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 30, 2011 Graphic
Community Bankers Association of Illinois
Community Bankers Association of Illinois Community Bankers Association of Illinois

  • CBAI Commentary: Exemptions for Community Banks are Essential
  • Secret Fed Loans to Failing Mega Banks Revealed
  • Court Rejects Citigroup/SEC Settlement
  • CBAI Encourages Members to Complete ICBA Overdraft Survey
  • 2012 CBAI Washington Visitation Dates Set
  • CBAI's Ohlendorf to Testify at House Financial Services Committee
  • CBAI Members Attend Chicago Fed Community Bank Symposium
  • Communities First Act Reflects Diversity of Community Banks
  • "Go Local" Campaign Continues to Expand
  • Baker Market Update
  • Fed’s Yellen Hints at QE3
  • FDIC-Insured Institutions Earned $35.3 Billion in Third Quarter
  • Where is the Midwest Farm Economy Headed?
  • FRB St. Louis Resource Helps Bankers Track Dodd-Frank Rules
  • Now's the Time for “A Real Community Bank™” Identity – Free to Members!
  • Need a Year-End Tax Deduction – One That Benefits Community Banking?
  • Budgeting for Next Year and Need Comparative Compensation Data?
  • Taking Some Stress Out of Stress Testing
  • Account Titling to be held December 6-8
  • Impaired Loans Scheduled for December 6 & 7
  • The Ins and Outs of Auditing Lending Compliance Set for December 8

  • CBAI Commentary: Exemptions for Community Banks are Essential

    For many years CBAI and ICBA have successfully lobbied to exempt community banks from onerous, burdensome, and counterproductive regulations. Many of them are intended for mega banks and their higher risk-taking activities while others simply aren’t justified for smaller, locally-owned institutions. These important exemptions have spared community banks additional burdensome and costly regulatory compliance requirements and are essential for community bank competitiveness. The Wall Street Reform Act of 2010 ("Dodd-Frank") is a good example of community banks receiving numerous exemptions from regulations that are directed at resolving the ills of Wall Street and not Main Street.

    The recent stunning statement by the American Bankers Association that it opposes regulatory exemptions based on bank size only serves to aid and abet the large banks at the expense of community banks. The ABA has implied that regulations affect all banks equally, regardless of size, despite clear evidence to the contrary. In reality, the burden of regulatory compliance has a disproportionately greater adverse impact on community banks than the mega banks.

    The ABA opposes a measure supported by CBAI and ICBA to allow banks under a certain size to amortize commercial real estate loan losses over a period of 10 years with a sunset provision based on the hollow argument that it doesn’t want Congress to determine accounting rules and federal regulators oppose it. Enactment of this provision would save scores of community banks from failure. Apparently the ABA can’t help troubled community banks in their time of need but certainly was quick to support the bailout of its troubled mega bank members. That’s why community banks must have strong, autonomous representation in Springfield and Washington. Otherwise, what’s best for community banks and Main Street America would get lost in the Wall Street message.

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    Secret Fed Loans to Failing Mega Banks Revealed

    The Federal Reserve and the mega banks fought for more than two years to keep details of the largest bailout in American history from public view, but a court-ordered release of 29,000 pages of documents has revealed troubling details of billions of additional dollars in emergency loans and guarantees that were not made known to Congress or the public.

    According to the documents, as of March 2009 the Fed had committed a staggering $7.77 trillion to rescue the giant financial firms. Lawmakers were unaware, for example, that Morgan Stanley took $107 billion in Fed loans in September 2008. The firm subsequently received $10 billion in TARP funds which were to be made available only to “healthy” firms.

    Saved by the bailout, Wall Street firms then lobbied against reform efforts. Ultimately, taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the largest banks to grow even bigger. Today, the four largest banks control about 50% of all U.S. banking assets.

    CBAI and ICBA have long advocated downsizing the mega banks and restoring the separation between commercial and investment banking which would help break the overt control Wall Street exerts over the Treasury and Federal Reserve.
    See Bloomberg Article.

    In a powerful commentary released yesterday, ICBA’s Cam Fine addresses the hideous double standard favoring Wall Street over Main Street. See Blog.

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    Court Rejects Citigroup/SEC Settlement

    In a surprise action, a U.S. District Court judge in New York rejected a $285 million settlement between Citigroup and the Securities and Exchange Commission. Historically the SEC has been allowed to settle cases with organizations it regulates without admissions of guilt.

    The judge argued that the SEC “has a duty… to see that the truth emerges.” He said he could not determine whether the proposed settlement was fair and in the public interest. The SEC said Citigroup sold mortgage-backed securities to investors in 2007 that it believed would fail and then bet against its customers. Citigroup made $160 million while investors lost $700 million. The judge also noted that the SEC’s settlement policy creates potential for abuse because it undermines the constitutional separation of powers by asking the judiciary to rubber-stamp the executive branch’s interpretation of the law.

    Citigroup and several other mega firms are repeat offenders that regard the settlements as a cost of doing business without the threat of personal legal prosecution.
    See New York Times Article.

