Arkansas Bankers Association

Keating Named to ‘Effective’ Association Lobbyists List
Association Trends magazine last week named AmBA President and CEO Frank Keating to an eight-person list of “effective” association lobbyists. The lobbyists were selected for “prowess, success and demonstrating the best attributes of an association advocate.”

“I have had the honor of representing two indispensable industries, life insurance and banking. It is easy to carry the flag for people who build lives and communities,” Keating said in the magazine’s thumbnail profiles of the honorees.

Keating last week -- along with Floyd Stoner, AmBA EVP of congressional relations -- also was named to a list of top association lobbyists by The Hill newspaper, a “must-read” publication among policymakers on Capitol Hill. Read the Association Trends list.

AmBA’s Keating, Stoner Named Top Lobbyists
ABA President and CEO Frank Keating and Floyd Stoner, EVP of congressional relations, yesterday were both named to a list of top association lobbyists by The Hill newspaper, a “must-read” publication among policymakers on Capitol Hill.

"Keating, a former Oklahoma governor, joined up with Stoner and the AmBA -- and their attempts to influence Dodd-Frank implementation -- at the beginning of the year," the newspaper noted.

AmBA has made the list of those The Hill describes as “people who are good at finding consensus among their members and then communicating their message on Capitol Hill” for several years in a row.

AmBA Strongly Opposes Raising CU Business-Lending Cap
AmBA strongly opposes a bill (H.R. 1418) that would raise the member business-lending cap for qualifying credit unions from 12.25 percent to 27.5 percent of total assets, and effectively turn them into tax-exempt banks, AmBA Chairman-Elect Albert “Kell” Kelly told the House Financial Services’ Financial Institutions Subcommittee.

The bill “would allow qualified credit unions to significantly increase their business lending at the expense of making consumer loans. This increase in business lending would shift some business loans to tax-exempt credit unions from tax-paying banks, causing an increase to the federal deficit just when Congress is looking for ways to reduce the government debt,” said Kelly, who is president and CEO, SpiritBank, Bristow, Okla.

He explained that credit unions already can make all the business loans they want under $50,000 because such loans do not count against their current 12.25 percent cap. “These exemptions mean that credit unions have unlimited business lending for small loans already, without the need to seek increases in their [member business-lending] limits,” Kelly said. “In fact, only … 96 out of 7,292 credit unions are within 80 percent of their cap [needed to qualify under the bill] as of year-end 2010.”

He added that credit unions seeking to expand their business lending have the option to convert to a mutual savings bank charter. “This charter provides the flexibility credit unions desire and preserves the mutual member focus that is the trademark of the credit union charter,” Kelly said. “It would put these credit unions on equal footing with banks with respect to taxes and regulatory oversight.” Read more. Read the testimony.

AmBA: GSE Reform Should Not Include FHLBs
Proposals to improve housing finance by changing Fannie Mae, Freddie Mac and the government-sponsored enterprises as a group should not include modifications to the Federal Home Loan Bank System, AmBA community banker Anthony Costa told the House Financial Services’ Oversight and Investigations Subcommittee.

“Great care must be taken with any reform of the secondary mortgage market to protect the traditional business of the FHLBs and access to liquidity by their members. Failure to do so will have a detrimental effect on mortgage funding and home ownership for many years to come,” said Costa, who is chairman and co-CEO, Empire State Bank, Newburgh, N.Y.

He emphasized that the FHLBs are essential in enabling community banks to meet the needs of their communities, especially low-and-moderate-income communities, under all economic conditions. Costa also noted that the FHLB System performed exactly as intended during the financial crisis.

“As the crisis took hold and interbank lending froze, the FHLBs were the first available source of funding for U.S. financial institutions, preventing far greater losses and potential institutional failures,” he said. “As members had more need for liquidity, FHLBs increased the availability of advances from about $650 billion to over $1 trillion at the peak of the crisis. This proves the flexibility of the system and its ability to withstand crises.” Read more. Read the testimony.

Bill Introduced to Repeal Durbin Amendment
Reps. Jason Chaffetz (R-Utah) and Bill Owens (D-N.Y.) yesterday introduced a bill (H.R. 3156) that would repeal the Dodd-Frank Act’s Durbin amendment and withdraw the Federal Reserve’s debit-card interchange rule that implemented it.

