CBAI Members Attend Federal Reserve’s Community Bankers Symposium

On November 10, 2017, the Federal Reserve Bank of Chicago hosted its 12th Annual Community Bankers Symposium titled, "Winds of Change: Headwinds, Tailwinds and Regulation." The Symposium was a joint effort among the Federal Reserve Bank of Chicago, Federal Deposit Insurance Corporation, and the Office of Comptroller of the Currency.

The previous evening, CBAI hosted a Welcome Dinner for its members attending the Symposium at Mastro’s Steakhouse. The Welcome Dinner was generously sponsored by the Federal Home Loan Bank of Chicago.

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Federal Reserve Community Banker Symposium - November 2017

The day-long Symposium began with opening remarks by Charles L. Evans, President and Chief Executive Officer, Federal Reserve Bank of Chicago. Mr. Evans' personal commentary on the economy is that it is on solid ground and the fundamentals are favorable going forward. He cautioned that the prolonged  low interest rates, and gradual future rate increases nearing only 2.75% (the long-term Fed Funds Rate), leaves little room for the Fed to react aggressively in the event of an economic downturn. He noted that this is particularly concerning as the current expansion crosses the 100-month mark which makes this the third-longest period of economic expansion.

Lara Lylozian, Assistant Chief Accountant for the Federal Reserve System, provided a CECL Presentation. Takeaways for community banks from this presentation include: CECL is a high priority for regulators; community banks should be proactive and not wait for the regulators to tell you what to do; the process should begin now and should include data collection and investigation of all available resources; bankers should take an “adopt and adapt” approach to implementation; and the regulators will only be setting the CECL guiderails and will not immediately be expecting perfection but will be expecting a “best faith effort”.

An informative Ombudsman Panel and Consumer Compliance Supervisory Panel bracketed lunch and an Economic Update by Richard Brown, Chief Economist & Deputy Director, Federal Deposit Insurance Corporation.

Blake Paulson, Deputy Comptroller of the Office of the Comptroller of the Currency, provided the View from the OCC because Acting Comptroller Noreika's last day at teh OCC was November 10th, and Josepth Otting had not yet been confirmed as the Comptroller. Paulson commented that he has worked under seven Comptrollers in his OCC career, and Otting is different in that he has significant previous bank experience (OneWest Bank, CIT Bank and U.S. Bancorp). As Paulson stated that he believes Otting’s experience will be positive for the OCC and the 1,400 banks it regulates.

CBAI encourages Chicago Fed member banks to plan on attending the 13th annual Symposium next year as the new leadership of the OCC, FDIC, and the Federal Reserve Board will likely be invited to speak to attendees.


Joseph Otting Takes the Helm at the OCC

The Community Bankers Association of Illinois (CBAI) congratulates Joseph M. Otting on the occasion of his being sworn in as the 31st Comptroller of the Currency. President Trump nominated Otting in June and was confirmed by the United States Senate on November 16th. He was sworn into office by Secretary of the Treasury Steven T. Mnuchin.

Otting takes the OCC helm from Keith Noreika, who was acting Comptroller following the departure of Thomas Curry. Otting brings to the position deep executive-level banking experience with CIT Bank, OneWest Bank, U.S. Bank, and Union Bank, and is distinguished from other recent Comptrollers because he has led banks whose primary regulator was the OCC. Blake Paulson, Deputy Comptroller (Central District) of the OCC said at a recent Federal Reserve Bank of Chicago Community Bankers Symposium that he believes Otting’s extensive management and banking experience will be positive for the Agency and the 1,400 national banks it regulates.

Mr. Otting holds a bachelor of arts in management from the University of Northern Iowa and is a graduate of the School of Credit and Financial Management, at Dartmouth College in Hanover, New Hampshire. Read OCC’s News Release.

November 30, 2017


Tax Reform Bill Clears the U.S. House

On November 16th, the United States House of Representatives cleared a major hurdle by passing H.R. 1 – the Tax Cuts and Jobs Act by a vote of 227-205. All Illinois Republican members of the House voted in favor and all Illinois Democrats voted against the bill. The legislation contained several provisions which the Independent Community Bankers of America (ICBA) and CBAI support, including: the 20% corporate rate, estate tax relief, and repeal of the alternate minimum tax for individuals and corporations. Both Associations, however, have significant concerns about several provisions including the treatment of Subchapter “S” corporations and active shareholders of Subchapter “S” community banks.

Approximately one third of all community banks are organized under Subchapter “S”. Subjecting these community banks to a higher maximum tax rate exacerbates the tax disparity among financial service providers, would disrupt the corporate and tax structure of the community bank industry, and would harm community banks’ ability to serve their customers and communities. CBAI recently issued an Action Alert, in conjunction with the ICBA, urging CBAI Subchapter “S” community bankers to weigh-in with their Member of Congress to ensure meaningful relief under the tax code. This Action Alert generated more than 3,500 responses nation-wide.

