ICBA News, sponsored by Bank Assetpoint—Megabank Uses Creative Numbers to Take on Community Banks

Lending
Fine: Megabank Uses Creative Numbers to Take on Community Banks
A new report from one of the megabanks that contributed to the recent Wall Street financial crisis is using creative numbers to defend these institutions and take on community banks, ICBA President and CEO Cam Fine wrote in his latest blog post. A JPMorgan Chase paper says that megabanks lend more relative to their size than do smaller institutions—thanks to a formula that expands the definition of credit to include categories of funding that rarely apply to community banks.

“By simply adding in other sources of funding to the traditional measures of bank lending, JPMorgan has concluded that the megabanks come out on top,” Fine wrote in Finer Points. “Well, that’s convenient. Of course, every other measure of bank business lending finds that, pound for pound, community banks reign supreme.” Read the Blog Post.

Advocacy
ICBA Supports Fed Governor’s Comments on “One-Size-Fits-All” Regulation
ICBA said it supports comments from Federal Reserve Governor Elizabeth Duke encouraging community banks to continue making their successful case against “one-size-fits-all” banking regulation. Duke said that community banks should continue to identify the most onerous regulatory requirements and suggest alternatives to achieve those regulatory objectives in a less intrusive way.

Duke cited community bank concerns that new regulations will inhibit their ability to lend in their communities. However, she also said that she can’t remember a time when more regulatory proposals differentiate between banks based on size or complexity. Further, she said the community banking industry’s future is bright and that the advantages of community banking, such as deep community ties and customer relationships, have not diminished.

“ICBA strongly supports a tiered approach to financial regulation that distinguishes between common-sense community banks on Main Street and systemically risky financial firms on Wall Street,” ICBA President and CEO Camden R. Fine said. “We are encouraged by Governor Duke’s words of support for smart regulations that do not overburden community banks and prevent them from continuing to serve their customers and communities.”

ICBA this week called on policymakers to carve out community banks from new regulations and to expand on the tiered financial regulatory approach, citing the volume and cost of new regulations. Read ICBA Release.

Marketing
Facebook App Live for I Luv My Community Bank
The Facebook application for the I Luv My Community Bank campaign goes live on ICBA’s Facebook page today. The app will aid with collecting submissions starting Thursday, Feb. 14, and will host a voting function starting Monday, April 15, for the public to determine the five winners for 2013. Stay tuned to ICBA’s Facebook page for updates.

The campaign offers consumers and small businesses the ability to evangelize their experiences with their community bank. Its 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 (see contest rules).

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.

ICBA NewsWatch Today is sponsored by Bank Assetpoint:
Promontory introduces Bank Assetpoint—a single point connecting buyers and sellers of bank assets. Post and search listings for loans, loan participations, loan pools and OREO. Connect with real-estate brokers, loan sale advisors and specialty service providers to help dispose of or purchase assets. Visit www.bankassetpoint.com, or contact Steve Kinner at skinner@promnetwork.com.

Fraud
DOJ Sues S&P for Fraud in Rating Mortgage-Backed Securities
The Justice Department filed a civil lawsuit against Standard & Poor’s Ratings Services alleging that S&P engaged in a scheme to defraud investors in residential mortgage-backed securities and collateralized debt obligations. The lawsuit alleges that investors, many of them federally insured financial institutions, lost billions of dollars on CDOs for which S&P issued inflated ratings that misrepresented the securities’ true credit risks.

The complaint also alleges that S&P falsely represented that its ratings were objective, independent and uninfluenced by S&P’s relationships with investment banks when, in actuality, S&P’s desire for increased revenue and market share led it to favor the interests of these banks over investors. The action was filed in the Central District of California, home to the now-defunct Western Federal Corporate Credit Union, which was the largest corporate credit union in the country before it collapsed due to massive losses on RMBS and CDOs rated by S&P.

Regulation
FDIC Board Meeting on Insured Deposit Definition
The FDIC board of directors announced it will meet at 10 a.m. (Eastern time) Tuesday, Feb. 12. The board’s agenda includes a discussion of a notice of proposed rulemaking on the definition of insured deposit.

Economy
CBO Projects 1.4 Percent GDP Growth in 2013
The U.S. gross domestic product is projected to increase by 1.4 percent this year followed by more rapid growth starting in 2014, the Congressional Budget Office said. The CBO said the slow growth reflects a combination of economic improvement and fiscal tightening—including the expiration of a 2 percentage point cut in the payroll tax and scheduled automatic reductions in federal spending. After the economy adjusts to the fiscal tightening inherent in current law, underlying economic factors will lead to 3.4 percent growth in 2014 and an average of 3.6 percent in 2015-18, the CBO said.

Economy
Services-Sector Activity Slows in January
Economic activity in the services sector grew in January but at a slower pace than the month before, according to the Institute for Supply Management. ISM’s Non-Manufacturing Index registered 55.2 percent in January, which was 0.5 percentage points lower than December but above growth-neutral for the 37th consecutive month. The business-activity and new-orders indexes declined in January, while the employment and prices index increased.

Poll
This Week’s Quick Poll
Take this week’s Quick Poll on new Federal Housing Administration rules, and view results from the previous poll on the impact of new mortgage regulations. 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 catchphrases such as “risk-based” and “as needed.” Register Online.

Products and Services
Upcoming Webinar on How To Earn CRA Credit
ICBA and the Senior Housing Crime Prevention Foundation are hosting an upcoming webinar on how to earn CRA credit by making community development loans, qualified investments and grants that provide safe and secure living environments for senior housing residents through the Senior Crimestoppers program. This program has been reviewed by the federal regulatory agencies and has passed the rigors of multiple exams. The webinar is scheduled for 11 a.m. (Eastern time) Thursday, Feb. 21. Register Online.