“This is a perfect example of the dangers of price controls and the inefficiency of government intervention in the free market,” Chaffetz said. “The Durbin amendment is an affront to consumers and the banking industry. These legislatively enacted price controls have compelled banks to charge consumers higher -- and in some cases new -- fees to make up for lost revenue.” Read more. Read the bill.

Debit Card Rewards Programs Down 30 Percent
The availability of debit card rewards offers fell 30 percent over the past year -- a direct result of the Dodd-Frank Act’s debit interchange restrictions, according to a new Bankrate.com survey.

The survey also found that 71 percent of debit rewards cards currently have no annual or monthly fees, while fees for programs that are not free range from $1.50 to $10 per month. In addition, 71 percent have no cap on rewards and 61 percent have no expiration date.

Bankrate.com senior financial analyst Greg McBride, however, warned that the costs and terms of the programs are in flux. “In addition to fewer debit reward programs, I expect that over time the programs that do remain in the marketplace will be less generous, will see a higher propensity for fees, and more of the offers will be funded by the merchants,” he said.

Bankrate.com surveyed the five largest banks, thrifts and credit unions in 10 key U.S. markets between Aug. 22 and Sept. 9. Read more.

July 19, 2011

HOUSE SUBCOMMITTEE TO MARK UP NEW DATA BREACH BILL
The House Energy and Commerce Subcommittee on Commerce announced that it will mark up newly introduced data breach legislation (H.R. 2577) tomorrow morning. The legislation includes ABA-supported provisions that would exempt banks and other financial institutions subject to the Gramm-Leach-Bliley Act from the bill’s data security and consumer notice provisions. AmBA is pleased that the bill also would extend data security and consumer notice requirements to retailers and other entities that currently do not adequately protect consumer information.Subcommittee Chairman Mary Bono Mack (R-CA) introduced the legislation, titled the SAFE Data Act.

Bill Introduced to Repeal Durbin Amendment
Reps. Jason Chaffetz (R-Utah) and Bill Owens (D-N.Y.) introduced a bill (H.R. 3156) that would repeal the Dodd-Frank Act’s Durbin amendment and withdraw the Federal Reserve’s debit-card interchange rule that implemented it.

“This is a perfect example of the dangers of price controls and the inefficiency of government intervention in the free market,” Chaffetz said. “The Durbin amendment is an affront to consumers and the banking industry. These legislatively enacted price controls have compelled banks to charge consumers higher -- and in some cases new -- fees to make up for lost revenue.” Read more. Read the bill.

July 18, 2011

AmBA’s Stoner to Retire
Floyd Stoner, AmBA EVP for congressional relations and public policy, will retire at the end of this year, AmBA announced. Stoner joined AmBA in 1985 after earning his Ph.D. in political science from the University of Wisconsin , teaching at Marquette University and working for the U.S. Congress.

“The AmBA is in good hands with its new leadership and now seemed the right time for a transition,” said Stoner. “I’m grateful to have worked with a group of passionate and devoted bankers as well as AmBA ’s talented and committed staff.”

“The banking industry owes Floyd an immeasurable debt of gratitude for his tireless service and steady hand as its chief lobbyist during such a critical time,” said AmBA President and CEO Frank Keating. “He will be missed.”

AmBA COO Mike Hunter, who oversees AmBA ’s advocacy functions, announced that Ken Clayton and James Ballentine will assume operational responsibilities next year for the congressional relations and public policy division. Clayton will become chief counsel and SVP of legislative affairs, while Ballentine will serve as SVP of congressional relations and political affairs.

House Lawmakers Introduce Bill to Extend Conforming Loan Limits
Reps. John Campbell (R-Calif.) and Gary Ackerman (D-N.Y.) introduced a bill (H.R. 2508) that would extend for two years -- through fiscal year 2013 -- the maximum conforming loan limits for mortgages backed by Fannie Mae, Freddie Mac and the Federal Housing Administration.

Those limits vary by region, but they currently peak at $729,750 for single-family homes in the highest-cost areas. If Congress does not pass the bill, the maximum mortgage amount will drop to $625,500 on Oct. 1. Congress raised the conforming loans limits in 2008 to allow the government-sponsored enterprises to insure, guarantee and buy more mortgages when private funding froze during the financial crisis.

