Arkansas Bankers Association

February 15, 2012

AmBA OPPOSES LATEST BANK TAX PROPOSAL
AmBA “strongly opposes the tax on banks that was included in the Administration’s…Fiscal Year 2013 budget proposal,” the association said yesterday in a letter to Treasury Secretary Timothy Geithner. AmBA explained that the “financial crisis responsibility fee” was originally introduced in January 2010 to recoup losses from the Troubled Asset Relief Program (TARP), but Treasury’s report on TARP stated just last week that “the bank programs will result in a lifetime positive return for taxpayers of more than $20 billion.”“Besides the unfairness of banks paying a tax on top of the significant return on investment for taxpayers, there are significant negative and unintended consequences of taking capital out of the banking system,” AmBA wrote. “It is important to remember that $1 of bank capital can support up to $10 in lending, which means that a 10-year tax of $61 billion would result in up to $500 billion in loans that would not be made over the 10-year period.”The bank tax is outlined on page 101 in the “green book” for the Administration’s fiscal year 2013 revenue proposals.

BANKING CHAIRMAN SEEKS IG AUDIT OF EXAMS PROCESS
U.S. Senate Banking Committee Chairman Tim Johnson (D-SD) asked the Inspectors General of the Treasury Department, FDIC, Federal Reserve, and National Credit Union Administration to conduct audits of their agencies, focusing on “each agency’s examination process for small community banks and credit unions, including timelines and how agencies ensure consistency in the administration of exams across the country.”“While the regulators must ensure the safety and soundness of financial institutions, I believe responsible lending to families and small business owners is one key to our economic recovery,” Chairman Johnson wrote. “If current supervisory practices discourage business growth and responsible lending, we should understand the causes and possible solutions, if any.”

REGULATORY NEWS - AmBA FILES MULTIPLE LETTERS ON VOLCKER RULE

AmBA filed a series of comment letters regarding the proposed Volcker Rule regulations. One comment letter asked the federal regulators to revise and re-issue their proposal to make it more narrowly and clearly focused on the activities that are not permitted. The re-proposal should define “key terms in a manner that provides certainty to banks that the rules will not impede [them]from engaging in bona fide market-making, asset liability management, hedging, and other permissible trading activities,” AmBA wrote.AmBA also expressed concern that the proposal would have a significant and lasting adverse impact on midsize banks. “If not corrected, the proposed rules will constrain bank investments in, and limit access to funding for, private businesses…and local government entities, while imposing excessive and unnecessary compliance costs on midsize banks,” AmBA wrote.

AmBA Government Relations Summit to Feature Discussions with Top Regulators
Acting FDIC Chairman Martin Gruenberg, Acting Comptroller of the Currency John Walsh and the Consumer Financial Protection Bureau’s Richard Silberman, who is acting associate director for research, markets and regulation, are the latest confirmed speakers for the AmBA Government Relations Summit, March 19-21 in Washington , D.C. The regulators are part of a stellar lineup of speakers that includes Rep. Shelley Moore Capito (R-W.Va.), the lead sponsor of the ABA-backed exam fairness bill (H.R. 3461), Sen. Mark Warner (D-Va.), Indiana Gov. Mitch Daniels (R) and NBC political pundit Chris Matthews. The Arkansas Bankers Association strongly encourages our bank CEOs, employees and directors to attend the summit, which is the largest gathering of banking leaders in the nation’s capital.

February 9, 2012

AmBA LEADERSHIP NEWS

The American Bankers Association announced the promotion of five staff members to executive positions, reinforcing the association's role as the industry's champion for banks of all sizes, charters, and business models.

* James Ballentine has been promoted to executive vice-president, Congressional Relations and Political Affairs.

* Ken Clayton has been promoted to executive vice-president, Legislative Affairs and Chief Counsel. He will also continue to oversee the Card Policy Council.

* Christy Walika has been promoted to executive vice-president, Community Bank Group. She will continue to lead the Community Bankers Council, the National Conference for Community Bankers, and ABA Women's Forum. Her new role includes responsibility for ABA 's Government Relations Summit and Summer Leadership Meeting.

