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     A Bi-Weekly News Bulletin for CBAI Members                                    November 23, 2016

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Community Bankers Association of Illinois
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  • CBAI and ICBA Urge Regulatory Relief Push During Lame Duck Session
  • CBAI Thanks Congressman Hultgren for Urging Call Report Reg Relief
  • Judge Puts Overtime Pay Hike on Hold
  • ICBA Congratulates Trump, Pence on Election Victory
  • Community Bank Role in Washington Transition Makes Headlines
  • State Regulators Oppose OCC Fintech Charter
  • ICBA to DOJ: Intervene in ADA Demand Letters
  • Minneapolis Fed Releases Plan to End Too-Big-To-Fail
  • There's No Such Thing as a 'Good' Megabank
  • Investment News From THE BAKER GROUP
  • CDD Visits the Windy City for Its Fall Meeting
  • Rural Index Remains Weak in November
  • Survey: Consumers Oppose Interchange-Merchant Markup
  • Wolters Kluwer 2016 Regulatory and Risk-Management Indicator Survey
  • 275 Community Banks Offer Student Loans with ICBA and iHELP®
  • With the Holidays Right Around the Corner, Midwest Office Has Perfect Gift Solutions!
  • CBIS Nicoud: Thank You, Community Banks
  • Consumer Lending Institute Slated for November 28-30
  • Account Titling Scheduled for November 29 – December 1
  • Cybersecurity Trends/Update & IT Exam Hot Topics Set for December 8
  • Community Bank Directors’ Conference Slated for December 12


  • CBAI and ICBA Urge Regulatory Relief Push During Lame Duck Session

    With Congress back in Washington for the post-election “lame duck” session, CBAI and ICBA are calling on community bankers to urge lawmakers to advance regulatory relief. Community bankers can send a custom message to their lawmakers urging relief from mortgage-lending restrictions, call report burdens, Basel II capital rules and more. Now is the time for Congress to hear directly from community bankers on the top legislative priorities for the remainder of the 114th Congress. Contact Congress Today!

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    CBAI Thanks Congressman Hultgren for Urging Call Report Reg Relief

    CBAI thanks Illinois Congressman Randy Hultgren (R-14th) for leading a Member Letter to the banking regulators questioning their reluctance to provide meaningful Call Report regulatory relief. Congressman Hultgren reiterated the purpose of his legislation, the Community Bank Reporting Relief Act (H.R. 4500), which would require the Agencies to issue regulations allowing for a short-form call report for highly-rated and well-capitalized community banks to use for the first and third quarter. In the Member Letter, Congressman Hultgren put forth specific questions regarding the regulator's objections and concerns to implementing a short-form report. Read Member Letter.

    CBAI has been a strong proponent of Call Report regulatory relief. In an October 14th detailed comment letter, CBAI urged the regulators to provide additional Call Report regulatory relief for well-capitalized and highly-rated community banks under $10 billion in assets. This was the latest in a series of CBAI initiatives supporting Call Report relief dating back to support for an ICBA petition in August of 2014, an EGRPRA comment letter to FFIEC in September of 2014, and a comment letter to FFIEC in November of 2015. Read CBAI’s Comment Letter to the Regulators.

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    Judge Puts Overtime Pay Hike on Hold

    A federal judge yesterday blocked a new rule making millions more Americans eligible for overtime pay, indefinitely pushing back the December 1 effective date while he weighs a challenge to the requirement.

    The decision by U.S. District Judge Amos Mazzant in the Eastern District of Texas to grant a preliminary injunction affects an estimated 4.2 million workers who were to be newly eligible for time-and-a-half wages for each hour they put in beyond 40 a week. The rule, released by the Labor Department in May, would nearly double the threshold at which executive, administrative and professional employees are exempt from overtime to $47,476 from $23,660.

    Small business and other trade groups have argued the overtime rule would swell labor costs and force employers to demote managers to hourly employees, hurting morale, among other hassles. Read More.

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    ICBA Congratulates Trump, Pence on Election Victory

    ICBA congratulated president-elect Donald Trump and vice president-elect Mike Pence for their victory on election day. In a statement, ICBA President and CEO Cam Fine said the association will continue advocating regulatory relief during the remainder of the current Congress and looks forward to getting to work with the new administration and the 115th Congress.

    “ICBA and community bankers enjoy strong and positive relationships with policymakers on both sides of the aisle,” Fine said. “We invite the incoming administration and new members of Congress to review the policy proposals contained in our Plan for Prosperity. Together, we can make meaningful reforms to support local communities, job creation and economic prosperity nationwide.” Read ICBA Release.

