Comment Letter

On Monday, IBAT filed a comment letter speaking out against a proposal by the National Credit Union Administration (NCUA) to allow more member business lending by tax-exempt credit unions. As it stands, credit unions are statutorily limited to a cap of 12.25 percent of total assets for member business lending. 

“The NCUA’s proposal is a blatant and offensive attempt to sidestep the authority of Congress,” said IBAT Executive Vice President Steve Scurlock. “Tax-exempt credit unions have already been given a free pass, via loosened membership standards, to buy the auto loan and small consumer credit market with low rates,” he added. “Any attempt to extend their reach in the marketplace to do the same with business lending ought to be dismissed outright.”

The IBAT letter can be read here. Additionally, ICBA has provided an online tool for community bankers to weigh in on this issue with their lawmakers and the NCUA. IBAT members are encouraged to comment to the NCUA and/or write a letter, email or otherwise contact their members of Congress and two Senators on this issue during the August recess.

Let's Hear It for Hoenig

In prepared remarks delivered last week, FDIC Vice Chairman Tom Hoenig expanded on his proposal to create a bifurcated regulatory system based on the complexity of banks’ business activities. “Under the plan,” Hoenig said, “a bank would be eligible for regulatory relief if:

  • it holds no trading assets or liabilities;
  • it holds no derivative positions other than interest rate and foreign exchange derivatives;
  • the total notional value of all its derivatives exposures - including cleared and non-cleared derivatives - is less than $3 billion; and
  • it maintains a ratio of Generally Accepted Accounting Principles equity-to-assets of at least 10%.”

Hoenig emphasized the importance of business model, rather than asset size, being the guiding principle in consideration of regulatory relief. He went on to suggest that banks meeting this criteria should be exempt from Basel III capital requirements, treated with greater discretion with regard to fair lending requirements, subject to an 18-month examination cycle, earn automatic QM status for mortgage loans held in portfolio, and be able to exhibit compliance with the Volcker rule by having clear policies and procedures that place appropriate controls on activities.

IBAT President and CEO Chris Williston and Executive Vice President Steve Scurlock recently met with Vice Chairman Hoenig in Washington, D.C. to discuss the proposal. “Hoenig has given this a lot of careful thought and although we disagree that a minimum capital standard should be included for qualifying banks, we commend him for moving the needle towards a tiered regulatory environment,” Williston said. “I am hopeful Congress will look seriously at this idea and soon.”

Operations Compliance

The operations side of the bank is facing increasing challenges. Technology is driving more products, but creating new security and compliance burdens. Innovative products are bringing in more non-interest income, but also raising regulatory concerns. And non-bank agencies continue to poke around in bank records and operations!

New this year
The Summit has added a panel of experts to conduct a case study concerning Cyber Security & Disaster Recovery.

Topics Include:

  • Cyber Security
  • Escheat Basics
  • Electronic Banking
  • CFPB Update
  • Common HR Mistakes for Today’s Bankers

Who Should Attend
This Summit will benefit anyone with responsibilities in the operations and compliance departments of community financial institutions. Learn more and register.

Baker Market Update: Aug. 10, 2015

Most everyone has experienced the vexation of being stuck in the fast lane behind a slow driver who is blissfully unaware of where they are and that their right-hand blinker is stuck in the “on” position. What are they telling us? Maybe their blinker isn’t stuck and they really are going to change lanes. Maybe they’re going to slam on the brakes and make a last-minute exit across three lanes of traffic. Maybe they’re just clueless and don’t really know what they’re going to do, either. It’s a little bit like following the Fed.
Well, the Fed has had its turn signal on all year but has yet to change lanes.

Overdraft Protection

Bankers have asked if they may charge “continuing overdraft fees,” as they have heard of other banks charging these and want to do likewise. For Texas chartered banks, these fees bump into the usury laws. (Out of state banks could import the usury laws of their state.)

Click here to view an informal letter from the OCCC on this issue. It is not binding, and it does not opine on the possibility of national banks being able to preempt state law. However, as the CFPB goes after overdraft practices with a vengeance, it is particularly prudent to cautiously comply with all applicable law!

This Could be You...

IBAT’s 41st Annual Convention, themed “It’s Island Time in Galveston,” will be here soon. We officially invite you to join us in Galveston, September 19-22, 2015, for a variety of educational sessions, networking events, entertainment that can’t be beat, opportunities to contribute to the IBAT PAC and keynote speakers that will make you think long after their sessions.

Keynote speaker Joe Dittmar will discuss “Lessons Learned from a Date with Destiny/An Inspirational and Historic View of 9/11/01.” This session is not to be missed as Dittmar presents an intriguing and gripping perspective on what really happened before, during and after the terrorist attacks. He will also share concepts and ideas about what we learned that day and what lessons we can continue to teach.