* Paul Katz has been promoted to executive vice-president, Large Bank Group. He will work with senior bank executives to enhance ABA 's value proposition for money center and regional banks. Katz will also be responsible for the American Bankers Insurance Association.

* James Chessen has been promoted to ABA 's executive staff and retains his title of ABA Chief Economist with an increased emphasis on public policy engagement.

Dodd-Frank Guide for Community Banks in the Mail
AmBA today is mailing a booklet -- “Dodd-Frank and Community Banks: Your Guide to 12 Critical Issues” -- to help community bankers focus on the most critical Dodd-Frank issues that are expected to see action in 2012. The guide describes the issues, explains why they matter and offers ways bankers can get involved to help influence the outcome.

“Many Dodd-Frank proponents have attempted to persuade community banks that the law is not about them, and that they wouldn’t be subject to unfair and unnecessary burdens under the act,” says AmBA Chairman Kell Kelly in the guide’s cover memo. “Though I have yet to meet a community banker who believes these advocates, the enclosed document ... alone demonstrates that they are wrong.” Kelly is president and CEO of SpiritBank in Bristow , Okla.

The guide is being mailed to all banks with less than $10 billion in assets and will soon be available online at aba.com.

AmBA Testifies on Need to Assure CFPB Accountability

AmBA supports an effective mechanism for applying checks and balances to the Consumer Financial Protection Bureau’s authority and it applauds congressional efforts to achieve that goal, association COO Mike Hunter told the House Financial Institutions Subcommittee.

Hunter was testifying on bills that would move the CFPB under the Treasury Department, subjecting it to the same appropriations process (H.R. 1355); remove the bureau’s director from the FDIC Board (H.R. 2081); and preserve the attorney-client privilege for information submitted to the CFPB (H.R. 3871). AmBA has not taken a formal position on the measures. MikeHunter

He noted that H.R. 1355 and H.R. 2081 are two of many options to address concerns about the bureau’s role and how it exercises power. There are numerous ways to assure the CFPB’s accountability, Hunter explained. “AmBA has long advocated the use of a commission or board structure to accomplish this,” he said, and the House passed a bill last year that would create a five-member bureau board.

Hunter also emphasized the critical need for banking industry representation on the FDIC Board. “Banks bear the full cost of the FDIC without any taxpayer assistance, yet have no voice in the priorities, policies, and staffing of the agency,” he said. “We would be happy to work with the subcommittee on how this might be accomplished.”

He added AmBA also wants to work with Rep. Bill Huizenga (R-Mich.) on H.R. 3871, which is intended to clarify the bureau’s protection of confidential information. “While the [CFPB] has expressed its willingness to address this issue through regulation, AmBA believes it is appropriate to add certainty by enacting the same, express rules regarding privilege of information for the bureau as those already established for other federal banking supervisors,” Hunter said.

February 7, 2012

AmBA URGE HOUSE TO REJECT CREDIT UNION BILL
AmBA and the Independent Community Bankers of America (ICBA) joined forces yesterday to combat the credit unions’ efforts to increase the member business lending limits for certain credit unions. In a joint letter to House Members, ABA and ICBA explained that credit-union sponsored legislation (H.R. 1418) would “exacerbate an already unlevel playing field by increasing the ability of large, tax-subsidized credit unions to seize small business lending from taxpaying banks.”“The American Bankers Association and the Independent Community Bankers of America strongly urge you to oppose H.R. 1418 and to reject any attempts to move this legislation,” our joint letter said. “Congress has rejected this unwarranted power grab by the tax-exempt credit unions for a decade because it is bad policy, and should do so again.”

February 3, 2012

FDIC to Host Free Teleconference on Reg Z MLO Compensation Rule
The FDIC's Division of Depositor and Consumer Protection will host a free teleconference 11 a.m. to 12:30 p.m. on February 21 on Regulation Z's mortgage loan originator compensation rule. The teleconference, which is open to bank directors, officers and other employees, will review how the rule affects an institution’s ability to compensate such originators on a loan’s terms and conditions.

It is the first in a series of 2012 teleconferences intended to maintain open lines of communication, provide transparency and update banks on compliance and consumer protection rules, guidance, and other emerging issues, the FDIC said. Read more. Register for the teleconference.