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    The ability to batch-transfer funds efficiently and cost-effectively is an essential element in a cash management program. SHAZAM’s ACH services offers a cost-effective and efficient alternative to process transactions, such as direct deposits and government benefits, direct payments and business-to-business payments, e-checks, tax payments, child-support payments and much more. LEARN MORE about SHAZAM ACH and the benefits of membership today!



    Community Bank Role in Washington Transition Makes Headlines

    The impact of the new presidential administration and incoming Congress on community banks is making news this week, with industry advocates continuing the push for regulatory relief.

    The New York Times reported that the 2016 elections position the community banking industry to advance regulatory relief. Quoting community bankers Rusty Cloutier, Tim Zimmerman and Scott McComb, the article notes that the industry’s push to reform the Consumer Financial Protection Bureau and roll back Durbin Amendment price controls on debit card interchange fees will gain new life in 2017.

    A separate Morning Consult article cites ICBA’s support for raising the $50 billion asset threshold determining which banks are deemed systemically important financial institutions. In the article, ICBA’s Paul Merski notes there is bipartisan support for an increase, which is a provision in ICBA’s Plan for Prosperity regulatory relief platform which CBAI supports. Read NY Times Article. See Morning Consult Article.

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    State Regulators Oppose OCC Fintech Charter

    Citing a lack of statutory authority, a history of preempting state consumer protection laws, and an approach that would distort the marketplace, the Conference of State Bank Supervisors (CSBS) urged the Office of the Comptroller of the Currency (OCC) not to issue a federal charter for fintech firms. In a comment letter, CSBS opposed the OCC’s proposed rulemaking on receiverships for uninsured national banks, interpreting it as a preliminary step toward issuing a formal federal fintech charter.

    On behalf of financial regulators in all states and U.S. territories, John Ryan, CSBS president, said, “Rather than adapting our financial system to the possibilities enabled by technology, the OCC would put a stop sign on innovation through a regulatory regime that favors the entrenched over the emerging, circumvents consumer protection, and weakens the dual banking system.”

    Among the key points CSBS makes in its comment letter:

    • OCC actions would likely distort the marketplace. A federal fintech charter would centralize authority for perhaps all non-depository activities within a single regulator. Inevitability, the rules of that regulator would benefit some to the exclusion of others, possibly create the conditions for regulatory capture, and stifle innovation among smaller, less established players.
    • OCC has a history of preempting state consumer protection laws. During the early 2000s, the OCC preempted state attempts to crack down on predatory lending. The U.S. financial and mortgage crises followed.
    • OCC lacks statutory authority. The OCC exceeds its mandate by claiming authority to create a charter for fintech firms that only perform non-depository functions, such as lending or paying checks.
    • State regulation enables innovators. States support innovation through a choice in regulatory regimes and “a state-based licensing structure (which) benefits financial service providers by precluding large, entrenched incumbents from capturing the licensing process to exclude new, innovative entrants.”
    Read CSBS Release and Comment Letter.

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    ICBA to DOJ: Intervene in ADA Demand Letters

    ICBA has asked the Department of Justice to intervene against demand letters that are being sent to community banks and their small business customers by plaintiffs’ law firms alleging non-compliance with Title III of the Americans with Disabilities Act website accessibility standards. The ICBA told the DOJ that the absence of a final rule exposes community banks and other small businesses to litigation threats, and forces these businesses into complying with a provisional standard that could be substantially modified when the DOJ issues a final rule. ICBA recently issued guidance for community banks, which offers practical advice on how to respond to plaintiffs’ demand letters. Read Guidance.

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    Minneapolis Fed Releases Plan to End Too-Big-To-Fail

    Federal Reserve Bank of Minneapolis President Neel Kashkari last week announced the release of the Minneapolis Plan to End Too Big to Fail, a policy solution that he indicated will enable the U.S. economy to flourish without exposing it to large risks of financial crises and without requiring taxpayer bailouts.

    CBAI and ICBA have long advocated resolving too-big-to-fail, a terrible double standard whereby failed mega banks are saved by taxpayers and government guarantees while troubled community banks are summarily closed. As a result, both CBAI and ICBA appreciate the efforts of President Kashkari and his staff for preparing a plan for resolution.