Registrations received on or before August 7 are eligible for early bird pricing. August 14 is the cut-off for the special room rate at both the San Luis Resort, Spa & Conference Center and Hilton Galveston Island Resort. Space is limited and will be available on a first-come, first-served basis. We encourage you to register today and secure your accommodations. Additional Convention information can be found here.

Community Bank Reg Burden

A special section in The Washington Times last week covered the excessive regulatory burden on community banks through a series of articles and op-eds. “How excessive regulation is crushing Main Street” is a special report from The Washington Times Advocacy Department. Below are a few of the stories included:

Call to Action

Short-term spending bill leaves out fed dividend cut in follow-up to the story reported in last week's issue of the Bottom Line. Congress headed into the August recess by passing a short-term highway spending bill that did not include the proposed cut to Fed dividends for banks with more than $1 billion in assets.

The slimmed-down measure effectively kicks the can down the road for three months and places pressure on Congress to pass a longer-term spending bill in an already crowded agenda this fall.

"While the Congressional calendar helped the industry dodge a bullet this time around, it will be essential that community bank leaders engage with letters to Congress to ensure that this proposal gets taken off the table for future consideration," said IBAT President and CEO Chris Williston.

As lawmakers have returned to their districts for the month of August, IBAT members are encouraged to make contact during the recess to discuss this issue, as well as other items on the regulatory relief agenda (reported above).

Making Bipartisan Progress

As reported in last week’s Bottom Line, the House Financial Services Committee voted on numerous community bank regulatory relief bills throughout the week. 

Promising bipartisan progress was made on several fronts, including the passage of the following:

  • H.R. 766, the “Financial Institution Customer Protection Act of 2015,”
    to protect financial institutions and their customers from Operation Choke Point;
  • H.R. 1210, the “Portfolio Lending and Mortgage Access Act,” 
    to give Qualified Mortgage treatment to loans held in portfolio by the originator;
  • H.R. 1553, the “Small Bank Exam Cycle Reform Act of 2015,”
    to provide an 18-month exam cycle for community banks with $1 billion or less in assets;
  • H.R. 1737, the “Reforming CFPB Indirect Auto Financing Guidance Act,”
    to reform CFPB indirect auto financing guidance;
  • H.R. 1941, the “Financial Institutions Examination Fairness and Reform Act,”
    to create a workable exam appeals process and common-sense standards for classifying loans;
  • H.R. 3189, the “Fed Oversight Reform and Modernization Act of 2015,”
    to improve the economy’s performance by bringing greater accountability and transparency to the Federal Reserve; and
  • H.R. 3192, the “Homebuyers Assistance Act,”
    to provide a TILA-RESPA Integrated Disclosure safe harbor.

Baker Market Update: Aug. 3, 2015

Most people have heard the story about the guy who asked the waiter to cut his pizza into sixths instead of eighths. He wasn’t hungry enough, he reasoned, to eat eight slices of pizza. So, it’s all in how one looks at things. Well, the Bureau of Economic Analysis (BEA) decided to take another look at how things played out for the economy over the last few years in an attempt to rectify “seasonal biases.” It’s 2015, and there is no place in our economy for biases; seasonal or otherwise. The most salient adjustment relates to what represents the fourth counting of first quarter GDP. The previously reported “final” calculation of a .2% decline has now become a .6% increase. Voila’. How’s that pizza?

Read more in the Baker Market Update.

2015 Salary Survey

The data collection period for IBAT’s Texas Community Bank Salary and Compensation Survey will close this Friday, July 31, 2015. If you haven't already, please submit your bank's data by clicking the link above.

What are the benefits of submitting your bank's data? Participating banks receive:

  • A PDF copy of the full survey report for FREE;
  • Exclusive access to a compensation strategies webinar, hosted by Bank Compensation Consulting, FREE of charge; and
  • Discounted pricing on the segmented data reporting tool. 

Finally, we’ll send the person who completes the report a $5 SONIC gift card to “sweeten” the deal. Participation is open to all Texas community banks. Please help us set a new record for participation this year and make the survey more valuable than ever.

Click here to create a profile, complete the survey online or download a printed reporting form to complete the survey and send back via fax.

Reg Relief Round-Up

A promising effort on the reg relief front escaped much notice last week. Sen. Susan Collins added the Community Bank Sensible Regulation Act of 2015, a game changer for community and regional banks under $10 billion in assets, to the financial services appropriations bill before it was approved by the Senate Appropriations Committee late last week. The provision would grant the FDIC, OCC and Federal Reserve Board with powers to exempt community banks from select regulations they deem unnecessary or burdensome to smaller institutions. This measure would help exempt these institutions from regulations like the Volcker Rule.