February 1, 2012

FDIC to Host ‘Future of Community Banking’ Conference
The FDIC will host a one-day national conference titled “The Future of Community Banking” on Feb.16 at the agency’s L. William Seidman Center in Arlington , Va. The conference will provide a forum for stakeholders to explore the unique role community banks play in the nation’s economy and the challenges they face, the FDIC said.

A number of AmBA bankers will participate on four conference panels that will examine community banks’ evolution and characteristics; current challenges and opportunities; customers’ perspectives; and lessons learned along with future successful strategies. Attendance at the conference is by invitation and many AmBA bankers also will be in the audience.

AmBA Chairman Kell Kelly, President and CEO Frank Keating, Chairman-Elect Matt Williams and Vice Chairman Jeff Plagge recently met with Acting FDIC Chairman Martin Gruenberg to emphasize the association’s support for this important FDIC project and to pledge their full cooperation. Gruenberg, Federal Reserve Chairman Ben Bernanke and FDIC Director Thomas Curry and are slated to give conference keynote addresses.

The Arkansas Bankers Association encourages bankers to submit conference questions in advance to the FDIC's community banking initiatives public mailbox: CommunityBanking@fdic.gov. Read more. Read the conference agenda.

January 27, 2012

Governor Beebe made the following appointments to Arkansas Boards and Commissions:

State Banking BoardElizabeth Bowles, President of Aristotle.net of Little Rock, replaces Creed Spann. Her term expires December 31, 2016

Arkansas State Police CommissionJohnny Allison, Conway banker and businessman, reappointed to a term that expires
January 14, 2019

January 25, 2012

Cordray: CFPB to Consider Rules Exemption for Smaller Banks
The Consumer Financial Protection Bureau will explore the possibility of exempting smaller banks from some of its rules, CFPB Director Richard Cordray told a House Oversight and Government Reform subcommittee.

Cordray said the bureau may consider setting a minimum asset size to exclude community banks from new rules, and he added that the agency also will analyze how its rules would affect banks with fewer than $10 billion in assets. AmBA is advocating that the CFPB and other regulators adopt an even more flexible, graduated approach to supervision that recognizes a wider range of sizes, charters and business models.

Cordray also assured lawmakers that the CFPB wouldn’t abuse its power and promised that the agency would take action only against companies that break the law. “It … is not our intention to start going off and acting like we’re some sort of mini-Congress, just doing anything we think is good and right,” he said.

The agency will follow the existing interpretation of consumer laws covering financial products and "should not be going off in some wild, new unexpected direction” that would cause confusion among banks and other firms, Cordray said.

He also repeated a pledge -- made at an earlier hearing -- to reach out to small businesses and to convene panels of small-business leaders on any major regulation that could potentially affect them.To read Director Cordray’s testimony go to:http://www.consumerfinance.gov/speech/testimony-of-richard-cordray-before-the-subcommittee-on-tarp-financial-services-and-bailouts-of-public-and-private-programs/

January 23, 2012

EXAMS BILL HEARING SCHEDULED
The U.S. House of Representatives Financial Services Financial Institutions Subcommittee has scheduled a hearing on the ABA-supported exams bill (H.R. 3461) for Wednesday, February 1. ABA Chairman Kell Kelly will testify on ABA ’s behalf. The hearing will begin with testimony from the federal banking regulators.The exams bill, introduced by Rep. Shelley Moore Capito (R-WV) and Rep. Carolyn Maloney (D-NY), would ensure that banks receive timely examination reports, including full documentation of the information regulators used to make their determinations, and it would provide new standards for examinations. It also would establish a new, independent inter-agency ombudsman within the Federal Financial Institutions Examination Council to ensure the consistency and quality of all exams, and would create a process for banks to appeal examination decisions without fear of reprisal. Every member of the Arkansas Congressional delegation has signed on as a Co-Sponsor to HR 3461, the Financial Institutions Examination Fairness and Reform Act. Please contact your

Congressman and thank him for co-sponsoring this banking bill.

January 17, 2012

Obama Elevates SBA to Cabinet; Proposes Six-Agency Merger
President Obama recently said the Small Business Administration has been elevated to a cabinet-level agency and SBA Administrator Karen Mills will attend cabinet meetings. The White House announced the move, which requires no congressional approval, as part of a broader effort to consolidate six agencies.

