CBAI Concerned That Wells Fargo Fraud Will Increase Regulatory Burden on Community Banks

This week's U.S. House hearing for John Stumpf, Chairman and CEO of Wells Fargo (the second largest bank in the nation), was as disastrous as his U. S. Senate hearing the previous week. House Financial Services Committee Chairman Jeb Hensarling (R-TX-05) stated in his opening remarks, “Fraud is fraud and theft is theft. What happened at Wells Fargo over the course of many years cannot be described any other way.” On the other side of the aisle, Ranking Member Maxine Waters (D-CA-43) provided Stumpf with no quarter when she stated in her opening remarks, “So, let’s call this what it really is: some of the most egregious fraud we have seen since the foreclosure crisis.”

CBAI is extremely concerned that the massive fraud committed by Wells Fargo will result in additional banking regulations which will likely apply directly or trickle down to innocent community banks.

    Committee member Roger Williams (R-TX-25) confirmed our suspicion when he stated, “Because of your actions, it’s really making it extremely difficult for me to advocate for Main Street or community banks. So I’ve got one simple question for you. When are you going to resign?”

    Committee member Burce Poliquin (R-ME-02) echoed William’s statement when he stated, “The probability will be high that your organization and the actions of you—this systemic pattern of misbehavior and gross mismanagement … is going to find its way to the community banks and the folks that rely on them.” “You ought to be ashamed of yourself.”

These sentiments were shared by other members of the Committee. The prolonged criminal actions of Wells Fargo undermine the free enterprise system and make it exceedingly difficult to argue for reliance on the market discipline that virtually self-regulates the behavior of community banks.

CBAI will be closely monitoring the legislative and regulatory reaction to the Wells Fargo debacle to make sure Main Street community banks are not once again paying for the sins of the Wall Street mega banks with additional, excessive, costly, and inappropriate regulations.

October 5, 2016


Community Bank Message to Congress: "We Are Not Wells!"

CBAI was compelled to write to the Illinois Congressional Delegation regarding the disturbing revelations about the massive wrongdoing at Wells Fargo Bank which resulted in a multi-million dollar fine against yet another mega bank. Well Fargo’s misdeeds adds to a tragically long list of violations (often criminal) by the nation’s largest banks as evidenced by billions of dollars in fines and settlements, enforcement actions, and deferred prosecution agreements (conditional amnesty). These mega banks have again proven that they are Too-Big-To-Manage, Too-Big-To-Regulate, Too-Big-to-Behave, Too-Big-To-Prosecute, and are apparently Too-Big-To-Jail.

The bi-partisan reaction to the Wells Fargo debacle in Congress was swift and justifiably damning.

    House Financial Services Committee Chairman Jeb Hensarling (R-TX-05) said “potentially millions of customers have been ripped off by Wells-Fargo”, and “It is beyond belief that this could go on and somebody up the food chain didn’t know about it.”, and finally “This was basic theft. This was basic fraud.”

    Senate Banking Committee Chairman Richard Shelby (R-AL) stated during a Senate Banking Committee hearing when Stumpf tried to dodge the question about clawing-back executive compensation, “Are you the Chairman? Are you the CEO of the company [right]?”, “The buck stops here”.

    And at the same hearing, Senator Elizabeth Warren (D-MA) accused Stumpf of “gutless leadership” and said, "You should resign. You should give back the money that you took while this scam was going on and you should be criminally investigated by both the Department of Justice and the Securities and Exchange Commission."

CBAI strongly urged the Illinois Delegation to not let the sins of Wells Fargo, and the nation’s megabanks, stall the passage of meaningful regulatory relief for well deserving community banks that treat their customers and communities with honesty and respect. Read CBAI Letter to the Illinois Congressional Delegation.

September 27, 2016


Congressman Mike Bost Introduces Legislation to Increase USDA Loan Guarantee Limits

CBAI thanks Illinois Congressman Mike Bost (R-12) for introducing The Beginning Farmer and Rancher Guaranteed Loan Modernization Act of 2016 (H.R. 5733). This legislation amends the Agricultural Act of 1961 to modify the limitations applicable to qualified conservation loan guarantees.