“H.R. 2508 … will ensure that qualified homebuyers in this country continue to have access to the financing they need at a time when there are few alternatives,” Campbell said in a press release. “This will not only help to stabilize home prices, but would also provide for continued recovery in the broader economy.” Read more.

July 14, 2011

House Panel Approves Six GSE Reform Bills
The House Financial Services’ Capital Markets Subcommittee on Tuesday approved six narrowly focused bills intended to reform Fannie Mae and Freddie Mac.

The panel approved by voice vote bills that would direct the Federal Housing Finance Agency to require Fannie and Freddie to dispose of their nonmission-critical assets (H.R. 2440); subject them to the Freedom of Information Act (H.R. 463); prevent the Treasury Department from lowering the 10 percent dividend payment to taxpayers on their senior preferred stock (H.R. 2436); limit the amount of their additional bailout funds (H.R. 2462); and allow the Federal Housing Finance Agency to revoke their charters (H.R. 2439).

The subcommittee also approved by an 18-14 vote legislation (H.R. 2441) that would eliminate the Affordable Housing Trust Fund. The fund, which was intended to provide resources for low- to middle-income housing, was originally slated to receive contributions from Fannie and Freddie. Read more.

Rep. Frank Asks Walsh to Clarify Remarks on ‘Public Safety Net’ for Banks
House Financial Services Committee ranking member Barney Frank this week asked Acting Comptroller of the Currency John Walsh to clarify his remarks to the Centre for the Study of Financial Innovation in London in which he suggested there should be a “public safety net” for large financial institutions.

Banks’ unique economic role, which requires them to take risk, “justifies the maintenance of a public safety net, and because that safety net provides a public benefit, it is unlikely ever to be provided at zero public cost,” Walsh said in the June 21 speech.

Frank noted in a letter to Walsh that his remarks could be interpreted as advocating the restoration of regulators’ ability to use taxpayer funds to resolve failing financial firms -- something the Dodd-Frank Act specifically prevents.

“If that is not what you meant in your remarks, I would appreciate your dispelling this notion immediately so that taxpayers and market participants are confident that the U.S. government stands firmly behind the idea that the era of government bailouts is over,” Frank said. Read Frank’s letter. Read Walsh’s speech.

July 13, 2011

House Passes Flood Insurance Reform Bill
The House late yesterday passed by 406-22 vote a bill (H.R. 1309) that would reauthorize the National Flood Insurance Program for five years, and also make needed reforms. Both AmBA and its American Bankers Insurance Association subsidiary strongly support H.R. 1309.

The legislation, among other things, also would increase flood-insurance premiums, create new flood maps and give more flexibility to the Federal Emergency Management Agency, which administers the NFIP.

The bill, which the White House supports, now goes to the Senate. The NFIP authorization will expire on Sept. 30 unless Congress acts. AmBA and AmBIA have emphasized to lawmakers that a long-term program extension is needed to provide certainty to recovering real estate, insurance and financial markets -- along with every other participant in the economy the program affects.

July 12, 2011

HOUSE TO BEGIN FLOOD INSURANCE DEBATE
The House is scheduled today to begin consideration of AmBA-supported flood insurance reform legislation (H.R. 1309). The bill includes both a long-term reauthorization and important reforms that will optimize the current program with important coverage and rate changes and needed improvements to the floodplain mapping and appeals processes. The House will consider the bill under a structured rule that allows for one hour of general debate and the offering of 25 amendments.

Rep. Frank: Proposed QRM Too Narrow
Rep. Barney Frank (D-Mass.) at a press briefing said that regulators’ proposed qualified residential mortgage definition -- which would exempt mortgages with a 20-percent down payment from the Dodd-Frank Act’s risk retention rules -- was too narrow. Frank reiterated the importance of the risk-retention provisions but suggested a QRM down payment requirement of 4 or 5 percent would be more reasonable.

AmBA , as part of the broad-based Coalition for Sensible Housing Policy, responded by reiterating concerns about the proposed QRM standards.

“Requiring a 10 or 20 percent minimum down payment in addition to strong underwriting would raise the cost and reduce the availability of mortgages for creditworthy families without the wealth or savings for a down payment, but do so with only minor improvements in overall default rates,” the coalition said in a press statement. “We urge policy-makers to redesign a QRM that will support -- not hinder -- the housing recovery, attract private capital and minimize future defaults without shutting responsible borrowers out of the housing market.”

