ICBA News, sponsored by Holtmeyer & Monson—ICBA Kicks Off “I Luv My Community Bank” Campaign

ICBA News
ICBA Kicks Off “I Luv My Community Bank” Campaign
ICBA is kicking off its third annual “I Luv My Community Bank” campaign. The grassroots-style social media campaign offers consumers and small businesses the ability to evangelize their experiences with their community bank.

The campaign’s unique interactive website will act as a forum for consumers and small businesses to post comments, upload photos and deliver video testimonials about their community banking experiences. Consumers and small businesses that share testimonials of their experiences are eligible to receive one of five $500 gift cards, courtesy of ICBA.

New this year, a Facebook app component will aid with collecting submissions and will host a voting function for the public to determine the five winners for 2013. Stay tuned to ICBA’s Facebook page for updates.

The campaign is designed to promote the importance of community banks and will complement Community Bank Month in April and the nationally recognized Go Local initiative. Sign Up Today.

Congress
Lawmakers Question Too-Big-To-Fail Impact on Prosecutions
Sens. Sherrod Brown (D-Ohio) and Chuck Grassley (R-Iowa) asked Attorney General Eric Holder whether the too-big-to-fail status of large financial institutions undermines the ability of the federal government to prosecute megabank wrongdoing. In a letter to Holder, the lawmakers also asked the Justice Department to disclose the identities of parties with whom prosecutors consult about the appropriate level of penalties for financial institutions.

In the letter, Brown and Grassley cited a recent “Frontline” report in which a Justice Department official said prosecutors consider the potential economic impact of prosecutions against large financial firms. They asked Holder whether Justice has held off on prosecuting institutions due to concern that their failure could jeopardize financial markets.

In a recent blog post titled “Too Big To Jail?” ICBA President and CEO Cam Fine wrote that the “Frontline” report shows that the individuals who wrecked the nation’s financial system have been allowed to walk away while community banks have been left to pick up the pieces under the weight of new regulations.

“If this isn’t a textbook definition of the problem of too-big-to-fail, I don’t know what is,” Fine wrote in Finer Points. “These financial firms are so large and so interconnected that they not only have access to lower-cost funding and to a seemingly limitless taxpayer backstop, but they are also immune from criminal prosecution.”

Housing
FHA Increasing Premiums To Shore Up Insurance Fund
The Federal Housing Administration announced that it will increase mortgage insurance premiums as part of a series of changes to strengthen its Mutual Mortgage Insurance Fund. The FHA will increase premiums for most new mortgages by 10 basis points and increase premiums on jumbo mortgages ($625,500 or larger) by 5 basis points to the maximum authorized amount. Further, the FHA said it will require most borrowers to continue paying annual premiums for the life of their mortgage loan.

Additionally, the FHA said it will:

consolidate its Standard Fixed-Rate Home Equity Conversion Mortgage (HECM) and Saver Fixed Rate HECM pricing options for FHA case numbers assigned on or after April 1,
require lenders to manually underwrite loans for which borrowers have a decision credit score below 620 and a total debt-to-income ratio greater than 43 percent,
propose increased down payment requirements for mortgages with original principal balances above $625,500, and
step up its enforcement efforts on aggressive marketing to borrowers with previous foreclosures.

ICBA NewsWatch Today is sponsored by Holtmeyer & Monson:
Brighton Bank in Tennessee reports that its institution earned $367,000 last year from Small Business Administration loans facilitated by Holtmeyer & Monson. This income was a significant portion of the bank’s total 2012 earnings, contributing to a total of $1,008,000 in SBA premiums that the institution has earned since 2008. Brad Hailey, president of the $62 million Brighton Bank, notes, “H&M’s top-notch service makes gains like these easy to come by.” Find out how to start adding non-interest fee income at no net cost—getting started is simple. Call (800) 340-7304.

TARP
SIGTARP: Too-Big-To-Fail Problem Persists
The U.S. financial system remains vulnerable to companies that can be deemed too interconnected to fail, according to the Special Inspector General for the Troubled Asset Relief Program. In its second report this week, the SIGTARP said that these risky institutions continue to form the foundation of the U.S. economy and have only gotten bigger in the past four years because of their implicit government guarantee.