The consolidation -- which would require Congress' approval -- would merge the core business and trade functions of the Commerce Department, SBA, Office of the U.S. Trade Representative, Export-Import Bank, Overseas Private Investment Corp. and the U.S. Trade and Development Agency.

It’s not clear what the new department would be called, or who would lead it. Commerce Secretary John Bryson and U.S. Trade Representative Ron Kirk are already cabinet members. The move to streamline the bureaucracy follows last year's Government Accountability Office report detailing how different government agencies duplicate efforts. For example, there are 80 programs across four agencies that deal with economic development.

January 12, 2012

HOUSE PANEL SCHEDULES VOLCKER RULE HEARING
The House Financial Services Committee announced that the Financial Institutions Subcommittee and the Capital Markets Subcommittee will hold a joint hearing next week on the Volcker Rule proposal, its impact on the economy and jobs, and the compliance costs and benefits of the proposal.“From the beginning there have been serious concerns that this complex regulation will hinder American markets, competitiveness, and job creation,” Committee Chairman Spencer Bachus (R-AL) said. “Despite claims from Dodd-Frank supporters that our foreign competitors would implement the same restrictions on proprietary trading, no other country has any plans to do so. Therefore, we run the grave risk of creating an unlevel playing field that disadvantages the U.S. economy at a time when unemployment remains stubbornly high.”The hearing is scheduled for Wednesday, January 18, at 9:30 a.m. It will feature testimony from the banking and securities regulators, as well as from industry experts and academics.

AmBA , TRADE GROUPS FILE BRIEF IN RESPA CASE
AmBA and six other financial trade groups filed an amicus brief with the U.S. Supreme Court in a case – Freeman v. Quicken Loans Inc. – that centers on whether the Real Estate Settlement Procedures Act (RESPA) bars mortgage lenders from charging “unearned fees” at closing.

The case consolidates three separate lawsuits from Louisiana in which borrowers alleged Detroit-based Quicken charged them loan-discount fees but did not provide reduced interest rates in return. The plaintiffs asserted that the discount fees, as “unearned fees” for settlement services, were illegal under RESPA. Quicken countered that discount fees are points, and constitute upfront money paid to the lender, which is part of the interest rate of a loan.

AmBA and the trade groups rejected the borrowers' legal interpretation. Our brief emphasized that RESPA does not govern the reasonableness of fees or charges imposed in mortgage transactions, but rather “prohibits only divided charges for which no service is provided.” It does not “regulate the amount that a borrower can be charged for any particular service.”

December 6, 2011

SEC Shareholder Relief Bill Reintroduced in Senate
Sen. Kay Bailey Hutchison (R-Texas) reintroduced her AmBA-backed shareholder registration relief bill, minus a provision that would have required a study and cost-benefit analysis of shareholder registration thresholds. The change was made to address concerns of some senators and improve its chances for Senate passage.

The new bill number is S. 1941, and the Senate could act on the revised legislation as early as this week.

With the exception of the study provision, S. 1941 is identical to legislation (H.R. 1965) that the House passed overwhelmingly last month. Both bills would raise the current 500-shareholder threshold for Securities and Exchange Commission registration to 2,000 for banks and also raise the deregistration threshold from 300 to 1,200 shareholders. We encourages our Arkansas bankers to contact U.S. Senators Boozman and Pryor and urge them to support S.1941 http://boozman.senate.gov/public/index.cfm/http://pryor.senate.gov/public/

November 18, 2011

Sen. McConnell Calls on Senate to Pass SEC Registration Relief Bill
Senate Minority Leader Mitch McConnell in a floor statement last week called on his chamber to pass AmBA-backed legislation that would raise the current 500-shareholder threshold for Securities and Exchange Commission registration to 2,000 for financial institutions, and also raise the deregistration threshold from 300 to 1,200 shareholders. The House approved its shareholder bill (H.R. 1965) on Nov. 2.

"H.R. 1965 would increase the threshold of shareholders that trigger the requirement from 500 to 2000. A companion bill [S. 556] in the Senate that would do the same thing is co-sponsored on the Republican side by Senator Hutchison, among others, and on the Democratic side by Senator Pryor, among others," McConnell said. "And Senator Toomey has a bill, S. 1824, to expand this legislation by applying it to businesses other than banks.

