ICBA News, sponsored by WebEquity Solutions—ICBA’s Fine: We Weren’t Born to Follow

Convention
ICBA’s Fine Calls on Community Bankers To Persevere
ICBA President and CEO Cam Fine called on the nation’s community bankers to not give up in the face of challenges from overly burdensome regulations and unfairly advantaged competitors. Speaking to community bankers at the 2013 ICBA National Convention and Techworld, Fine said that while community bankers are almost always the underdog in the “bigger is better” financial world, that underdog status also makes them strong and effective.

Despite being underestimated by their opponents, community bankers have effectively blocked Wal-Mart from getting an FDIC-insured charter, changed the FDIC premium assessment formula, raised the deposit-insurance coverage limit, increased the SEC shareholder registration threshold, and held up implementation of Basel III capital guidelines, Fine said.

But these persistent challenges cannot be completely resolved unless the nation identifies and deals with the source—the increasing concentration of the financial system, Fine said. Nevertheless, community banks have come out of the 2008-10 financial crisis as the only sector in the financial system with their reputations intact, which is helping ICBA advance its Plan for Prosperity for a fairer regulatory system. Watch the Speech. Read ICBA Release.

Convention
Cordray: QM Accommodations Recognize Community Bank Model
Accommodations in the Consumer Financial Protection Bureau’s Qualified Mortgage rule will shelter community banks from many of the rule’s requirements, CFPB Director Richard Cordray told community bankers at the 2013 ICBA National Convention and Techworld in Las Vegas. Cordray said regulators wrote the rule to reflect that community banks have strong incentives to pay close attention to borrowers’ ability to repay.

First, Congress gave regulators a limited ability to extend QM status to certain balloon loans held in portfolio by small creditors operating in rural or underserved areas, Cordray said. Many community banks operating in these areas will be covered by this exemption.

Second, he said, the CFPB proposed amendments to the QM rule that would ensure that portfolio loans made by small lenders would be QMs even if the loans exceed the 43 percent debt-to-income ratio. This would be true as long as lenders consider debt-to-income or residual income before making the loan and as long as the loans meet the QM requirements.

“As you can see, there are certain big pieces of our new mortgage rules where the end result may be that most community banks will be covered by special provisions,” Cordray said. “This seems quite appropriate to me since, as we all agree, the traditional lending practices of community banks did not cause the financial crisis.”

In its comment letter to the CFPB, ICBA wrote that while it appreciates that the CFPB’s final rule provides some flexibility for community banks, the exemptions do not cover nearly enough. ICBA is urging the bureau to expand its definition of “rural” and to provide a QM safe harbor protection to balloon loans held in portfolio by community banks.

ICBA recently launched an educational webpage to provide details of the CFPB’s rules on mortgage lending, including its QM rule.

Convention
Gruenberg: Community Banks Have Critical Role in Financial System
Community banks fill a critical niche in the financial system and will continue do so for the foreseeable future, FDIC Chairman Martin Gruenberg said at the 2013 ICBA National Convention and Techworld in Las Vegas. Gruenberg noted that most of the bank consolidation caused by regulatory changes, such as the Riegle-Neal Act of 1994, is well behind us.

Because community banks are leading small-business lenders and take a highly customized approach to banking, U.S. small businesses would likely not have sufficient access to the type of credit they need if there were not a strong community banking sector, Gruenberg told community bankers in attendance.

Gruenberg noted that there are thousands of communities across the country with no access to an FDIC-insured institution but for community banks. Further, community banks made up approximately 92 percent of all FDIC-insured institutions in 2011, up from 87 percent in 1984.

He noted that many of the community banks that failed in recent years exhibited similar characteristics uncommon among most community banks, such as rapid growth, concentrations in high-risk assets and reliance on volatile brokered deposits.

“The fact is that most community banks engage in careful, generally conservative, relationship lending; generally rely heavily on stable core deposits; know their customers well; and manage their business very carefully,” he said.

ICBA NewsWatch Today is sponsored by WebEquity Solutions:
Competing for small business loans, building an appraisal values database and automating your ALLL process are hot issues examiners, auditors and lenders are facing today. Find out how WebEquity Solutions, an ICBA Preferred Service Provider, addresses all these areas. Visit us at Booth #456 at the ICBA National Convention and Techworld or email info@webequitysolutions.com.

Convention
ICBA Announces 2013 Community Banking Policy Priorities
ICBA announced its top legislative and regulatory priorities for the coming year at the 2013 National Convention and Techworld. ICBA’s top priorities for 2013 include:

Exempting financial institutions with $50 billion or less in assets from Basel III and the standardized approach.
Expanding community bank accommodations in new Consumer Financial Protection Bureau mortgage-lending rules.
Exempting community banks from CFPB rules designed to address abuses in large-bank mortgage servicing.
Relieving community banks from excessive regulations.
Urging Congress to review the credit union federal tax subsidy.
Supporting legislation that ensures greater deliberation and accountability for consumer-protection regulations.
Advocating the use of consistent standards when evaluating community bank fair-lending practices.
Urging Congress to abolish the Farm Credit System or at least restrict it to its historical mission of serving the agricultural marketplace.
Warning regulators about the impact of excessively tough safety-and-soundness and compliance exams.
Ensuring that reforms of the housing-finance system do not disrupt the housing recovery.
Advocating tax laws that promote robust economic activity and a vibrant community banking sector.
Supporting the restructuring of systemically dangerous financial firms to reduce their systemic threats.
Advocating accounting and auditing standards for smaller financial institutions and businesses that do not impose costs that outweigh benefits to financial statement users.

