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Regulation
ICBA Urging Volcker Rule Guidance on CDO TruPS
ICBA is urging the federal banking agencies to issue further guidance under the Volcker Rule concerning the treatment of collateralized debt obligations backed by trust-preferred securities.

In the community bank summary of the Volcker Rule, the agencies indicated that a “small number of community banks” owning CDOs backed by TruPS meet the definition of “covered funds” and would have to divest in conformance with the rule. However, several brokers and investment bankers have been advising banks that not only do they have to divest their CDO TruPS by July 2015, but that there is an immediate impact to the carrying value of the CDOs under OTTI accounting rules.

At ICBA’s urging, the banking agencies are meeting this week to discuss the implications of the CDO TruPS issue. ICBA is urging them to issue guidance that will relieve community banks of having to take immediate writedowns.

Read the Final Rule.

Read the Community Bank Guide.



Regulation
Agencies Issue Statement on Supervisory Approach for QM, non-QM Loans
Regulators issued a statement to clarify safety-and-soundness expectations and Community Reinvestment Act considerations related to qualified mortgage and non-qualified mortgage loans offered by regulated institutions. Regulators said the statement is intended to guide institutions as they assess the implementation of the Consumer Financial Protection Bureau's ability-to-repay and QM rule, which takes effect Jan. 10.

The agencies emphasized that institutions may originate both QM and non-QM loans and that regulators will not subject residential mortgage loans to safety-and-soundness criticism solely because of their status as QM or non-QM. The regulators said they continue to expect institutions to underwrite residential mortgage loans in a prudent fashion and address key risk areas in residential mortgage lending, regardless of whether loans are QM or non-QM.

They said the agencies responsible for conducting CRA evaluations do not anticipate that institutions’ decisions to originate only QM loans, absent other factors, would adversely affect their CRA evaluations. Read the Agencies' Statement.


Media Relations
Custom Op-Ed Urges More Flexible Community Bank Regulation
Following numerous reports on the community banking industry and its impact on the economy, ICBA is offering community bankers a customizable op-ed they can use to spread the industry’s story in their local media outlets. The op-ed expresses support for policies that would encourage the formation of more community banks.

In addition to discussing the benefits of community banks to economic growth and stability, the customizable op-ed also advocates reducing the regulatory red tape that is inhibiting the formation of new community banks. It expresses support for more flexible regulatory policies that are tailored to the risk profiles and business plans of both new bank applicants and existing community banks. Access the Custom Op-Ed.


Member Spotlight
ICBA’s MacPhee Named Federal Home Loan Bank of Indianapolis Chairman
ICBA Past Chairman James D. MacPhee was named chairman of the Federal Home Loan Bank of Indianapolis for a two-year term beginning Jan. 1. MacPhee, a member of the board since 2008, is the CEO and director of Kalamazoo County State Bank in Schoolcraft, Mich., and past president of the Community Bankers of Michigan.


Plan for Prosperity
Crapo: GAO Report Illustrates Community Bank Reg Burden
A recent Government Accountability Office report on federal regulators raises concerns because of the impact of regulations on community banks, Senate Banking Committee Ranking Member Mike Crapo (R-Idaho) said.

The report found that the Office of Management and Budget and regulatory agencies might not be consistently determining which Dodd-Frank Act rules are considered "major rules" under the Congressional Review Act, which was enacted to allow Congress to review major rules before they become effective.

Crapo said that regulators should perform meaningful cost-benefit analysis so policymakers can understand how new rules will interact with each other and affect community banks and the economy at large.

ICBA supports legislation that would require financial regulatory agencies to subject proposed rules to a more rigorous cost-benefit analysis, which is a key provision in ICBA’s Plan for Prosperity. Under S. 450 and H.R. 1750, the agencies could not issue notices of proposed rulemakings unless they first determine that the rules’ quantified costs are less than their quantified benefits.