On November 9th the Senate Finance Committee released its version of the Tax Cuts and Jobs Act, and as of November 17th has concluded four days of marking-up their bill. ICBA has published an Issues Brief which describes the differences between the House and Senate versions of tax relief and reform and where more attention is needed. CBAI looks forward to working with our community bank members, the Illinois congressional delegation, and the ICBA in improving the tax legislation as it moves through Congress. Read ICBA’s Issues Brief.

November 21, 2017


CBAI Supports Senate Community Bank Regulatory Relief Legislation

The U.S. Senate banking reform proposal unveiled on November 16th represents the best opportunity in many years for long-awaited, meaningful, and well-deserved regulatory relief for community banks. CBAI supports this important legislation and will be engaging our members in a grass roots effort to advance the bill, advocating for its passage with the entire Illinois Congressional Delegation, and working with the Independent Community Bankers of America to address any concerns and to improve this legislation.

Although past attempts at bi-partisan regulatory reform have consistently fallen short, hope was revived this year under the leadership of new Senate Banking Committee Chairman Mike Crapo (R-Idaho). Throughout the year, the Committee has been holding hearings and taking testimony from community banks, regulators and the mid-sized banks. These hearings provided an important informational foundation and opportunities for further discussions among members of the Committee. Although talks with Ranking Member Senator Sherrod Brown (D-Ohio) reached an impasse, Chairman Crapo continued negotiations with other Democrats on the Committee. The two sides reached an agreement and released language last week. CBAI understands that the Chairman wants the bill marked-up in the normal course of business but is hopeful it will pass out of the Committee with strong bipartisan support and considered for passage in the Senate by early 2018.

The Economic Growth, Regulatory Relief and Consumer Protection Act has been described as right-sizing regulation for smaller financial institutions and includes important consumer protections for veterans, senior citizens and victims of fraud. Also, it will improve the nation’s financial regulatory framework for Main Street banks, and encouraging economic growth in local communities.

The bipartisan legislation is sponsored or co-sponsored by 10 Republicans, 9 Democrats, and one Independent. The proposal includes many provisions in the Independent Community Bankers of America’s Plan for Prosperity. These provisions include the following:

  • Increase exemption thresholds for Home Mortgage Disclosure Act reporting;
  • Provide “qualified mortgage” status for portfolio mortgage loans at most community banks;
  • Exempt certain community bank loans from escrow requirements;
  • Simplify community bank capital requirements;
  • Increase eligibility for a short-form call report to restore proportionality to quarterly reporting;
  • Expand eligibility for the 18-month regulatory examination cycle;
  • Ease appraisal requirements to facilitate mortgage credit in local communities;
  • Exempt most community banks from the Volcker Rule;
  • Expand access to the Federal Reserve’s Small Bank Holding Company Policy Statement to help more community banks build capital; and
  • Improve regulatory treatment of reciprocal deposits and certain municipal securities.

Although CBAI believes that the Congress can and should do more to provide real regulatory relief to the nation’s community banks, we will continue to strongly advocate and support the passage of this U.S. Senate regulatory relief bill. CBAI is urging Illinois Senators Dick Durbin and Tammy Duckworth to co-sponsor and support this meaningful reform proposal. CBAI appreciates the leadership of Chairman Crapo and all the Republican and Democrat members of the Senate Banking Committee who negotiated this common-sense proposal. See Bill. See Section-by-section Legislative Summary. See Original Announcement on the Agreement. Regulatory Relief Impact by Asset Size.

November 20, 2017


CBAI Thanks Congressman Hultgren for Urging Delay in CECL Implementation

The Community Bankers Association of Illinois (CBAI) thanks Illinois Congressman Randy Hultgren (R-14th) for joining with 25 members of the United States House of Representatives in urging the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) to delay the implementation of the Current Expected Credit Loss (CECL) model. The letter urged “steps be taken to address the economic risks arising from the implementation of the new standards” as the final accounting rule has the “potential to negatively affect the cost and availability of credit, add volatility to the balance sheets of banks, and impact the ability of financial institutions to continue lending in stressful economic environments.” The letter requested the reevaluation of the accounting standard “be undertaken immediately” and that there be a delay in the implementation of CECL pending this important review.

CBAI and the ICBA actively participated in commenting on FASB’s proposed CECL model. While the final Rule, which was issued in 2016, reflected input from community bankers and their associations, a reevaluation of the accounting standard is warranted. CBAI appreciates Congressman Hultgern’s continued leadership on this important issue. Read Letter to FASB and SEC.