July 11, 2011

AmBA: Rep. Posey’s Accounting Bill Responds to Serious Problems
Rep. Bill Posey’s (R-Fla.) bill (H.R. 1723) that would change the definition of nonaccrual loans for both regulatory and financial reporting purposes is an effort to address serious problems affecting banks’ ability to serve their customers and benefit the economy, AmBA said in statement submitted for a House Financial Institutions Subcommittee hearing on proposals to address bank exam practices.

“However, we are concerned about legislating changes in accounting standards, even if they are only intended to be for regulatory use,” AmBA said. “Banks are issuers of financial statements -- upon which our investors rely -- as well as heavy users of financial statements of our borrowers. We need to make sure that all parties can rely on the accuracy of financial statements.”

AmBA explained that while it cannot support H.R. 1723 as drafted, the bill is a direct response to very real problems. “While the agency heads in Washington have said the right things about encouraging reasonable judgment by field examiners, we continue to hear that examiners are taking an overly aggressive approach in their analysis of asset quality and are consistently requiring downgrades of loans whenever there is any doubt about the loan’s condition -- even in cases where loans are fully performing,” AmBA said.

The association emphasized that Rep. Posey is rightfully concerned about how regulatory rules are being applied to classifying “troubled” loans. “In some instances, the application of the rules represents overkill and results in the need for banks to raise capital in situations that may be unwarranted,” AmBA said.

AmBA urged the subcommittee to use its oversight powers to ensure that the regulators are applying reasonable standards in determining what constitutes a classified loan, and even more important, ensure that consequences of the classifications don’t inadvertently stop banks from making loans to creditworthy borrowers. “We shall also continue to work with Rep. Posey and this subcommittee on specific proposals to address these concerns,” AmBA said.

AmBA also said Rep. Lynn Westmoreland’s (R-Ga.) bill (H.R. 2056) that, among other things, would require an FDIC study of how bank failure resolutions have affected surviving banks and their communities has merit. “[S]ince the surviving banks pay all the costs of banks that fail [and the costs of running the FDIC], it is important to have an independent validation of resolutions to assure that the FDIC is resolving failures in the least costly way, consistent with current law,” AmBA said. Read the statement.

Senators Disappointed With Treasury’s Pre-emption Interpretation
Sens. Tom Carper (D-Del.) and Mark Warner (D-Va.) on Friday told Treasury Secretary Timothy Geithner that they were “surprised and disappointed” by his agency’s June 27 comment letter that took issue with the Office of the Comptroller of the Currency’s proposed rule on federal pre-emption. The OCC’s proposal, which AmBA supports, concludes that that the Dodd-Frank Act codifies the pre-emption standards articulated in the Barnett Bank case.

“While we understand that the position of the administration was to eliminate federal pre-emption for national banks, the fact is that Congress did not accept that position,” the senators said in a letter. “Our amendment maintaining the Barnett standard passed the Senate by an overwhelming vote of 80 to 18. Both the language of the final law and its legislative history clearly demonstrate that the Barnett standard is maintained, and the Treasury position in this comment process was, in fact, rejected by Congress.”

Carper and Warner added that they hope Treasury will reconsider its comment letter and withdraw it. Read the senators’ letter

July 8, 2011

AmBA COMMENTS ON POSEY ACCOUNTING BILL
Legislation (H.R. 1723) by Rep. Bill Posey (R-FL) that would change the definition of non-accrual loans for both regulatory and financial reporting purposes is an effort to address serious problems affecting banks’ ability to serve their customers and benefit the economy, AmBA said in a statement for the record for a hearing this morning in the House Financial Services Committee.“However, we are concerned about legislating changes in accounting standards, even if they are only intended to be for regulatory use,” AmBA said. “Banks are issuers of financial statements – upon which our investors rely – as well as heavy users of financial statements of our borrowers. We need to make sure that all parties can rely on the accuracy of financial statements.”