    In a release last week, the ICBA made the following statement: “ICBA commends the Federal Reserve Bank of Minneapolis for its important work and analysis on the matter of systemic risk and ending too-big-to-fail. ICBA generally supports enhanced prudential standards and higher capital requirements for the largest banks as well as further regulatory requirements on the shadow banks to reduce the systemic risk they pose to our financial system and economy. ICBA also commends the Minneapolis Fed for its recognition that reducing unnecessary regulatory burdens on community banks is essential to promoting a stronger, safer and more secure financial system. We look forward to continuing to work with the Minneapolis Fed and others to advance policies that mitigate community bank overregulation and systemic risks to our financial system.” Read ICBA Release. See Minneapolis Fed Release.

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    There's No Such Thing as a 'Good' Megabank

    Law Professor Art Wilmarth Provides Reminder of What’s at Stake with TBTF Mega Banks

    A well-known and highly-respected professor of banking law, Art Wilmarth of George Washington University School of Law, recently penned a must-read article which provides an important reminder that giant financial conglomerates were at the epicenter of the global financial crisis.

    He notes that despite the unprecedented bailouts of megabanks during the crisis, supporters of financial giants continue to propagate the myth of the "good" megabank. The scandals at JPMC, Deutsche Bank and Wells Fargo confirm that global megabanks are not just too big to fail but also too big to manage or regulate effectively. Unfathomable size and complexity are only two of the fatal flaws of megabanks.

    He emphasizes that the business model for global megabanks has repeatedly failed and should be abandoned before it leads us into the next financial crisis. That business model allows megabanks to finance their speculative activities in the capital markets by exploiting explicit and implicit federal safety net subsidies. To expect managers and regulators to produce "good" megabanks is to ignore the lessons of history and fundamental laws of human nature. Wilmarth is a long-time advocate of the dual regulatory system, community banking, and a cherished friend of CBAI. Read More.

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    Investment News From THE BAKER GROUP

    Baker Market Update

    For those expecting a post-election respite, the time since November 8th has been anything but. And not just here. Recently, the Bank of Mexico raised its overnight lending rate by fifty basis points to 5.25%, and thus became the first major Central Bank to raise rates since the American election. See Baker Market Update.

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    CDD Visits the Windy City for Its Fall Meeting

    The Career Development Division (CDD) of CBAI held its Fall Meeting in Chicago on November 3-4, 2016. The meeting was sponsored by the Federal Home Loan Bank of Chicago and was held at the Mid-America Club on the 80th floor of the Aon Center. The Fall Meeting included speakers on many interesting topics and the business meeting seated the new CDD leadership team. Read Article.

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    Rural Index Remains Weak in November

    Creighton University’s index of the rural economy rose slightly in November but remained well below growth-neutral for the 15th consecutive month. The Rural MainstreetIndex rose to 36.6 from 31.8 in October as farm commodity prices remain low. On average, surveyed bankers said they expect one in five livestock producers to experience cash expenses greater than cash revenues in 2016. See Index Release.

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    Survey: Consumers Oppose Interchange-Merchant Markup

    More than six in 10 consumers think Durbin Amendment price controls on debit-card interchange fees should be repealed if merchants aren’t passing on the savings to customers, according to survey data released by the Electronic Payments Coalition. By a two-to-one margin, consumers said they think interchange fees should be negotiated by merchants and processors, not set by the federal government.

    The EPC, of which ICBA is a member, said retailers have pocketed $36 billion from the interchange price controls to pad their bottom lines. A recent Independent Banker article spotlights ICBA’s work as the coalition’s sole community-banking representative.

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    Wolters Kluwer 2016 Regulatory and Risk-Management Indicator Survey

    Encouraging strides in financial-institutions capabilities, confidence is offset by continued risk and compliance challenges

    Wolters Kluwer announced the results of its annual Regulatory and Risk Management Indicator survey of U.S. financial institutions, showing that regulatory compliance and risk-management concerns have collectively dropped for the first time in the survey’s four years, despite rising regulatory pressures. While the overall Indicator score remained unchanged from 2015, lower scores were tallied in indices measuring concerns in organizations’ ability to track regulatory changes, comply with regulatory requirements, and report on compliance to regulators. Risk-management concerns also dropped from previous Indicator surveys.

    The Indicator was conducted nationwide Sept. 9-22, 2016 and generated a record 846 responses this year, up from 539 responses in 2015. See Results.

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    275 Community Banks Offer Student Loans with ICBA and iHELP®

    The Independent Community Bankers of America® (ICBA) and iHELP announced that 275 ICBA community bank members have committed to helping young adults meet the challenges of funding a higher education through the iHELP private student loan program, which helps students bridge the gap between scholarships, federal loans, and the final cost of tuition. So far, community banks have provided $92 million in private student loans. (NOTE: iHELP is also a preferred service provider of CBAI).