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    CBAI Encourages Members to Complete ICBA Overdraft Survey

    In an effort to gain current information on the consumer overdraft payment services of community banks, ICBA is asking community bankers to complete a survey. The findings will help ICBA properly advocate community bank positions to policy makers and regulators who are implementing and proposing new overdraft regulations and guidance. CBAI urges its members to participate in the survey which can be accessed by
    Clicking Here.

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    2012 CBAI Washington Visitation Dates Set

    CBAI’s 2012 Washington Visitation will again be held in conjunction with the ICBA’s Washington Policy Summit, which is scheduled for April 24-27 at the Gaylord Resort and Convention Center in National Harbor, Maryland on the Potomac. Hundreds of community bankers from across the nation are expected to attend, and CBAI encourages member bank officers and directors to participate in this important event. It’s a perfect time to visit our nation’s Capital.

    Meetings will be scheduled with the Illinois congressional delegation and representatives of the various regulatory agencies, and presentations will be made by top-ranking government officials. Please mark your calendars now. Further details will be provided in the near future. For more information, please contact either Kraig Lounsberry, SVP Government Relations, at 800/736-2224 ( or David Schroeder, VP Federal Governmental Relations, at 847/909-8341 (

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    CBAI's Ohlendorf to Testify at House Financial Services Committee

    CBAI's Greg Ohlendorf will testify before the U.S. House Financial Services Committee at a field hearing in Chicago on Monday, December 5, 2011. Greg is the President and CEO of First Community Bank and Trust in Beecher, Illinois, and currently serves as the Chairman of the Policy Development Committee for the Independent Community Bankers of America (ICBA). Greg was recently recognized as CBAI's Outstanding Member for his many contributions to the cause of community banking.

    Titled "Regulatory Reform: How New Regulations are Impacting Financial institutions, Small Businesses and Consumers in Illinois," the field hearing is one of a series of hearings on this subject being conducted by the House Financial Services Committee. Greg has previously testified in Chicago and Washington on various legislative and regulatory issues and is an outstanding advocate for community banks.

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    CBAI Members Attend Chicago Fed Community Bank Symposium

    CBAI members from across the state attended the Seventh Annual Community Bankers Symposium at the Federal Reserve Bank of Chicago on November 18.
    Read More.

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    Communities First Act Reflects Diversity of Community Banks

    latest in-depth article on the Communities First Act, which is supported by ICBA and CBAI, features provisions benefitting publicly-traded institutions and Subchapter S corporations. Several sections of the act target these institutions by addressing Securities and Exchange Commission registration requirements, Sarbanes-Oxley reporting burdens, Subchapter S shareholder restrictions and other issues.

    “By making reasonable reforms to onerous regulations, the act is designed to improve community banks’ ability to raise capital, reduce compliance cost and improve their viability so they can continue to serve their customers and communities,” ICBA executive vice president and chief economist Paul Merski writes in the article. Read Article.

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    "Go Local" Campaign Continues to Expand

    The ICBA/CBAI "Go Local" Campaign is building momentum across the country. For ICBA's latest blog,
    click here. Please share with CBAI examples of how you are using the ICBA/CBAI “Go Local” campaign to let your communities know that doing business with a community bank really does make a difference. Send your activities to

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    Baker Market Update

    Markets continue to worry about Europe’s continuing debt crisis; the annualized GDP expanded less than economists expected, yet there may be added growth in the fourth quarter; and durable goods orders fell less than anticipated.
    Read More.

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    Fed’s Yellen Hints at QE3

    Federal Reserve Vice Chairman Janet Yellen said yesterday that additional purchases of U.S. debt instruments by the Fed have the potential to “flatten the yield curve” and implied that another round of quantitative easing is likely. Earlier this year the Fed announced that it is committed to keep rates low through at least mid-2013. She also noted that monetary policy alone cannot restore economic prosperity, and Congress needs to act soon to reduce the deficit.
    See Article. See Speech.

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    FDIC-Insured Institutions Earned $35.3 Billion in Third Quarter

    The FDIC reported that insured commercial banks and savings institutions earned $35.3 billion in the third quarter which is an $11.5 billion improvement over a year ago. Acting FDIC Chairman Martin Gruenberg said banks are experiencing improving asset quality and lower loss provisions. He cautioned, however, that the recovery is by no means complete. He cited ongoing stress in the real estate markets, stagnant job growth, and uncertainties in the global economy as causes for concern.
    See FDIC Release.

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    Where is the Midwest Farm Economy Headed?

    While much of the country is concerned about a double-dip recession and declining property values, life in the rural Midwest has rarely been better. Corn prices are at triple the historical average and the highest on record, and new technologies are improving per-acre yields. The resulting prosperity has allowed farmers to purchase new equipment and farm land, and unemployment is well below the national average.

    The concern for community bankers is whether the Corn belt is on a bubble or in a new era of sustained growth and profitability as many remember the 1980s farm crisis that occurred during a period of loose monetary policy, soaring commodities prices, and a weak dollar, similar to today. Regulators are uncomfortable, and their edginess has resulted in some testy bank examinations in rural America.
    See Full Article.

