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Too-Big-To-Fail
ICBA: Holder Testimony Confirms Too-Big-to-Jail Problem
ICBA
said that last week’s remarks from U.S. Attorney General Eric Holder confirm that too-big-to-fail financial institutions operate above the law. In testimony before the Senate Judiciary Committee, Holder said that the size of too-big-to-fail financial firms inhibits Justice Department prosecutions on Wall Street.
“Not only have these institutions received billions of dollars in taxpayer support because of the systemic risks they pose, they are also apparently immune from criminal prosecution,” ICBA President and CEO Cam Fine said. “Meanwhile, community banks have been left to pick up the pieces under the weight of crushing laws and regulations enacted to halt Wall Street’s unscrupulous behavior.”
Fine
said the too-big-to-fail financial giants should be downsized and split up to help restore sanity and accountability in the financial system.
In a Jan. 24 blog post, Fine wrote that a recent episode of “Frontline” shows that the too-big-to-fail problem is alive and well. In that episode, the previous assistant attorney general of the Justice Department’s Criminal Division, who has since left the department, said he has lost sleep worrying about the systemic impact of prosecuting Wall Street executives. Read ICBA Release.
Congress
Shelby Introduces Reg Cost-Benefit Bill
Sen. Richard Shelby (R-Ala.) recently introduced legislation to help address the stifling regulatory burdens facing community banks. The Financial Regulatory Responsibility Act of 2013 would require the financial regulatory agencies to subject proposed rules to a more rigorous cost-benefit analysis.
ICBA has long supported this proposal, which is a key plank in the ICBA Plan for Prosperity
legislative platform. Among its provisions, the association’s Plan for Prosperity would require cost-benefit analyses to take into account the impact of new regulations on the smallest banks and to identify and assess available alternatives.
Under the Shelby legislation, regulators would have to provide clear justification for new rules and determine the economic impacts of their proposals, including their effects on growth and net job creation. It also bars new regulations with burdens that outweigh their costs.
Senate Banking Committee Ranking Member Mike Crapo (R-Idaho) and Sens. Mike Johanns (R-Neb.) and Saxby Chambliss (R-Ga.) are cosponsoring the measure. ICBA strongly supported similar legislation introduced in the 112th Congress.
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Convention
ICBA Kicks Off National Convention and Techworld
ICBA launched the 2013 ICBA National Convention and Techworld yesterday in Las Vegas. The largest gathering of community bankers in the world runs through Friday.
The 2013 convention features educational events, networking opportunities and an all-star lineup of speakers. Speakers include Consumer Financial Protection Bureau Director Richard Cordray, Comptroller of the Currency Thomas Curry, FDIC Chairman Martin Gruenberg, Hall of Fame quarterback Joe Montana, Fox News Sunday host Chris Wallace and more.
Get
the latest news and information from Las Vegas via ICBA’s convention website and by following the #ICBALV13 hashtag on Twitter.
Convention
Wikipedia Founder Jimmy Wales Previews Convention Address
Jimmy Wales, the founder of online encyclopedia Wikipedia, is delivering a keynote address Thursday at the ICBA National Convention and Techworld in Las Vegas.
In
an ICBA preconvention interview, Wales offers a short preview of his ideas for community bankers on how technology is transforming communication and how positive change can foster growth in business. “Remember that you can trust people and be very open to people and you’ll be rewarded for that,” he says.
To suggest a question for Wales during his ICBA convention address on Thursday, tweet @ICBA today. To follow Wales’ moves online, visit his Twitter page @jimmy_wales. Read the Interview.
Regional News
ICBA’s Merski Highlights Congressional Priorities During Texas Tour
ICBA
Executive Vice President of Congressional Relations and Chief Economist Paul Merski recently joined the Independent Bankers Association of Texas to provide updates on the industry’s key congressional priorities. Merski and IBAT President and CEO Christopher Williston provided advocacy updates to community bankers in eight Texas cities over three days as part of IBAT’s 2013 Tour de Texas regional meetings.
In interactive panel discussions reaching more than 800 participants, Merski and Williston discussed some of the top community banking issues in the 113th Congress. Among the issues discussed were the proposed Basel III capital rule, the ongoing need for a more tiered regulatory approach to help community banks, and the recently launched Plan for Prosperity,
ICBA’s flexible legislative platform to ease specific regulatory burdens identified by ICBA, IBAT, other community banking groups and grassroots bankers nationwide.