"We should take up these bills here in the Senate and pass them as soon as possible with the same show of bipartisan support that the two parties mustered on behalf of H.R. 1965 last week."

AmBA-Backed Exam Relief Bill Introduced
Reps. Shelley Moore Capito (R-W.Va.) and Carolyn Maloney (D-N.Y.) yesterday introduced a bipartisan, AmBA-backed bill that would address concerns expressed by bankers about a lack of transparency and consistency in the examination process.

Bankers have told AmBA and policymakers that the reasons for certain decisions made by regulators during the examination process have not been clear. Moreover, bankers have reported that some examiner decisions have effectively and unnecessarily reduced the amount of capital available for increased lending -- particularly to small businesses. This has hindered banks’ ability to help local businesses grow and create jobs.

The bill, H.R. 3461, helps address these concerns by requiring, among other things:

Timely Examination Reports. The bill requires regulators to provide bankers with more timely examination reports and more information about the facts upon which the agency relied in making its examination decisions. The regulators would be required to complete an examination within nine months (unless the institution is subject to a resident examiner program) and provide a final examination report not later than 60 days after the examination exit interview.

Clear Exam Standards. The bill provides for more precise, consistent and understandable classification standards for commercial loans. Specific provisions, for example, would require that:

A commercial loan could not be placed in nonaccrual status solely because the collateral has deteriorated in value.
A modified or restructured commercial loan must be removed from nonaccrual status if the borrower has a demonstrated ability to perform on such loan over a maximum six-month period. For loans on a quarterly or longer repayment schedule the period shall be a maximum of three consecutive repayment periods.
A new appraisal would not be required on a commercial loan unless an advance of new funds is involved.
A commercial loan with deterioration in collateral must be classified in proportion to the deficiency relating to the decline in collateral.
Well-capitalized institutions must not be required to raise additional capital in excess of what is required by regulation.
The appropriate federal financial institution regulatory agencies must develop and apply identical definitions and reporting requirements for non-accrual loans.

Exam Consistency and Quality. The bill would create a new, independent inter-agency ombudsman within the Federal Financial Institutions Examination Council to ensure the consistency and quality of all examinations. The ombudsman would, among other things, investigate complaints from banks about examinations; review the examination procedures of the agencies to ensure that written policies are being followed consistently in the field and to conduct a regular program of examination quality assurance for all types of examinations conducted by the regulatory agencies.

Expedited Appeals to Independent Judge. The legislation would institute an expedited process for banks to appeal examination decisions without fear of reprisals. The appeal would be to a specialized administrative law judge, or “ALJ,” that is an independent entity not subject to control by the agency. Regulatory agencies would be specifically prohibited from retaliating against a bank, including its service providers and affiliates.

AmBA -- which along with the state bankers associations has taken the leading role in identifying specific examination issues and practical, concrete solutions -- strongly supports H.R. 3461.

“ AmBA focuses on legislation that is passable, is backed by solid, credible arguments, and will make a real difference for our members,” said AmBA President and CEO Frank Keating. “The Capito/Maloney bill meets those tests, and we will fight tirelessly for its enactment.”

Keating also encouraged bankers to contact their House members to urge them to cosponsor the legislation. Read an AmBA summary of the bill. Read the bill.

November 2, 2011

AmBA Explains Opposition to ‘Nonaccrual’ Bill
While a bill (H.R. 1723) designed to stop regulators from assigning “nonaccrual” status to performing amortizing loans has worthy goals, ABA cannot support it, the association said yesterday in a memo to the House Financial Institutions Subcommittee. The panel is slated to consider the legislation on Thursday.

“H.R. 1723 … attempts to address real problems that community banks experience. Unfortunately, the bill would legislate changes in accounting standards, which should be avoided,” said Floyd Stoner, AmBA EVP of congressional relations. “Banks are both issuers of financial statements needed by investors and heavy users of the financial statements of our borrowers. As such, banks need to make sure that all parties can rely on the accuracy of all financial statements.”

