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CFPB Adopts Rule on Privileged Information

The Consumer Financial Protection Bureau (CFPB) has adopted a Rule to codify the protection of privileged information submitted to the Bureau by the financial institutions it regulates. In a comment letter in March, CBAI recommended the Rule specifically state that any information provided by community banks, either directly or indirectly to the Bureau, will not waive or otherwise affect any privilege with respect to such information under Federal or State law. The CFPB said that although the rule is primarily focused on large financial institutions, it is not limited to those institutions and will be interpreted broadly.

Read CBAI Comment Letter

Read CFPB Announcement

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CBAI Supported ATM Fee Disclosure Bill Passes the U.S. House

July 10, 2012

H.R. 4367 eliminates the unnecessary and duplicative disclosure of ATM fees and helps prevent frivolous lawsuits against community banks.

The Electronic Funds Transfer (EFT) Act requires ATM operators to provide two separate notices regarding ATM fees (i.e., a placard placed on the ATM machine and a separate disclosure on the video screen). The video screen fee disclosure requires the user to accept the fee - or not. If the user accepts the fee the transaction proceeds. If the fee is declined the transaction is cancelled and the fee is not charged. Community banks fully support the consumer protection of video screen fee disclosure.

Issues however have arisen with the placard on the ATM machine. Penalties for not displaying the placard are severe (i.e., the lesser of $500,000 or 1% of the net worth of the ATM operator) and have unfortunately provided an incentive for ATM vigilantes to remove the placard and file frivolous lawsuits. During the last 18 months these lawsuits have increased, and if the situation is left unchecked ATM operators may be forced to remove ATMs which will result in reduced consumer convenience. Several CBAI members have reported these problems, and more such instances will likely occur in the future unless this common sense legislation is passed.

The House Financial Services Committee recently reported this legislation to the entire House of Representatives by a voice vote. Yesterday, the House approved this legislation by a wide bipartisan margin (371 “yea”, 0 “nay” with 60 members “not voting”).

CBAI thanks the Illinois members who voted in favor of passage and particularly those members who were proactive and cosponsored this important legislation: Dan Lipinski (D-3rd), Luis Gutierrez (D-4th), Mike Quigley (D-5th), Peter Roskam (R-6th), Robert Dold (R-10th), Judy Biggert (R-13th), Don Manzullo (R-16th), and John Shimkus (R-19th).

CBAI encourages the U.S. Senate to quickly pass this important legislation.

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FDIC Information Session on the Proposed Basel III Capital Rules

July 24, 2012

The FDIC will be conducting a Chicago regional information session (July 31st) and a national conference call (August 3rd) to discuss how the proposed Basel III capital rules are likely to affect community banks.

Chicago session attendees must register in advance by accessing http://www.regonline.com/RegCap-Chicago. The registration deadline is Friday, July 27, 2012.

The FDIC has made available a PowerPoint presentation which is accessible here.

The national conference call will be on Friday, August 3, 2012, at 1:00p.m. (Eastern). The toll free number to call is 1-888-455-0408 and the pass code is 8824839#.

CBAI encourages all Illinois community banks to become familiar with these proposed new capital rules.

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FASB Issues Community Bank Exemption

August 9, 2012

At the urging of CBAI and ICBA, the Financial Accounting Standards Board (FASB) decided that nonpublic entities will not have to disclose the fair value amounts for financial assets and liabilities measured at amortized cost.

In a comment letter to FASB the CBAI stated that the fair value accounting change applied to community banks is more likely to mislead financial statement users than to provide them with a clearer picture of financial condition. The change would also be expensive for community banks to implement by requiring new accounting policies and practices.

The community bank business model is to make loans and hold them to maturity not actively buying and selling loans. Fair value or mark-to-market determinations are more appropriate for trading assets not community bank loans.

Community bank loans have unique risk profiles and are not readily marketable making them difficult if not impossible to determine realistic valuations. These loans would certainly be at a below-par or liquidation value from the very day they are made if FASB imposed this requirement.

The impact of aggressively discounted loan values would be devastating to community bank capital and surely jeopardize the very existence of many community banks. Read CBAI Comment Letter.

The FASB said that it would discuss at future meetings other disclosures (i.e. demand deposits) required of nonpublic entities).

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ACTION ALERT: Extend Basel III Comment Period Deadline

August 3, 2012

Dear Illinois Community Banker:

CBAI urges you to contact your primary regulator to request a 90-day extension of the public comment period for the joint-agency Basel III capital standard proposal. We have attached a copy of CBAI's comment letter for you to use as a guide.

CBAI strongly opposes subjecting community banks to the same capital standards as the nation's largest too-big-to-fail financial institutions. We are actively engaged with the various banking regulators in representing your interests and protecting your franchise value. Your cooperation is needed to extend the comment period which expires on September 7th.

We recommend that your personalized comment letter be organized as follows.

1. Introduction

  • An introductory sentence should include your name, title, the name of your bank, and a statement that the Fed/FDIC/OCC is your primary regulator.
  • Next should be a brief description of your bank's location, asset size, and business model or area of concentration (i.e., agriculture, small business lending, residential mortgage lending).
  • You should express your concern for the impact of the proposed NPRs on your bank’s capital position and thus your ability to serve your community.
  • The paragraph should conclude with your request for a 90-day extension to the comment period to properly assess the impact of the NPRs on your bank. 

2. Body Paragraph

  • The body paragraph should detail the areas of Basel III that most concern you (based on the information you have readso far) and the difficulty in analyzing the impact of the proposed NPRs on your bank within the comment period that expires on September 7th. 

3. Concluding Paragraph

  • The final paragraph should restate your request for a 90-day extension and provide your contact number and e-mail address for questions or additional information. 

Please do not personally sign the letter, or reveal confidential data, as letters will be posted by the regulators for anyone to view. Use the e-signature convention /s/ instead of your actual signature.

Comments may be submitted within the body of your e-mail or as an attached letter. CBAI's letter was sent as a PDF attachment.

Please make sure to include the Docket or RIN Numbers in the subject line so the regulators can properly direct the comments to the appropriate area.

Here are the detailed instructions for each of the three primary regulators:         

  • FDIC-supervised banks: Send comments to comments@FDIC.gov. Include “Basel III FDIC RIN 3064-AD95, RIN 3064-AD96, and RIN 3064-D97” in the subject line.         
  • Federal Reserve-supervised banks: Send comments to regs.comments@federalreserve.gov. Include “Basel III Docket No.1442” in the subject line.        
  • OCC-supervised national banks: Send comments to regs.comments@occ.treas.gov. Include “Basel III OCC Docket IDOCC-2012-0008, 0009, and 0010” in the subject line. 

Thank you very much!

Click here to access CBAI’s comment letter.