch Morehart, Senior Agricultural Economist, U.S. Department of Agriculture.
    • Mike Duffy, Professor of Economics and Director of the Beginning Farmer Center, Iowa State University.
    • Perry Vieth, President, Ceres Partners.
    • Leland A. Strom, Chairman and Chief Executive Officer, Farm Credit Administration.
    • Kim D. Greenland, Market President, Great Western Bank.
    • Brent Gloy, Associate Professor, Purdue University.
    • Bruce J. Sherrick, Professor, University of Illinois at Urbana-Champaign.

    The conference will be held November 15, 2011, from 8 a.m. to 4:00 p.m. at The Federal Reserve Bank of Chicago, 230 S. LaSalle St., Chicago, in the Third Floor Conference Center. For a complete agenda, or to register,
    click here.

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    Reminder about Weather-Related Emergency Closings

    Recent snowstorms and resulting power outages elsewhere in the United States offer a timely opportunity to remind Illinois community banks about the procedures to follow when temporarily closing a main office or branch due to emergency conditions.
    Read More.

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    Fed Announces Fee Schedules Effective January, 2012

    This week the Federal Reserve announced fee schedules for payment services the Federal Reserve Banks provide to depository institutions. The current earnings credit rate on clearing balances was also maintained.
    See FRB Release.

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    Essential Functions of Human Resources Set for November 7 & 8

    "Human Resources Review: Understanding the Essential Functions of HR" in two locations is a
    human-resource review and an opportunity to conduct an in-depth analysis of current human-resource practices. The review helps answer the question, “Are your human-resource practices helping, hindering, or having little impact on what your organization is trying to accomplish?” An effective human-resource-management function serves as an integral business partner and assists in the management of the bank's most important asset – its people. In this program, the educator presents and discusses a systematic approach to evaluating the strengths and weaknesses of the human-resource function as well as developing comprehensive action plans. Leading this seminar is Julia Johnson, a senior manager of human-resource consulting at WIPFLi LLP, Green Bay, WI.

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    Women in Community Banking Conference Scheduled for November 15 & 16

    CBAI is pleased to offer the fifth annual
    “Women in Community Banking Conference” at the Hilton Hotel in Springfield. The “Women in Community Banking Conference” begins with an evening social on Tuesday, November 15, and a full-day conference is scheduled for Wednesday, November 16. The 2011 Women in Banking Conference is designed for women community bankers at all levels of expertise who wish to develop their skills and grow within the banking profession. A mini-exposition featuring the latest products and services also highlights the conference. Topics covered include “Finding Your Mojo: Living in Abundance, Balance, and Creativity” and “Staying Calm Amid the Tempests of Change” with Theresa Rose, motivational speaker and award-winning author, Minneapolis, MN; “Social Media as a Sales Tool: What You Really Need To Know” with Tammy Finch, owner of Web Tech Services, East Peoria, IL; “Consumer Financial Protection Bureau (CFPB): Its Genesis, Mission, Structure, and Priorities,” with Elizabeth Vale, senior policy advisor and team lead of CFPB’s small financial services providers division, Washington, D.C.; and “Solving People and Business Problems” with Julia Johnson, senior manager of human resources with WIPFLi LLP, Green Bay, WI. CBAI Chairman Mary Sulser, Buena Vista National Bank, Chester, also shares her experiences as a woman in community banking.

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    Safe-Deposit Fundamentals Set for November 29 – December 1

    CBAI will offer
    “Safe-Deposit Fundamentals, Compliance, Legal & Security Issues” in three locations statewide. Are your internal safe-deposit procedures in compliance with all state, federal, and security regulations? Do you follow correct day-to-day operating procedures? This timely and comprehensive presentation contains important information about “Most-Frequently-Asked” operations and compliance questions. It covers the USA Patriot Act, Suspicious Activity Reporting, Bank Protection Act, OCC, FDIC, NCUA, and ADA regulatory requirements, plus recommended procedures for renting, surrendering, box access, key control, deceased renters, living trusts, payable-on-death accounts, delinquent boxes, record retention, unclaimed property, and many other legal and operation issues. David McGuinn, a nationally-known expert in the area of safe deposit, provides clear and concise answers to complicated questions regarding your institution's responsibility and potential liability. He also identifies and discusses various compliance issues and provides current examples relating to each regulatory, operations, and security topic. McGuinn, president and founder of Safe Deposit Specialists, is a former banker with more than 40 years of safe deposit experience.

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    Consumer Credit Reports and Scores on November 29 – December 1

    CBAI is pleased to offer
    “Consumer Credit Reports and Credit Scores” in three locations. This one-half day seminar addresses two key topics. The first topic deals with and discusses credit reports, what they are, what is in them, and what is not included in the reports. It also looks at how the bureaus sort, store, and retrieve data. It reviews what information is really needed to get a complete report, how to pull a report correctly, how to get the correct information, how to pull the report without damaging the consumers' credit files, and how to read a credit report. Lastly, it reviews the different types of inquiries that do not count against the consumers' score. The second key topic is credit scores. It provides a brief history of credit scores. It examines the different models offered by Fair Isaac, Experian, TU, and Equifax. The session then reviews how each bureau changed the scoring when they bought the program from FICO and how they are the same. Samples of actual files and their scores or lack of scores is also provided. Finally, this course shows how to explain scores and help customers correct and increase their scores. Leading this seminar is Larry Nelson, owner of Kewanee Credit Bureau (KCB).

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