CBAI Urges NCUA Not to Proceed with Alternative Capital Rulemaking

In a comment letter to the National Credit Union Administration (NCUA), CBAI urged a halt to their rulemaking regarding supplemental capital for credit unions. Read Comment Letter.


CBAI found fault with the reasoning that because of a lack of specific statutory authority the NCUA is permitted to promulgate capital rules and authorize alternative capital instruments for credit unions. Congress should decide whether the actions contained in the NCUA’s proposal are permissible, but this authority has not been given. Absent such authority, the proposed rulemaking represents an abuse of the NCUA’s authority, a blatant expansion of powers, and a costly and unfair increase in the credit union industry tax subsidy.


In the comment letter, CBAI urged the NCUA to focus on the founding mission of credit unions: enabling people of modest means and with a common bond to pool their resources to meet their basic deposit, savings and borrowing needs through a mutual ownership structure. Yet, CBAI noted that credit unions have long since strayed from their founding mission and the supplemental capital proposal would result in credit unions having an ownership structure similar to most taxpaying banks with a category of investors whose interests are inconsistent with those of its mutual owners.


CBAI recommended the credit union industry’s tax subsidy should be eliminated and credit unions should pay their fair share of income taxes. Read Comment Letter.


CBAI Member Bankers Meet with President Trump

CBAI member bankers Bill Wubben, president of Apple River State Bank, and Mike Estes, president of The Fisher National Bank, joined with 100 community banking colleagues in a meeting with President Trump, Vice President Pence, and other top administration officials at the White House as part of the 2017 ICBA Capital Summit. In an exclusive meeting with ICBA leadership bankers, Trump said the administration is focused on addressing regulatory burdens to help community banks lend to small businesses. Read More.


CBAI Again Urges the OCC to Delay Moving Forward in Chartering New Fintech Companies

The Community Bankers Association of Illinois (CBAI) again called on the Office of the Comptroller of the Currency (OCC) to delay moving forward with considering applications for charters for fintech companies. In the OCC’s continuing effort to charter fintechs it published for comment a Licensing Manual Supplement for Evaluating Charter Applications From Financial Technology Companies (“Supplement”). However, the Supplement falls far short of successfully addressing the many concerns raised by CBAI as well as the Independent Community Bankers of America (ICBA), the Conference of State Bank Supervisors (CSBS), and influential Members of Congress on the House Financial Services and Senate Banking Committees. Read CBAI Comment Letter. CBAI’s observations and recommendations were enumerated in an April 13, 2017 comment letter to the OCC and included the following: the issue of OCC's authority to issue special purpose national bank charters (which was first raised by the CSBS) must be resolved; all of the banking regulators must be involved in public outreach meetings about fintechs and formal rulemaking; fintechs must not be regulated through non-public operating agreements but through specific, established and transparent rulemaking to ensure clear guidance and consistent application of rules and regulations; community banks should not be financially responsible for the OCC developing the skills needed to regulate fintechs; and the OCC must guarantee that fintechs will comply with all banking laws, rules and regulations, and be held to the same rigorous safety and soundness, supervision, regulation and enforcement standards which are required of community banks and bank holding companies. The bottom line: Fintechs cannot and must not have the advantages of being a national bank with more limited requirements, regulations and liability. Read CBAI Comment Letter. April 14, 2017


CBAI Thanks Congressman Hultgren for Addressing OCC’s Proposed Fintech Charters

In a March 10, 2017, letter to Comptroller Thomas Curry, 34 members of the House Financial Services Committee (HFSC) wrote the OCC regarding its intention to issue special purpose national banking charters to fintech companies without providing details of the charter or an opportunity for comment. CBAI thanks Illinois Congressman Randy Hultgren (R-14th) for taking a leadership position in examining and questioning the OCC’s fintech charter initiative. Read HFSC Comment Letter. Read CBAI Comment Letter.

The HFSC letter stated, “In light of the importance and complexity of the issue, the OCC should not rush this decision. The OCC should provide a full and fair opportunity for stakeholders to see the details for the special charter, solicit feedback, and allow the incoming Comptroller to assess the special purpose charter.” The letter notes that Comptroller Curry’s term of service will expire in April of 2017. It concludes with a warning, “If the OCC proceeds in haste to create a new policy for ‘fintech’ charters … please be aware that we will work with our colleagues to ensure that Congress will examine the OCC’s actions and, if appropriate, overturn them.

”In a January 13, 2017 comment letter to the OCC, CBAI expressed concerns about the OCC issuing special purpose fintech charters and recommended that the OCC:

  • clearly demonstrate it is fully prepared to assume the many new responsibilities of regulating fintechs;
  • resolve the issue of the legality of the OCC issuing fintech charters which has been raised by the Conference of State Bank Supervisors (CSBS);
  • include the other national banking regulators and the CSBS in formal outreach meetings regarding fintechs and joint rulemaking which will be available for public comment;
  • and to not regulate fintechs through operating agreements which lack the transparency and consistency of formal rulemaking.

The comment letter concluded, “CBAI urges the OCC to guarantee that Fintechs will comply with all banking laws, rules and regulations, and be held to the same rigorous safety and soundness, and supervision and regulation standards currently being required of community banks and bank holding companies. These standards must include but not be limited to frequent examination, CRA compliance, compliance with laws to protect consumers, regulatory actions for noncompliance, sanctions and prohibitions, and personal liability for Fintech directors and officers. Fintechs cannot have the advantages of being a national bank with limited requirements, regulations and liability."

CBAI again thanks Congressman Hultgren for his leadership on this issue and stands prepared to work with Congress should action be required to ensure that fintech charters do not gain a regulatory advantage over community banks.


CBAI Urges FDIC to Support Chartering De Novo Community Banks

In a February 17, 2017 comment letter to the Federal Deposit Insurance Corporation (FDIC) regarding its proposed new Application Handbook for newly chartered banks, CBAI expressed support for Chairman Martin Gruenberg’s recent statement that, “Newly chartered (de novo) community banks are vitally important to maintaining a strong, growing, evolving and vibrant banking profession.”

CBAI stated that the proposed FDIC Application Handbook contains a useful roadmap for those interested in deposit insurance for a proposed new bank charter. CBAI noted, however, that the absence of a useful roadmap was not the barrier to obtaining deposit insurance and the dearth of de novo banks during the past seven years. The lack of new charters was apparently the result of a decision by the FDIC, despite a formal position to the contrary, to require new bank charter applicants to prove they were virtually failure-proof rather than just having a reasonable likelihood of succeeding.

An obvious example was a requirement that extended the de novo period to seven years for examinations, capital maintenance, and other requirements. Last year the FDIC reduced the requirement to three years which, when combined with the Chairman’s recent comments and additional resources (including the Application Handbook), hopefully signals a sincere change in the position of the FDIC towards approving applications for deposit insurance for de novo charters.

CBAI looks forward to a resumption of many new banks being chartered each year to help maintain the community banking profession. Read CBAI Comment Letter to the FDIC.