AmBA also “is concerned that the legislation could be viewed as not permitting banks to report items as nonaccrual, even in situations when it would be proper to do so,” Stoner added. “Finally, it is highly unusual to have a ‘sunset’ for an accounting standard, raising concerns about this sunset’s effects.”

He explained that although the issues H.R. 1723 is intended to resolve are important and must be addressed, AmBA does not believe the bill’s specific proposals accomplish that goal. AmBA encourages “the subcommittee to work with the industry to craft legislation that addresses these issues,” Stoner said. Read the memo.

November 2, 2011

The House passed the AmBA-supported 500-shareholders legislation (H.R. 1965) moments ago, by a vote of 420-2.

The bill, by Rep. Jim Himes (D-CT) and Rep. Steve Womack (R-AR), would raise the threshold for registration with the Securities and Exchange Commission (SEC) to 2,000 shareholders for financial institutions. The bill also would raise the deregistration threshold to 1,200. The changes would enable banks to deploy their capital in lending rather than spending it on regulatory requirements that provide little incremental benefit to the banks, shareholders, or the public.

AmBA has long advocated raising the shareholder threshold for SEC registration, and worked closely with Members to move this legislation forward. We thank Rep. Himes and Rep. Womack for their leadership on this issue.

October 26, 2011

AmBA Elects Kelly Chairman
Albert “Kell” Kelly, president and CEO, SpiritBank, Bristow, Okla., was elected the 2011-2012 AmBA chairman yesterday during the association’s annual convention in San Antonio. Kelly assumed the AmBA’s top leadership post from Steve Wilson, chairman and CEO of LCNB National Bank, Lebanon, Ohio. Also elected were: AmBA Chairman-Elect Matt Williams, chairman and president, Gothenburg State Bank, Gothenburg, Neb.; Vice Chairman Jeff Plagge, president, Northwest Financial Corp., Arnolds Park, Iowa; and Treasurer Stephen Crowe, president and CEO, MountainOne Financial Partners, MHC, North Adams, Mass. Read more about Kelly. Read more about AmBA’s other officers and board members.

October 26, 2011

Kelly: AmBA Leadership Galvanized to Meet Reg Burden Challenge
AmBA’s leadership is galvanized as one to work tirelessly for bankers and the industry during this time of regulatory overreach, newly elected Chairman Albert “Kell” Kelly said yesterday at the association's annual convention in San Antonio.

Kelly, a long-time political activist in his home state of Oklahoma, said that AmBA under his leadership will take an aggressive, offensive approach to legislative and regulatory advocacy.

He noted that Washington policymakers seem to have forgotten -- or are overlooking -- the critical role that banks play in their communities and in the overall economy. Bankers nationwide must remind them by working in unison to send a loud, clear message.

"We need to show we are a united indumstry, that we stand together," Kelly said. He added that bankers can be proud of their grassroots efforts under the powerful ABA-state bankers associations alliance that has produced hundreds of thousands of letters, e-mails and phone calls, along with Washington fly-ins and countless meetings with lawmakers.

But more work needs to be done, he said. It is time to become even more passionate and dedicated to the grassroots advocacy that will shape the banking industry's future. "We are the ones that have to make a difference. It is up to us," Kelly said.

October 26, 2011

Gruenberg Expresses Strong Support for Community Banks
Acting FDIC Chairman Martin Gruenberg expressed his strong support for community banks yesterday at the AmBA Annual Convention. “It is important to recognize that community banks play a critical role not only in the financial system, but also in the U.S. economy as a whole,” Gruenberg said.

He noted that while banks with assets under $1 billion represent less than 11 percent of banking assets, they provide nearly 40 percent of the loans the banking industry makes to small businesses, extending credit that is crucial to job creation.

Gruenberg also reiterated that the FDIC is launching several initiatives intended to enhance its understanding of community banks’ challenges and future opportunities. The agency will hold a conference early next year on the future of community banking, he said, and its research division will study how community banks have evolved in the past two decades, including changes in their business models and cost structures.

The FDIC is also reviewing key challenges facing community banks such as raising capital, keeping up with technology, attracting quality personnel, and meeting regulatory obligations, Gruenberg said. He added that the agency also will hold regional roundtables with community bankers to obtain their input on key issues.