    The iHELP private student-loan program is designed specifically for community banks, which have identified a need for higher education funding based on the needs of their customers and local community. iHELP® is an end to end private student loan solution which provides exceptional personalized service for the bank’s customers along with full lender support to ensure all compliance and regulations are followed without the need for additional bank staffing.

    To learn more about the program or get to started providing another great service to your customers call Spencer Aberle at 800/645-1608.

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    With the Holidays Right Around the Corner, Midwest Office Has Perfect Gift Solutions!

    Executive gifts attract and maintain customers and build brand image, recognition and loyalty. Midwest Office can help you achieve all these things while maintaining your budget, brand name and consistency. Midwest is a preferred service provider of CBSC. See Midwest Office November Specials.

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    CBIS Nicoud: Thank You, Community Banks

    As we prepare to take a couple of well-earned days to relax and enjoy our families and loved ones, we at CBIS/Nicoud would like to extend our genuine gratitude for our community-bank partners throughout the state.

    What a phenomenal and uniquely American holiday Thanksgiving is. Consider for a second the powerful concept behind the day: as a country, we effectively stop all commerce and travel from sometimes far reaches to gather with parents, siblings and friends to break bread and participate in the conscious activity of itemizing and giving thanks for life’s gifts. Kind of remarkable, when you think about it. Read More.

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    Consumer Lending Institute Slated for November 28-30

    Sound credit decisions by community-bank lenders require a high degree of perception and skill. To reach this level of sophistication, your lending personnel must constantly rethink existing approaches, research new ideas, and update their knowledge. To provide your community bank with guidance and training, CBAI has developed the “Consumer Lending Institute.” This educational program provides essential knowledge and skills to your lending professionals and establishes a network of lenders for continued support by sharing experiences with lending professionals. Topics covered include lending compliance, introduction to consumer lending, taking the loan application and interviewing, investigating the application, risk analysis, lending to self-employed borrowers, business development, loan documentation, and collections and bankruptcy. Leading this institute is David Kemp, president of Bankers Management, Inc., College Park, GA, a nationally recognized company in financial services training and bank consulting. Tim Tedrick, CRCM, CRP, and executive officer at Wipfli LLP in Sterling, Illinois, also presents at this institute.

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    Account Titling Scheduled for November 29 – December 1

    This seminar is designed for new account representatives, tellers, and head tellers who need to understand the various types of account ownerships that exist – from single account owners through corporations. Learn what the different ownership types represent and how to make sure you are opening the proper type of account for your customer. In addition, the seminar covers Customer Identification Program requirements and FDIC Insurance, as well as stop payments, forgeries, and tips on spotting and stopping a check-kiting operation. Leading the seminar is Bryan Fetty, who brings more than 26 years of banking experience to Young & Associates, Inc., Kent, OH. A former vice president of a mid-sized community bank, Fetty's primary expertise is on the operations side.

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    Cybersecurity Trends/Update & IT Exam Hot Topics Set for December 8

    FFIEC and other interagency guidance relating to cybersecurity awareness is the focus for upcoming IT examinations. This program is in response to the growing threat vector for cybercrime. We have evolved from worms, viruses, spyware, and botnets to more targeted cyber espionage involving advanced persistent threats, dynamic Trojans, and stealth botnets. Attacks have become blended, involving combinations of physical, technical, and social-engineering techniques. Know what your financial institution should be doing to mitigate cyber threats and meet regulatory expectations. Mark Scholl, partner for Wipfli LLP, leads this program. He specializes in all aspects of information-security services including information-system security auditing and Internet intrusion-testing services. Scholl has 27 years of technology experience with the last 19 years providing consulting services such as network design and installation, information systems support, IT auditing, perimeter-intrusion testing, IT training and many other information-security services.

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    Community Bank Directors’ Conference Slated for December 12

    Being a member of a community bank's board of directors is a challenging and rewarding experience. The community bank director has duties to the institution, its stockholders, and its depositors. And, he or she has responsibilities to the public-at-large. To meet these duties and responsibilities, a director must be knowledgeable and active. So, please join us at CBAI's Annual Directors' Conference. CBAI gathered top banking experts to make this comprehensive, one-day conference a must-attend. Dale Sheller from THE BAKER GROUP discusses investments; Paul Cornell of Premier Consulting Partners examines shareholder succession; Patrick Dix of SHAZAM Network shares tactics on helping directors leverage the media; Robert Purdy with BKD, LLP, focuses on risk management; and Kraig Lounsberry and David Schroeder of the CBAI governmental relations staff provide a legislative and regulation update.

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