The SIGTARP cites Federal Reserve Bank of Dallas estimates that the too-big-to-fail status of large financial institutions provides them a significant edge in the cost of raising funds. “Whether Dodd-Frank’s newly created resolution authority will ultimately be successful in ending ‘too big to fail’ will depend on the actions taken by regulators and Treasury,” the report said.

Regulation
Curry: Regulators Must Communicate, Coordinate Rules
The prudential bank regulators and Consumer Financial Protection Bureau must communicate to effectively coordinate safety-and-soundness and consumer-protection regulators, Comptroller of the Currency Thomas Curry said. Speaking to a gathering of consumer compliance specialists, said that where safety and soundness stop and consumer protection begins is not always clear, though the two areas of concern are closely related.

Done well, consumer-protection requirements should have a positive effect on banks’ health by supporting customer confidence in their financial institutions, Curry said. Consultation in developing rules and regulations is important to provide regulators with a comprehensive understanding of the institutions they regulate, he said.

Federal Reserve
Fed Holds Steady on Interest Rates, Asset Purchases
The Federal Open Market Committee said that economic growth has paused in recent months, largely due to weather-related disruptions and other transitory factors. The panel held steady on its plan to maintain historically low interest rates and to continue its expanded asset-purchase program.

The FOMC last month announced that the central bank would expand its bond purchases to a pace of $85 billion per month. The panel also again said it will hold target interest rates at between zero and 0.25 percent “at least as long” as the unemployment rate remains above 6.5 percent and if inflation “between one and two years ahead” is projected to be no more than 2.5 percent.

Regulation
OCC Names Acting Head of Large Bank Supervision
The Office of the Comptroller of the Currency announced that Martin Pfinsgraff would become acting senior deputy comptroller for large bank supervision. Pfinsgraff succeeds Michael L. Brosnan, who will become examiner-in-charge of Zions Bank.

Pfinsgraff, a Deputy Comptroller for Credit and Market Risk, joined the OCC from iJet International and has served as treasurer of Prudential Insurance Co. The OCC also announced that Darrin Benhart, one of the two deputy comptrollers in the Credit and Market Risk Group, would assume full responsibility for the entire group on an acting basis.

Economy
GDP Shrinks in Fourth Quarter
Real gross domestic product decreased at an annual rate of 0.1 percent in the fourth quarter of 2012, according to the Commerce Department’s advance estimate. Commerce attributed the decrease to negative contributions from private inventory investment, federal government spending, and exports. The decline followed a 3.1 percent GDP increase in the third quarter. The second estimate for the fourth quarter is due out on Feb. 28.

Economy
Private-Sector Employment Up 192K in January
Private-sector employment increased by 192,000 jobs in January, according to the ADP National Employment Report. The December increase was downwardly revised from 215,000 to 185,000. Small and medium-sized businesses reported gains of 115,000 and 79,000, respectively, while large businesses reported a loss of 2,000.

Agriculture
USDA Issuing Milk Income Loss Contract Payments in February
The USDA Farm Service Agency announced that beginning Feb. 5, USDA will issue payments to dairy farmers enrolled in the Milk Income Loss Contract program for the September 2012 marketings. The American Taxpayer Relief Act of 2012 extended the authorization of the 2008 Farm Bill through 2013 for many programs administered by FSA, including MILC. The 2008 Farm Bill extension provides for a continuation of the MILC program through Sept. 30.

Poll
This Week’s Quick Poll
Take this week’s Quick Poll on the impact of new mortgage regulations, and review the previous poll on the regulatory environment. View the Archive.

Education
ICBA’s BSA/AML Institute Slated for May
An upcoming ICBA seminar is designed to provide attendees with a greater understanding of how to adopt improved Bank Secrecy Act/Anti-Money Laundering practices, establish stronger internal controls, and monitor for weaknesses. The BSA/AML Institute, scheduled for May 13-15 in Minneapolis, will utilize “real world” examples for banks of varied asset sizes. Using this approach, attendees can closely consider their situation relative to a peer example and put more substance behind catch phrases such as “risk-based” and “as needed.” Register Online.