Additionally, several other reg relief bills are scheduled to be considered by the House Financial Services Committee this week:

  • H.R. 3192 to provide a TILA-RESPA Integrated Disclosure safe harbor;
  • H.R. 1210 to give Qualified Mortgage treatment to loans held in portfolio by the originator;
  • H.R. 1553 to provide an 18-month exam cycle for community banks with $1 billion or less in assets;
  • H.R. 1941 to create a workable exam appeals process and common-sense standards for classifying loans;
  • H.R. 1737 to reform CFPB indirect auto financing guidance; and
  • H.R. 766 to protect financial institutions and their customers from Operation Choke Point.

Lastly, media outlets across the country published stories last week about Dodd-Frank’s unhappy fifth birthday. The House Financial Services Committee kindly put together this press release with a compilation of these stories.

Dell Flash Sale

Dell is pleased to offer exclusive discounts for IBAT members, including 45% off Optiplex desktops ordered before July 31, 2015 with coupon code 15XM?498ZLDML7

Other special promotions currently available include:

  • Save an additional 10% on PowerEdge servers $1299 and more with coupon code 0N25ZQG3C75KSS
  • Save an additional 10% on Dell Precision Workstations with coupon code 26MCRQ5LQ31S20
  • Save an additional 5% on select Dell electronics and accessories with coupon code W42L1$VV$55VWZ

IBAT members save an average of 30% on orders with Dell. To access these discounts, visit the IBAT landing page on Dell’s website or contact Bryan Horten, IBAT’s Strategic Account Manager, at 512-942-9120 to order. As a reminder, whenever ordering Dell equipment please be sure to include the unique Dell/IBAT link number GS126658178.

Abolishing the CFPB

The Consumer Financial Protection Bureau (CFPB), which last week “celebrated” its fourth year in existence, was hit with a barrage of scrutiny in the United States Congress. First, Senator Ted Cruz and Representative John Ratcliffe introduced legislation (S. 1804, H.R. 3118) to abolish the Bureau, saying that while the Bureau was intended to “help consumers by regulating and reigning in larger financial institutions,” in actuality, “big banks have only gotten bigger and the number of smaller banks and options for consumers have only decreased.”

Separately, Chairman Richard Shelby of the Senate Banking Committee progressed legislation that would place the Bureau within the appropriations process and replace its director-driven governance model with a five-member commission. While Shelby’s amendment is not expected to hold up in its entirety, its place in the subcommittee-approved bill provides an opportunity for debate on meaningful regulatory relief measures for community and regional banks.

In survey results released by SNL Financial last week, 33% of respondents identified the creation of the CFPB as the byproduct of Dodd-Frank that has most impacted their bank.

“Despite lacking direct supervisory power over community banks, the CFPB has left an indelible mark on the regulatory environment overshadowing community banks,” said IBAT President and CEO Chris Williston. “While we support efforts to hold the too-big-to-fail banks responsible for their misdeeds in the marketplace, we believe consumers are under equal threat by having credit availability and banking services limited by CFPB rules,” Williston added. “It’s nothing short of regrettable that the actions of the agency cannot be focused on where the real problems exist.”

New Proposed Tax

The U.S. Senate was hard at work this weekend crafting a highway spending bill that includes a plan to slash dividends paid by the Federal Reserve to member banks with more than $1 billion in assets. Under the plan, the dividend would be reduced from 6% to 1.5%, with the savings being reallocated to highway spending. The established dividend rate of 6% has been in place for more than 100 years. Member banks are required by federal law to buy and hold a set amount of stock in the Federal Reserve System. The stock may not be pledged or sold.

“Applying this tax to any bank is another blow to an industry already crushed with the costly impact of regulatory burden,” said IBAT President and CEO Chris Williston. “Lawmakers need to scrap this proposal altogether,” he added.

If you would like to weigh in on this proposal, please do so using ICBA’s customizable messaging platform.

Baker Market Update: July 27, 2015

It’s the dog days again, and things are heating up. With the winter season getting much of the blame for 2015’s economic  malaise, should it then follow that summer gets the credit for macro-prosperity? Well, first let’s see if we can find some. Prosperity, that is.
The sellers of Existing Homes might be feeling pretty prosperous this week with the announcement that a 3.2% increase was notched in that measure last month; a pace of growth that more than tripled market expectations. Unfortunately, there’s a yin for every yang and New Home Sales got yinned down by 6.8% in June. Home prices in general got a bit of a boost as the Federal Housing Finance Agency (FHFA) announced that for May, residential property prices rose by .4%. More price data will be available next week when a new Case-Shiller Home Price Index report comes out on Tuesday. Coming out of the Kansas City Fed today, however, was a disappointing report for manufacturing’s prosperity. Their Index of Manufacturing Activity came in at a value of -7.  Minus signs are a definite yin.