Regulation
CFPB Updates Mortgage Rules Readiness Guide
The Consumer Financial Protection Bureau released updates to its Mortgage Rules Readiness Guide in connection with mortgage regulations issued in January 2013 and amended through Oct. 15. The update offers financial institutions guidance on how to evaluate their readiness for complying with the 2013 mortgage rule changes.

The updated guide incorporates changes made to Regulation Z, the implementing regulation for the Truth in Lending Act, and to Regulation X, the implementing regulation for the Real Estate Settlement Procedures Act.

More information on the mortgage rules is available on ICBA’s Mortgage Rules Resource Page and on the CFPB’s Regulatory Implementation webpage.



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Regulation
FDIC Issues Update on Volcker Rule Regulations
A new FDIC Financial Institution Letter outlines the Volcker Rule regulations approved last week by financial regulators. The final rule, required under the Dodd-Frank Act, generally bars depository institutions and their affiliates from engaging in short-term proprietary trading for their own account. It also prohibits these institutions from owning, sponsoring or having certain relationships with hedge funds or private equity funds

The FDIC letter cites the agency’s “Volcker Rule: Community Bank Applicability” guide, which features the rule’s exemptions for community banks. As advocated by ICBA, most community banks will be exempt from all compliance program requirements under the final rule if they do not engage in any of the covered activities defined in the final rule other than trading in certain government, agency, state and municipal obligations. Read the FDIC Letter.


Bank Failures
Regulators Close Texas Bank
Regulators closed Texas Community Bank, N.A., in The Woodlands, Texas. The FDIC entered into a purchase-and-assumption agreement with Spirit of Texas Bank, SSB, in College Station, Texas. As of Sept. 30, Texas Community Bank had approximately $160.1 million in total assets and $142.6 million in total deposits.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $10.8 million. Texas Community Bank is the 24th FDIC-insured institution to fail in the nation this year. Read More from the FDIC.



Regulation
FDIC Hosting Calls This Week on Consumer Complaints, Social Media
The FDIC announced that it is hosting two teleconferences this week, on consumer complaints and social media. The consumer complaints teleconference is scheduled for 2 p.m. (Eastern time) this Wednesday, and the social media call is slated for 1 p.m. (Eastern time) on Thursday. The sessions are free, but registration is required. Read More from the FDIC.


Regulation
Latest FDIC Consumer News Features New Mortgage Rules
The fall 2013 issue of FDIC Consumer News features an overview of new mortgage rules, what to do when turned down for an account based on a report of a previously closed checking or savings account, and information on using a financial institution's social media site. The goal of the publication is to deliver timely, reliable and innovative tips and information about financial matters to consumers.


Survey
ICBA Seeks Feedback on Insurance Exposure
ICBA and Travelers Insurance are seeking community banker feedback on the industry’s insurance needs amid the increasing importance of insurance coverage for claims. Individuals who participate in a 15-minute survey are eligible for a $500 Visa gift card drawing.

Community banks are exposed to securities litigation, allegations of misrepresentation by creditors or customers, conflicts of interest and other breaches of fiduciary duty.  As a result, insurance coverage for claims has become more even more important than in years past.

The survey closes Dec. 23. Take the Survey.


Poll
Take This Week’s Quick Poll
Take this week’s Quick Poll on arbitration clauses, and view results from the previous poll on new bank charters. View the Archive.


Education
ICBA Offers BSA/AML Training Series
ICBA’s updated BSA/AML Training Series DVDs are a must-have for BSA/AML training. Regulatory expectations are high and appear to be on the rise. Agencies have recommitted to stringent BSA/AML examinations. Don’t get caught unprepared—these videos can serve as an excellent training resource for your entire bank. Learn More.


Products and Services
Free Webinar: 10 Things to Know about Small Biz Borrowers
WebEquity Solutions, an ICBA Preferred Service Provider, is hosting “10 Things to Know About Working with Small Business Borrowers” on Thursday, Dec. 19. The webinar will look at the unique challenges that community banks will face competing for small-business loans and making this segment of the business profitable. If growing your small-business loan portfolio is a goal for 2014, this is a must-attend event. Register Online.










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