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    FRB St. Louis Resource Helps Bankers Track Dodd-Frank Rules

    The Federal Reserve Bank of St Louis has created an easy-to-use web site that enables bankers to track the proposals and rules that will be written by various federal agencies as part of the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The site sorts the proposed rules according to four main rule-making categories: Open For Comment, Proposed, Interim Final, and Final. A new feature allows bankers to sort by topic that categorizes each rule by subject matter. Bankers may also subscribe to email alerts, which provides a brief description and links to recent postings. Please note that community banks are exempt from the vast majority of rules propagated by the Reform Act.
    Go to Sight.

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    Now's the Time for “A Real Community Bank™” Identity – Free to Members!

    At this crucial time, make sure that your bank is identified as “A Real Community Bank.” Use the identifying logo, which is available at no cost to CBAI members. NOTE: Only CBAI member banks are licensed to use the logo and/or the “A Real Community Bank™” phrase. For more information,
    click here.

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    Need a Year-End Tax Deduction – One That Benefits Community Banking?

    Please remember the CBAI Foundation for Community Banking in your year-end charitable contributions. The Foundation supports the 15 scholarships that are offered annually to deserving Illinois high-school seniors, including the children and grandchildren of community bankers. To make a 100-percent tax-deductible contribution, send your check (made payable to the Foundation) to:

      CBAI Foundation for Community Banking
      901 Community Drive
      Springfield, IL 62703-5184
    For information on the 2012 scholarship competition for at-large high schoolers,
    click here. For information on the scholarships for the children and grandchildren of community bankers, click here.

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    Budgeting for Next Year and Need Comparative Compensation Data?

    Purchase the results of the 2011 CBAI Officer Compensation Survey. CBAI members that did not participate in the Survey may purchase the results for $300; non-members for $500 (members who completed the Survey received the results for free). Simply contact the CBAI Department of Communications at

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    Taking Some Stress Out of Stress Testing

    Banks of all sizes are facing an increasing push by federal regulators to go beyond historical risk-management efforts in the wake of the U.S. housing market’s collapse and the 2008 financial crisis. They’re being asked to evaluate more thoroughly and to prepare better for worst-case scenarios in the economy and in real estate markets in order to avoid future problems. The problem is there’s not a lot of specific guidance from regulators on this additional “stress testing,” which has led to confusion about which banks must do it, how they should test, and how they’ll be graded on their efforts. CBSC-preferred provider Sageworks has prepared a
    white paper regarding this issue.

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    Account Titling Scheduled for December 6-8

    “Account Titling” will be held in three locations this December. This seminar is designed for new account representatives, tellers, and head tellers who need to know 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 operational issues tellers face daily. All new account representatives, tellers, and head tellers will benefit from attending this seminar. Leading this seminar is Bryan Fetty of 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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    Impaired Loans Scheduled for December 6 & 7

    CBAI has scheduled
    “Impaired Loans” seminars in two locations this December. This program is designed to respond to today’s economic and regulatory environment. Safety and Soundness exams have created tremendous stress in the banking community. The economic down-turn was triggered by the collapse of the subprime mortgage market. Income-producing properties appear to be the next great challenge for community bankers. Loans that have been rated as “pass” credits are now being rated as “substandard” credits. Cash flow and appraisal reviews are the major cause of loan downgrades. Banks are faced with the question of should we form a “special assets” function? The session also addresses impaired asset reduction requirements for banks under administrative actions. Topics covered include preparing for a safety and soundness exam, managing impaired commercial real estate loans, responding to regulatory orders, documenting the impaired loan process, and workout guidelines and strategies. Senior lenders, special asset managers, CEOs, board chairs, loan review officers, and credit administrators will benefit from attending this seminar. Leading this seminar is David Kemp, president of Bankers Management, Inc., College Park, GA, a nationally recognized company in financial services training and bank consulting.

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    The Ins and Outs of Auditing Lending Compliance Set for December 8

    CBAI is pleased to offer
    “The Ins and Outs of Auditing Lending Compliance” in Springfield on December 8. Attendees learn audit skills necessary to examine loan files for compliance with major loan regulations, including Truth in Lending (Regulation Z), Real Estate Settlement Procedures Act (RESPA), Equal Credit Opportunity Act (Regulation B), Flood Protection Act, Homeowner's Protection Act (PMI Law), Fair Housing Act, variable rate real estate lending, and fair lending principals. Attendees also learn techniques for implementing a risk based loan compliance program and selecting files and records for compliance testing. This seminar should appeal to compliance officers and compliance auditors. Leading this seminar is Tim Tedrick, partner at WIPFLi, LLP, who specializes in compliance, consulting, and assistance. He performs internal audit and compliance exams for all sizes of financial institutions in five states.

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    ACT Appraisal


    First Data Internet Banking Suite


    CBAI EVENTS December 13
    with Dr. Kevin Elko
    Community Bank Directors' Conference

    Crowne Plaza, Springfield

    Finer Points Blog





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