AmBA explained that, while we cannot support H.R. 1723 as drafted, the bill “is a direct response to very real problems.”“While the agency heads in Washington have said the right things about encouraging reasonable judgment by field examiners,” AmBA said, “we continue to hear that examiners are taking an overly aggressive approach in their analysis of asset quality and are consistently requiring downgrades of loans whenever there is any doubt about the loan’s condition – even in cases where loans are fully performing… Congressman Posey is rightfully concerned about how regulatory rules are being applied to classifying ‘troubled’ loans. In some instances, the application of the rules represents overkill and results in the need for banks to raise capital in situations that may be unwarranted.” AmBA urged the Committee to “use its oversight powers to ensure that the regulators are applying reasonable standards in determining what constitutes a classified loan, and even more importantly, ensure that consequences of the classifications do not inadvertently stop banks from making loans to creditworthy borrowers.”“We shall also continue to work with Rep. Posey and this Committee on specific proposals to address these concerns,” AmBA said.

AmBA also commented on a bill (H.R. 2056) by Rep. Lynn Westmoreland (R-GA) that would require an FDIC study on the impact of bank failures, saying that “a careful study of how bank failure resolutions have affected other surviving banks and their communities has merit.”

House Panel Approves Biz Activity Tax Simplification Bill
The House Judiciary Committee approved by voice vote an AmBA-supported bill (H.R. 1439) that would ensure that states and localities could impose business-activity taxes only on businesses that have a physical presence -- defined as employees or property -- in the taxing jurisdiction. The legislation also includes a bright-line test that would establish a minimal amount of activity a business must perform in a state before it is subject to income taxes and additional paperwork. For more information, contact AmBA 's Larry Seyfried.

July 7, 2011

Organizations Support Passage of Biz Activity Tax Simplification Bill
AmBA and 195 other business organizations yesterday sent a letter to the chairmen of the House Judiciary Committee and a key subcommittee, expressing their strong support for that Business Activity Tax Simplification Act (H.R. 1439). The full committee is scheduled to consider the bill today.

The legislation would modernize existing law to ensure that states and localities could impose business-activity taxes only on businesses that have a physical presence -- defined as employees or property -- in the taxing jurisdiction.

H.R. 1439 “would ensure fairness, minimize costly litigation for both state governments and taxpayers and create legal certainty and a stable business environment that encourages companies to make investments in the United States , expand interstate commerce and create new jobs,” the business organizations said. Read the letter. For more information, contact AmBA 's Larry Seyfried.

July 6, 2011

PATENT BILL DEBATE UNLIKELY THIS WEEK
It appears unlikely that the Senate will take up the House-passed patent bill (H.R. 1249) this week, as the Senate is keeping its focus on budget and debt limit issues. AmBA continues to push for the bill’s consideration as soon as possible, as we noted in a joint letter to the chamber last week. The legislation’s supporters in the Senate hope to pass the House bill without changes so that it can be sent to the President, but disagreements remain over the funding mechanism for the Patent and Trademark Office and over an amendment added to the House bill to help a particular biotech firm.

July 5, 2011

AmBA Posts Staff Summary of Debit-Card Interchange Rule
The AmBA staff has developed a summary and analysis of the final debit-card interchange rule the Federal Reserve issued on June 29. AmBA also will host a free member telephone briefing 2-3:30 p.m. EDT on Thursday, July 14, to review the rule’s details and its effect on banks. Read the summary.

Register for the briefing.

Service members register for the briefing and read the summary here.

July 1, 2011

Bair Urges Congress to Support Dodd-Frank Implementation
Congress should give regulators the support they need to put the Dodd-Frank Act into effect, FDIC Chairman Sheila Bair told the Senate Banking Committee during her last scheduled appearance on Capitol Hill.

“The regulators charged with carrying out the implementation of these reforms will need your full support and encouragement if they are to be successful in their work,” Bair said. “The work they have ahead of them is considerable, and without proper funding and -- where needed -- the confirmation of qualified leadership, the result could be needless uncertainty about the regulatory environment and failure to instill confidence in our financial markets and institutions.”

She added that the Dodd-Frank implementation process has many facets, and vigorous debate on details should be welcomed. “But the central lessons of the crisis remain clear,” Bair said. “The animal spirits that lead private financial institutions to new innovations and new efficiencies need clear regulatory rules within which to operate. These rules must check the inherent tendency of these markets to pursue excessive leverage that renders our financial system unstable.” Read Bair’s testimony.