CBAI congratulates Jelena McWilliams upon her being sworn in as the 21st Chairman of the Federal Deposit Insurance Corporation (FDIC). McWilliams was appointed by President Donald J. Trump to serve as FDIC Chairman for a term of five years and a six-year term on the FDIC Board of Directors. She succeeds Martin Gruenberg, who has served on the FDIC board since August 2005 and as Chairman since November 2012.
Prior to joining the FDIC Board, McWilliams’ professional experience included serving as chief legal officer at Fifth Third Bank, chief counsel and deputy director of the U.S. Senate Banking Committee, assistant chief counsel of the U.S. Senate Small Business Committee, and attorney at the Federal Reserve Board of Governors. McWilliams received a Bachelor of Science degree in political science and a law degree from the University of California, Berkeley. CBAI looks forward to working with FDIC Chairman Jelena McWilliams. Read FDIC Release.
CBAI has commented on the Federal Reserve’s involvement in payments-system improvements (System Improvements). In the letter, CBAI presented a detailed analysis and recommendations to support System Improvements that are progressive, competitive and secure, and that offer fair and open access to all community banks regardless of size, charter type or location so that they can meet the existing and evolving payment needs of their customers and communities. Read Letter.
A fast and secure payments system is at the very foundation of our financial services community and economy. The number of payment options and the pace of change in this area are not expected to abate in the future. Unfortunately, community banks do not account for most payment transactions and therefore must rely on the Federal Reserve to provide access, speed and security for all members of the payment system. Community banks, however, provide 50% of the loans to small businesses and an even higher percentage of agricultural loans, so a payments system that does not serve all, or disadvantages community banks, will have a devastating impact on the nation’s consumers, agriculture and small businesses.
CBAI is concerned about System Improvements that are dominated by the largest banks and financial firms as well as private-sector non-bank solutions. The largest banks endangered our financial system and economy during the financial crisis while non-banks present significantly different risks and are not subject to the same safety and soundness regulations as community banks. Therefore, several non-large-bank controlled alternatives should be incorporated into an improved payments system, and non-banks must subject to the same robust safety and soundness regulations (including examination and enforcement) as community banks. Implementing these safeguards will increase competition, reduce concentration and other risks, and be less likely to disadvantage community banks.
CBAI listed a number of desirable attributes for System Improvements and specifically recommended that the Federal Reserve:
- Provide central-bank settlement;
- Use its connectivity to provide all financial institutions with access to real-time payments;
- Serve as an operator for real-time payments as it does for checks, ACH, and wire transfers; and,
- Operate as a payments directory that would link to financial and other private-sector directories.
Following these recommendations will ensure the Federal Reserve is acting consistent with its own statement of functions and the Payment System Policy Statement and will satisfy their required criteria before introducing a new service or major enhancement.
The Federal Reserve has historically been, and remains, a critically important point of access to the payments system that must be available to every community bank. CBAI urged the Federal Reserve to play a preeminent role in System Improvements to ensure fair and equitable access for all community banks for the benefit of their customers and communities.
The Community Bankers Association of Illinois thanks President Trump for signing into law long-overdue, well-deserved and meaningful regulatory relief for the nation’s community banks.
The Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) is a carefully constructed bipartisan bill that includes common-sense improvements to financial regulation that will allow community banks to better serve their customers and communities. For consumers it will open the door for more creditworthy borrowers and businesses, and will contribute to local economic growth and job creation.
Community banks are the economic lifeblood of local communities. While holding less than 20 percent of the nation’s banking assets, community banks fund more than 60 percent of small-business loans and more than 80 percent of U.S. agricultural loans. Further, community banks operate in many areas where large banks do not, serving as the only physical banking presence in nearly one in five U.S. counties, according to the FDIC.
