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Illinois Congressman Randy Hultgren (R-14) Introduces Call Report Relief Legislation

CBAI thanks Illinois Congressman Randy Hultgren (R-14) for introducing legislation to provide Call Report relief to communityHultgrenRandy banks. The Community Bank Reporting Relief Act (H.R. 4500) amends the Federal Deposit Insurance Act to permit reduced reporting requirements for the first and third quarters for highly-rated and well-capitalized institutions (the long form would continue to be filed in the second and fourth quarters). The streamlined reports would provide sufficient information to regulators while being less burdensome to prepare for community banks. Call Report regulatory relief is supported by CBAI and is included in ICBA’s Plan for Prosperity.

CBAI member Greg Ohlendorf, President and CEO of First Community Bank and Trust in Beecher, Illinois, was quoted in Congressman Hultgren’s Press Release as saying, “The quarterly Call Report has increased to some 80 pages supported by almost 700 pages of instructions, and it represents a growing burden on community banks. … As a community banker, I appreciate the efforts of Congressman Hultgren to sponsor this important legislation.” Read Congressman Hultgren’s Press Release.

February 15, 2016

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CECL Update - CBAI Member Attends FASB Meeting

A Strong Congressional Response, and CBAI Staff Lobbies Issue in Washington

CBAI member Greg Ohlendorf, President and CEO of First Community Bank and Trust in Beecher, Illinois, was one of four ICBA bankers who attended the February 4, 2016 meeting with the Financial Accounting Standards Board (FASB) to discuss community banks’ serious concerns with FASB’s proposed Current Expected Credit Loss (CECL) model. Backing the community bank position was a U.S. House of Representatives’ letter to FASB (January 29, 2016) signed by 62 bi-partisan members.

This meeting was hastily convened by FASB after Chairman Russell Golden’s unbelievable comments about community banks and the financial crisis. CBAI stated in its December 21st response to Golden, “In the span of four sentences you cite community bank failure statistics followed by your conclusion that ‘Clearly community banks have been a major part of the problem [financial crisis]’ and that this is the reason why ‘all lending institutions should be included in the new [CECL] guidance.’ This flawed reasoning is comparable to citing elder financial abuse statistics and then blaming senior citizens for that abuse. Read CBAI’s Comment Letter to FASB.

The congressional letter to FASB stated in part, “FASB must proceed with utmost caution … as [CECL] has the potential to irreversibly damage community banks”. Members of Congress also noted that a “method for determining expected losses should be simple, straightforward, and easy to apply. A requirement that uses complex, theoretical forecasting models, determining each loan’s probability of failure based on a wide range of economic factors, is impractical, costly, and time consuming for community banks.” Read U.S. House Member Letter to FASB.

CBAI thanks Illinois Congressmen Mike Bost (R-12), Rodney Davis (R-13), Bill Foster (D-11), Randy Hultgren (R-14), and Mike Quigley (D-05) for signing the Member Letter urging caution, suggesting better alternatives, and requesting a response to their thoughtful questions and concerns.

CBAI’s Vice President Federal Governmental Relations, David Schroeder, supported the efforts of Ohlendorf and U.S. House members during his quarterly visit to Washington last week. He cited the harmful effects of the CECL model with the entire Illinois congressional delegation. Schroeder noted that the Illinois delegation is quickly gaining knowledge about this important issue and wants to be kept informed on progress in resolving the widely divergent positions between community banks and FASB. Read Report on CBAI Quarterly Staff Visit to D.C.

February 15, 2016
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CBAI Urges NCUA to Withdraw its Field of Membership Proposal

CBAI responded forcefully to the National Credit Union Administration’s (NCUA) proposed expansion of its field of membership rule and urged its immediate withdrawal. The proposed rule is being framed by the NCUA as regulatory relief versus what it really is -- a wholesale charter enhancement. It’s the latest in a series of industry efforts in that direction. The sweeping changes in this proposal would dramatically extend the credit union tax-advantaged status over taxpaying community banks.

NCUA stated that this proposed rule represents the most sweeping change in membership in the NCUA’s 45 years history. Its vice chairman indicated that the reason for the proposal was due to a deadlocked Congress. Apparently, quasi-legislative actions can now be justified by unelected NCUA bureaucrats. However, this proposed rule is a clear and intentional end-around Congress and disregards congressionally-imposed and established rules to assure that credit unions adhere to their original mission.

CBAI’s Vice President Federal Governmental Relations, David Schroeder, reinforced CBAI’s and the tax-paying community bank position on the proposed rule during his quarterly visit to Washington in early February. Schroeder highlighted to the entire Illinois congressional delegation this blatant end-around Congress and encouraged members to voice their concerns to the NCUA about this misguided proposal.

If credit unions want to weaken (so as to virtually eliminate) the common bond requirement and operate like banks, they should be taxed like banks and required to meet all of the same regulatory requirements as banks. They can't have it both ways.

Credit unions were never meant to be tax-exempt community banks!

Read CBAI Comment Letter.

February 16, 2016
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U.S. House Members Express CECL Concerns to FASB

Sixty-two members of the United States House of Representatives signed a Member Letter to the Chairman of the Financial Accounting Standards Board to express their strong concern about FASB’s proposed Current Expected Credit Loss (CECL) model. The CECL model would require banks to estimate loan losses on individual loans the day they are made and adjust the estimated losses throughout the life of the loans. The concept of recording a loan loss on day-one flies in the face of the plain logic that a loan is good the day it’s made otherwise you wouldn’t make the loan. Predicting losses on loans that currently qualify, and which mature in 5, 10 or 30 years, will be pure speculation.

The House members stated “FASB must proceed with utmost caution … as [CECL] has the potential to irreversibly damage community banks”. They went on to recommend a “method for determining expected losses should be simple, straightforward, and easy to apply. A requirement that uses complex, theoretical forecasting models, determining each loan’s probability of failure based on a wide range of economic factors, is impractical, costly, and time consuming for community banks.” Read U.S. House Member Letter to FASB.

CBAI thanks Illinois Congressmen Mike Bost (R-12), Rodney Davis (R-13), Bill Foster (D-11), Randy Hultgren (R-14), and Mike Quigley (D-05) for signing the U.S. House Member Letter to FASB that urges caution, suggests better alternatives and requests a response to their thoughtful questions and concerns. 

February 2, 2016