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Farm Bill Passes the U.S. Senate

The United States Senate passed its version of the Farm Bill with a strong bi-partisan 86-11 vote. Both Illinois Senators Durbin and Duckworth voted in favor of the Bill. Previously, the U.S. House passed the Agricultural and Nutrition Act of 2018 (H.R. 2) on a vote of 213 to 211, with all Illinois Republicans voting in favor, and all Illinois Democrats voting against, passage. The Bill now moves to a conference committee and CBAI encourages the conferees to successfully resolve their differences and implement the legislation by the September 30th expiration of the current farm bill.

The Community Bankers Association of Illinois has long been active in advocating for a strong Farm Bill. On June 22nd CBAI joined with 639 state and national organizations in signing a letter to the U.S. Senate urging support for crop insurance (see graphic below). CBAI joined 417 state and national associations in signing a similar letter to the U.S. House on May 16th. The letters highlighted crop insurance as a critically important risk-management tool for farmers, ranchers and the lenders that finance their operations. The letters urged 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 to the Senate.

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 principles to prevent a future farm-credit crisis and enable producers and lenders to engage in sound planning and business decision-making. The number one principle 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.

CBAI will continue in its advocacy efforts for a robust Farm Bill for the protection of Illinois community-bank lenders and producers alike.

June 29, 2018

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CBAI Urges Improvements to the FHLB’s Affordable-Housing Program

In a June 12, 2018 letter to the Federal Housing Finance Agency (FHFA), the Community Bankers Association of Illinois (CBAI) provided its observations and recommendations regarding proposed amendments (Proposal) to the Affordable Housing Program (AHP). CBAI emphasized that the importance of AHP should not be understated. For more than 25 years, the FHLB-Chicago’s AHP has provided nearly $300 million to help more than 57,000 low and moderate-income individuals and families to obtain, develop or preserve safe, decent and affordable housing.

Unfortunately, the FHFA’s Proposal recommends a top-down approach that promotes a number of national housing priorities that may not align with the housing priorities and needs within the various FHLB districts. In addition, the Proposal makes the AHP more complex, less flexible and less transparent.

CBAI urged the FHLB to withdraw the proposal and resubmit after consultation with stakeholders or allow each FHLB to retain its current AHP structure and requirements. If the FHFA decides to move forward with this Proposal, any final rule should provide maximum ease and flexibility to best meet the housing needs of FHLB districts and not threaten the relevancy of the AHP and lessen the value of FHLB membership. Read Comment Letter.

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CBAI Urges Support for Crop Insurance in the Senate Farm Bill

The Community Bankers Association of Illinois (CBAI) joined with 693 state and national organizations in signing a letter to the U.S. Senate urging support for crop insurance in its version of the Farm Bill. The letter highlighted 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 signed a similar letter to the United States House of Representatives on May 16th in which 417 state and national organizations urged support for crop insurance in the Agricultural and Nutrition Act of 2018 - H.R. 2. 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 principles to prevent a future farm-credit crisis and enable producers and lenders to engage in sound planning and business decision-making. The number one principle 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.

CBAI will continue to advocate for a robust Farm Bill for the protection of Illinois community-bank lenders and producers alike.

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Jelena McWilliams Takes the Helm at FDIC

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.

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CBAI Recommends Payments-System Improvements

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.