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Appeals Court Rules Against Merchant Effort to Increase Interchange Windfall
ICBA expressed satisfaction with an appeals court ruling rejecting major retailers’ efforts to increase the $6 billion annual windfall they secured with the passing of the Durbin debit interchange price caps.

The merchants, which had initiated a multi-year lobbying effort to impose price controls, sued the Federal Reserve Board in an effort to lower the board’s caps even further. The ruling from the U.S. Court of Appeals for the District of Columbia Circuit overturns a lower court decision that would have required lower debit interchange price caps than those required under the Fed’s interchange rule.

ICBA and a coalition of trade associations filed a friend-of-the-court brief in opposition to the merchants and participated in oral arguments. ICBA and the coalition argued that the Federal Reserve’s existing price caps did not allow card issuers to cover their costs while receiving a reasonable return on their investments.

The Fed originally proposed capping debit interchange rates at 12 cents per transaction, then raised the cap to 21 cents plus 5 basis points of the transaction value. The price controls apply to interchange paid to debit card issuers with $10 billion or more in assets.

ICBA opposes government price fixing of interchange fees, which the association has repeatedly argued will harm consumers and community banks, despite the exemption for institutions with less than $10 billion in assets. All banks regardless of size must comply with the network routing provisions of the rule.

Representatives of the merchants said they will review possible next steps. The case is NACS v. Board of Governors of the Federal Reserve System. Read the Court’s Decision. Read ICBA Release.

Flood Insurance
ICBA Applauds Signing of Act to Help Mitigate Drastic Flood Insurance Rate Hikes
President Barack Obama signed into law ICBA-advocated, bipartisan legislation to protect homeowners from significant increases in flood insurance premiums. ICBA said it is glad the legislation was quickly signed into law to help ensure that sharp rate hikes will not make flood insurance unaffordable for many policyholders who built to code and followed the law every step of the way.

The Homeowner Flood Insurance Affordability Act will help prevent sharp flood insurance rate hikes while maintaining the goal of actuarial soundness of the National Flood Insurance Program. Nevertheless, ICBA remains concerned with the impact of higher premiums on commercial properties, which will continue to face rate hikes under the Biggert-Waters Flood Insurance Reform Act of 2012.

Among its provisions, H.R. 3370 would:
  • reinstate grandfathered status for covered properties,
  • create an annual individual property rate cap (18 percent) to prevent year-over-year rate increases for homeowners,
  • repeal the home-sale and new-policy rate-increase triggers,
  • provide a refund for people who have realized large premium increases due to the purchase of a pre-FIRM subsidized home without the full transparency from the Federal Emergency Management Agency as to the new rate structure, and
  • require FEMA to complete an affordability study and to propose an affordability framework to help homeowners cope with dramatically higher premiums.
ICBA worked closely with the House and Senate to advance the legislation to help buffer the dramatic rate increases that began being phased in on Oct. 1 under the Biggert-Waters Act. ICBA supports a fully authorized, sustainable and fiscally responsible National Flood Insurance Program.

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ICBA Meets with Treasury Officials on Final Volcker Rule
ICBA on Friday discussed the impact of the final Volcker Rule on community banks with Treasury undersecretary Mary Miller and several other key Treasury staff members. ICBA reiterated that while the interim final rule did fix the TruPS CDO problem for a majority of affected community banks, there were still a significant number of community banks that had to divest their TruPS CDOs.

ICBA urged Treasury to do whatever it could to broaden the exemption under the interim final rule so that it would include all TruPS CDOs and collateralized loan obligations. ICBA also said that while the proprietary restrictions in the Volcker Rule should not affect most community banks, ICBA remains concerned about whether community banks would have to significantly change their policies and procedures, particularly if they were engaged in interest rate hedging.

ICBA President and CEO Cam Fine, ICBA Executive Vice President of Congressional Relations and Chief Economist Paul Merski and ICBA Senior Vice President and Senior Regulatory Counsel Christopher Cole represented ICBA at the meeting.

ICBA, Coalition Urge Regulators Not to Reduce GSE Loan Limits
ICBA and a coalition of other housing and finance trade associations expressed strong support for maintaining the housing government-sponsored enterprises’ current conforming and high-cost loan purchase limits. In a coalition letter to the Federal Housing Finance Agency, the associations advocated maintaining the levels determined by the Housing and Economic Recovery Act of 2008 of $417,000 and $625,500, respectively.

The FHFA sought public comment regarding the possible effect to credit availability if the current GSE loan limits were reduced to a maximum of $400,000 for most sections of the United States.

The coalition noted that mortgage credit remains tight in most markets and that reducing the loan limits would further slow the housing recovery. It also wrote that because Congress has started the process of considering legislation to reform the housing-finance system, the FHFA should let that process move forward.

If the loan limits were reduced, the coalition wrote, borrowers likely would move to other government-backed lending programs, such as the Federal Housing Administration, which would not reduce the government footprint in the housing market.

Take This Week’s Quick Poll
Take this week’s Quick Poll on Community Banking Month, and view results from the previous poll on the 2014 ICBA Washington Policy Summit. View the Archive.

Webinar Wednesday Covers How to Solve IT Compliance Challenges
ICBA Strategic Technology Solutions is hosting a webinar this week on how community banks are permanently solving their IT compliance challenges with cloud computing and IT risk and compliance services. The webinar, scheduled for 1 p.m. (Eastern time) this Wednesday, will feature case studies and an overview of solutions, from self-help Web applications to fully managed compliance assurance programs. Register Today!

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
Webinar: It’s Time to Think About Student Loans—Your Customers Are
ICBA Preferred Service Provider iHELP is hosting a webinar at 10 a.m. (Eastern time) tomorrow and again at 2 p.m. (Eastern time) Thursday, April 3, to help community banks prepare for the upcoming peak season for private student loans. Topics will include marketing best practices, successful marketing stories of participating community banks, and a review of the 2014-15 iHELP student loan program. Register for March 25. Register for April 3.

Products and Services
Webinar: What Examiners Expect in a Compliance Management System
Continuity Control, ICBA’s new Preferred Service Provider, is hosting a free webinar at 1 p.m. (Eastern time) this Thursday titled “Compliance Management System—What are the Examiners Looking For?” to discuss what examiners and auditors expect community banks to have in place for a compliance management system. This is an issue that examiners are holding CEOs and boards responsible for. The webinar will dissect recent enforcement actions citing inadequate CMS and outline steps you can take to bullet-proof your institution. Register Now.

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