Convention
More on Tap from Las Vegas Today
The 2013 ICBA National Convention and Techworld at the Wynn Las Vegas and Encore continues today. Among the activities on today’s schedule include the announcement of new ICBA officers and National Community Bank Service Award recipients as well as remarks from Comptroller of the Currency Thomas Curry, NFL Hall of Fame quarterback Joe Montana, and Wikipedia founder Jimmy Wales.

More than 3,300 community bankers and industry leaders are in Las Vegas for the convention, which is the largest gathering of community bankers in the world. Stay tuned to up-to-the-minute information via ICBA’s convention website, the ICBA 2013 Mobile App and the #ICBALV13 hashtag on Twitter.

Advocacy
ICBA to Congress: Too-Big-To-Fail Greatest Threat to Financial System
The greatest threat to the safety and soundness of the nation’s financial system is the ongoing and increasing dominance of too-big-to-fail institutions, ICBA told a congressional committee. In a statement for the record for today’s House Financial Services Subcommittee on Oversight and Investigations hearing on too-big-to-fail, ICBA said that excessive concentration contravenes the public interest and that a more diverse financial system would reduce risk and promote competition.

ICBA said that in addition to distorting the market and putting taxpayer funds at risk, the too-big-to-fail problem has caused crushing regulatory burdens for community banks, which did not cause the crisis and do not pose systemic risks. The association noted that ICBA’s Plan for Prosperity would provide much-needed relief from regulatory burdens and would help community banks reach their full potential as catalysts for entrepreneurship, economic growth and job creation.

ICBA said it looks forward to the results of the Government Accountability Office’s study evaluating the potential market distortions caused by too-big-to-fail financial institutions. Read ICBA Statement.

In the News
Fine in WSJ: Too-Big-To-Fail Causes Excess Reg Burden
Downsizing the nation's largest financial institutions would not only reduce systemic risks and help level the regulatory playing field—it also makes good business sense for much of the nation, ICBA President and CEO Cam Fine wrote in a Wall Street Journal letter to the editor. Writing in support of the Federal Reserve Bank of Dallas’ proposal to break up too-big-to-fail financial firms, Fine noted that the megabanks contribute to stricter regulations for the entire banking industry.

“Congress has made strides toward distinguishing megabanks from community banks in its regulations, but Main Street inevitably faces new regulatory burdens due to risky practices on Wall Street,” Fine wrote. “This means resources that could be devoted to small-business growth and local development are instead directed toward meeting regulatory mandates.” Read Fine’s Letter.

Housing
HARP Refinances Top 1M in 2012
Nearly 1.1 million mortgages were refinanced through the Home Affordable Refinance Program in 2012, surpassing previous estimates, the Federal Housing Finance Agency said. HARP refinances reached 297,461 in the fourth quarter, bringing total refinances to 2.2 million since the program was implemented in April 2009.

The program is designed to refinance mortgages for homeowners who are not behind on their payments but who have not been unable to get traditional refinancing because the value of their home has declined.

Economy
Retail Sales Increase 1.1 Percent
Retail sales increased 1.1 percent in February and were up 4.6 percent from a year ago, the Commerce Department reported. Total sales from December 2012 through February 2013 were up 4.5 percent from the same period a year ago. The January increase was revised up from 0.1 percent to 0.2 percent.

ICBA News
ICBA Bancard Pilots V.me by Visa Service with Members
ICBA Bancard launched a pilot program with several community bank clients in support of the new digital wallet service, V.me by Visa. The service is a commerce platform that extends the ease, reliability and security of payments for card holders, allowing them to authorize purchases using a single username and password at participating merchants. ICBA Bancard is expected to open the service up to all its debit and credit issuing clients in the second quarter. Read ICBA Release.

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 Audio Conference Features New Look at Holding Company
ICBA is hosting an upcoming audio conference to help community bank directors and officers take a fresh look at their holding company. Scheduled for 11 a.m. (Eastern time) Thursday, March 21, the audio conference will feature the need for and benefits of the holding company structure. The presentation will also include a detailed discussion on several specific transactions available to the holding company that will enhance shareholder value. Register Online.

Products and Services
Free Webinar: Getting Creative in Commercial Lending
WebEquity, an ICBA Preferred Service Provider, is hosting a webinar on March 21 on how community banks can get more creative to overcome some of today’s most challenging hurdles in commercial lending. Register Online.