This legislation passed the U.S. Senate in March on a 67-31 bipartisan vote. Following Senate action, the U.S. House of Representatives passed the bill on a 258-159 bipartisan vote. Those members of the Illinois Congressional Delegation who voted in favor of this regulatory relief for community banks were Mike Bost (R-12th), Danny Davis (D-7th), Rodney Davis (R-13th), Bill Foster (D-11th), Randy Hultgren (R-14th), Adam Kinzinger (R-16th), Darin LaHood (R-18th), Peter Roskam (R-6th), Bradley Schneider (D-10th), and John Shimkus (R-15th).
CBAI’s President Kraig Lounsberry said, “We are delighted and thankful for the strong bipartisan support this legislation received in Congress and for President Trump signing the bill into law. This was a defining vote where members chose to either stand for or against community banks. We sincerely thank the Illinois Members of Congress who stood with us. Every Illinois Republican Congressman voted to pass this legislation. We particularly thank three Illinois Democrats - Congressmen Danny Davis, Bill Foster and Brad Schneider for voting to support community banks despite their party leadership’s unjustified opposition to the passage of this legislation.”
The next step is the regulators implementing these beneficial provisions of this legislation.
- Granting “Qualified Mortgage” (QM) status for portfolio mortgage loans at most community banks;
- Increasing exemption thresholds for Home Mortgage Disclosure Act (HMDA) reporting;
- Exempting certain community-bank loans from escrow requirements;
- Simplifying community-bank capital requirements;
- Increasing eligibility for a short-form Call Report to restore proportionality to quarterly reporting;
- Expanding eligibility for the 18-month regulatory-examination cycle to more community banks;
- Easing appraisal requirements to facilitate mortgage credit in local communities;
- Exempting most community banks from the Volcker Rule;
- Expanding access to the Federal Reserve’s Small Bank Holding Company Policy Statement to help more community banks build capital; and
- Improving regulatory treatment of reciprocal deposits and certain municipal securities.
CBAI worked closely and tirelessly with both Democrats and Republicans in Congress, and the Independent Community Bankers of America (ICBA), to help enact this important legislation into law.
CBAI extends its thanks to all community bankers who engaged in the grassroots lobbying process to enlighten their lawmakers and encourage their support.
Click Here to learn more about what this legislation means for you bank.
May 25, 2018
The Community Bankers Association of Illinois (CBAI) joined with 417 state and national organizations in signing a letter to the U.S. House of Representatives urging support for crop insurance in the Agricultural and Nutrition Act of 2018 - H.R. 2 (Farm Bill or Bill). The letter highlighted the importance of crop insurance as a critically important risk management tool for farmers, ranchers and the lenders that finance their operations. The letter urges lawmakers to oppose harmful amendments to the Bill that would reduce or limit participation in crop insurance, make insurance more expensive in times of economic downturn, and harm private-sector delivery. Read Comment Letter.
CBAI has been actively engaged in the development of a robust Farm Bill. In a July 31, 2017 letter to the Illinois members of the U. S. House Agriculture Committee, CBAI urged the adoption of a new multi-year farm bill which incorporates several broad principals to prevent a future farm credit crisis and enable produces and lenders to engage in sound planning and business decision making. The number one principal stated in that letter was “providing producers ample funds for commodities, crop insurance and credit programs to help them weather a potential farm income or farm credit crisis.” Read Letters to Illinois Ag Committee Members.
During the floor debate on the Farm Bill in the House, a harmful amendment that would have phased out the discount that farmers receive when they pay their crop insurance bill, and simultaneously phasing out the reimbursement to the private sector for efficiently and effectively delivering crop insurance to farmers, was offered and soundly defeated by a bipartisan 380-34 vote. No Illinois member of the U.S. House voted in favor of this harmful amendment.
While the Farm Bill was offered and defeated in the House on May 18th by a 198-213 vote, a motion to reconsider the Bill was passed and negotiations continue. The House is planning a second vote on June 22nd and the Agriculture Committee Chairman Michael Conway (R-TX-11th) said that the House would deliver legislation by the September 30th deadline.