ICBA Senior Executive Vice President of Government Relations Karen Thomas toured the state with IBAT last month to provide advocacy updates during round one of the Tour de Texas.
Regulation
OCC’s Curry Cites Community Bank Money-Laundering Threat
As
large banks improve their Bank Secrecy Act/anti-money-laundering programs and jettison higher-risk lines of business, regulators are concerned that money launderers will migrate to smaller institutions, Comptroller of the Currency Thomas Curry said.
Testifying before the Senate Banking Committee, Curry said that while the OCC is committed to ensuring that all supervised institutions have effective BSA/AML programs in place, it recognizes the increased burden this places on community banks and thrifts. “We will work with these institutions to help them calibrate their controls to reflect the risks they face, thereby reducing unnecessary burden,” Curry said.
Regulation
Fed: Most Megabanks Would Survive Stress-Test Scenario
The nation’s 18 largest bank holding companies would lose an estimated $462 billion under the Federal Reserve’s stress-test scenario released last week. The agency said despite the losses, 17 of the institutions have enough capital to survive, with the exception of Ally Financial.
The
hypothetical stress scenario includes a peak unemployment rate of 12.1 percent, a drop in equity prices of more than 50 percent, a decline in housing prices of more than 20 percent, and a market shock for the largest trading firms. The aggregate Tier 1 common capital ratio would fall from 11.1 percent in the third quarter of 2012 to 7.7 percent in the fourth quarter of 2014 under the scenario.
Under Dodd-Frank Act rules, the Federal Reserve conducts annual supervisory stress tests to evaluate covered companies’ capital conditions.
Regulation
Agencies Seek Comments on Proposed Call Report Changes
The federal banking agencies requested comments on proposed revisions to the call report that generally would take effect in June 2013. The proposed reporting changes include a question on whether reporting institutions offer separate deposit products to consumers and businesses, a request for information on international remittance transfers, additional data to be reported by large and highly complex institutions, and more. All comments must be submitted by April 22.
Regulation
FinCEN Issues Reminder on April 1 Reporting Deadline
The Financial Crimes Enforcement Network issued an alert on a final notice requiring the electronic filing of most Bank Secrecy Act reports. FinCEN reminded financial institutions that they must begin using the new FinCEN reports, which are available only electronically through the BSA E-Filing System, by April 1. FinCEN said it generally considers financial institutions filing mandated reports in paper format to be noncompliant with the electronic filing mandate.
Bank Failures
Regulators Close Georgia Bank
Frontier Bank in LaGrange, Ga., was closed by regulators. The FDIC entered into a purchase-and-assumption agreement with HeritageBank of the South in Albany, Ga. As of Dec. 31, Frontier Bank had approximately $258.8 million in total assets and $224.1 million in total deposits. The FDIC estimates that the cost to the Deposit Insurance Fund will be $51.6 million. Frontier Bank is the fourth FDIC-insured institution to fail in the nation this year and the first in Georgia.
Congress
Sen.
Carl Levin Not Seeking Re-Election
Sen. Carl Levin (D-Mich.) announced that he will not seek re-election in 2014. Levin said he can best serve his state and nation by concentrating in the next two years on challenging policy issues, such as taxes and manufacturing, without the distraction of campaigning for re-election. Levin has served in the Senate since 1979.
Economy
Payrolls Up 236K in February
Nonfarm
payroll employment increased by 236,000 in February as the unemployment rate edged down to 7.7 percent, the Labor Department reported. Employment increased in professional and business services, construction, and health care. The number of unemployed persons edged down to 12 million, though the number of long-term unemployed was virtually unchanged at 4.8 million.
Poll
This Week’s Quick Poll
Take this week’s Quick Poll on too-big-to-jail, and view results from the previous poll on community bank advocacy. View the Archive.
Education
ICBA Seminar on IT Issues in April
ICBA is hosting an upcoming seminar to help technology and security officers learn more about some of the newer technologies community banks are implementing today. “Current IT Issues” is scheduled for April 24-25 in Minneapolis. Register Online.
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