Specifically, the legislation increases USDA guaranteed farm operating and guaranteed real estate loan limits from $1.39 million to $2.5 million while maintaining theCongressmanMikeBost existing 90% guarantee against default. Additionally, it allows higher loan limits in $100,000 increments up to $3.5 million while stepping down the guarantee percentages in 1% increments (90% to 80%). The legislation also includes an exception for certain producers (i.e., qualified beginning or socially disadvantaged farmers or ranchers) with a higher guarantee limit of 95% and stepping down to 85%. An annual inflation adjustment is also included so the guarantee amounts need not be revisited to keep them current. Read Legislation.

In a September 12, 2016 letter, ICBA President Cam Fine thanked Congressman Bost for introducing this legislation and stated that the higher loan limits will benefit family farmers and ranchers. Read ICBA Letter of Support.

CBAI strongly supports H.R. 5733.

September 21, 2016


Congressman Blaine Luetkemeyer Addresses CBAI Convention Attendees

On Saturday, September 17th, Missouri Congressman Blaine Luetkemeyer (R-03) addressed a general session of community bankers during CBAI’s 42nd Annual Convention in Kansas City. The Congressman is a former bank examiner, community banker, small business owner, and currently operates a 160 acre farm. He was first elected to Congress in November of 2008 and serves on the U.S. House Financial Services Committee, and is its Housing and Insurance Subcommittee Chairman, as well as serving as the Vice Chairman of the U.S. House Small Business Committee.


Congressman Luetkemeyer is an outspoken champion of community banks. A strong advocate for tiered regulation, he is the sponsor of the CLEAR Act (H.R. 1233) which contains many regulatory relief provisions from the ICBA’s Plan for Prosperity. He has also sponsored legislation in the 114th Congress to eliminate redundant privacy notices (H.R. 601), withdraw the Federal Housing Finance Agency’s harmful proposal to restrict membership in Federal Home Loan Banks (H.R. 3808), and prohibit the regulators from implementing “Operation Choke Point” (H.R. 766). Congressman Luetkemeyer discussed the prospects for enacting regulatory relief legislation after the November election and during the next session of Congress in 2017.

The Congressman also responded to questions and concerns relating to the general election, legislative gridlock, the pace and scope of additional regulatory relief for community banks, and the importance of community banker advocacy efforts in the legislative and regulatory process.

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CBAI thanks Congressman Luetkemeyer for taking the time to address Illinois community bankers at Convention.

September 17, 2016


CBAI Convention Breakout Session Featured FASB/CECL Community Bankers Advocacy Success

During a lively Breakout Session at CBAI's 42nd Annual Convention community bankers heard first-hand accounts of how their aggressive advocacy efforts, and those of the associations that exclusively represent their interests, resulted in significant revisions to the proposed Financial Accounting Standards Board’s (FASB) Current Expected Credit Loss (CECL) model.

CBAI member Greg Ohlendorf (President and CEO of First Community Bank and Trust in Beecher, Illinois) and James Kendrick (ICBA’s Vice President of Accounting Conv CECLFASB Advocacyand Capital Policy) represented the nation’s community banks in numerous meetings with FASB and described the significant concessions and accommodations community bankers received leading up to the final release of CECL. The new accounting rule will now be more manageable than what was first proposed as it will not require complex and costly models, benchmark increases to allowance levels, or loss forecasts for the entire life of loan.

Kendrick and Ohlendorf gave the Breakout Session attendees a revealing peek behind the curtain of this regulatory rulemaking process including the events leading up to a contentious meeting with FASB on the cusp of the release of the CECL. Community bankers also learned what the banking regulators are saying about their CECL implementation plans and what bankers need to be doing (and not doing) right now to prepare for this new mandatory credit loss model.

This informative discussion clearly reinforced the fact that community banker advocacy is important and truly does make a difference.

September 17, 2016



CBAI Articles

FASB Revises the Current Expected Credit Loss Model – June 16, 2016

CECL Update – CBAI Member Attends FASB Meeting – February 15, 2016

ICBA Press Releases

FASB Makes Major Improvements to Accounting Standard – June 16, 2016

FASB Continues Progress with Revised Accounting Disclosure – April 27, 2016

CECL Reforms Show FASB Listening to Community Banks – April 22, 2016

ICBA to FASB: Hit Stop Button on Dangerous Accounting Plan – February 4, 2016


Joint Statement by the Regulators – June 17, 2016

ICBA Questions and Answers