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February 16, 2010
President Signs Legislation to Raise Debt Ceiling
President Obama on Friday signed into law legislation that increases the federal government's statutory debt limit by $1.9 trillion to $14.3 trillion. The measure also includes a pay/go provision requiring that any mandatory spending increases or tax cuts be offset. Revenue losses from changes to the estate tax or alternative minimum tax would be exempt from the pay/go rules for two years.
February 8, 2010
Obama Proposes Expanding Two SBA Programs
President Obama on Friday proposed legislation that would expand two Small Business Administration programs to increase working capital and help businesses refinance. The first proposal would temporarily allow loans on owner-occupied commercial real estate to be refinanced under the SBA's 504 program, which provides loan guarantees for developing real estate and other fixed assets.
Currently, 504 loans must be used for new development or construction, and can only include a limited amount of refinancing when businesses are expanding. Businesses with loans maturing in the next year that are current on all payments would be eligible under the proposal. The White House estimated the plan would help refinance up to $18.7 billion annually in commercial real estate that otherwise might be foreclosed and liquidate.
The president also proposed temporarily raising the ceiling on SBA Express loans from $350,000 to $1 million to help more small businesses use the program's streamlined approval process. Unlike traditional SBA 7(a) loans, lenders can use their own paperwork for SBA Express loans, which can be structured as revolving lines of credit. Fees would cover virtually all of the added costs of this proposal, the White House said. Read more. Read an SBA fact sheet. For more information, contact AmBA's James Ballentine.
February 4, 2010
AmBA to Obama: Will Work to Make Small-Biz Lending Program Viable
AmBA appreciates Tuesday’s announcement of the new Small Business Lending Fund, and it hopes the program can be designed to attract interest among community banks with opportunities to increase their small-business lending in a responsible way, AmBA President and CEO Ed Yingling said yesterday in a letter to President Obama.
Yingling said the administration rightly recognized the need to separate the program from the Troubled Assets Relief Program because banks do not want to be burned again by the TARP stigma, or by rules the government can change after a contract has been signed.
To be successful, the program must be available to banks that actually need capital, such as the many well-managed community institutions struggling to work through the economic downturn, Yingling said. He emphasized that such banks would be viable with a comparatively small government investment, but past initiatives have left them on the sidelines and, in many cases, have made attracting private capital more difficult.
“It is crucial for the communities … these banks serve that the program help [them] bridge the gap until conditions improve,” Yingling said. “It is equally crucial that the regulators have a clear direction to consider the viability of applicants on a post-investment basis.”
The letter also was sent to Treasury, the banking regulators and Small Business Administration. Read the letter. For more information, contact AmBA’s Mark Tenhundfeld.
February 3, 2010
Obama Provides Details on Community Bank Small-Biz Program
President Obama at a town hall forum in Nashua, N.H., yesterday unveiled details of his proposed program to provide capital to community banks in exchange for more small-business lending. The proposal, mentioned in last week's State of the Union address, would transfer -- through legislation -- $30 billion in repaid Troubled Asset Relief Program funds to a new Small Business Lending Fund. Banks with $10 billion or less in assets that receive primary-regulator approval would be eligible to participate in the program, which would be separate and distinct from TARP.
Under the program, banks with less than $1 billion in assets could receive capital investments up to 5 percent of their risk-weighted assets, and those with between $1 and $10 billion in assets could receive up to 3 percent. Existing Capital Purchase Program participants with less than $10 billion in assets would be permitted to convert their capital to the new program.
Institutions that use the funds would receive incentives to boost lending. For every 2.5 percent increase in lending, the dividend the bank would have to pay the government would drop by one percentage point. For example, if a bank increased its lending by 10 percent, the initial 5 percent dividend would drop to 1 percent.
The program addresses some previously expressed AmBA concerns -- that the asset threshold for participation should be higher than the originally proposed $1 billion to include more banks, and that it should be free of TARP conditions.
But there are other stumbling blocks. Congressional Republicans oppose using repaid TARP money to fund the program, arguing that such money should be returned to Treasury to pay down the deficit. ABA President and CEO Ed Yingling said other issues of concern include the need for regulatory approval prior to participation and ensuring that as many banks as possible will be eligible for the program.
"It remains a very difficult environment for community banks to raise capital and that affects their ability to lend," Yingling said. "We are hopeful that these issues can be addressed and look forward to working with Congress and the administration to make this program viable." Read more. Read a White House fact sheet. Read Yingling's statement. For more information, contact AmBA's Mark Tenhundfeld.
PRESIDENT DETAILS SMALL BUSINESS LENDING PROGRAM
President Obama provided new details yesterday on his proposed program to provide capital to community banks in exchange for increased small-business lending. The legislative proposal would transfer $30 billion in repaid Troubled Asset Relief Program (TARP) funds to a new Small Business Lending Fund.
Banks with less than $1 billion in assets could receive capital investments of up to 5 percent of their risk-weighted assets, and those with between $1 and $10 billion in assets could receive up to 3 percent. Existing Capital Purchase Program participants with less than $10 billion in assets would be permitted to convert their capital to the new program.
Institutions that use the funds would receive incentives to boost lending. For every 2.5 percent increase in lending, the dividend the bank would have to pay the government would drop by one percentage point.
AmBA President and CEO Ed Yingling expressed appreciation for the new initiative, saying “A key factor to the proposal is removing it from association with the rules and restrictions of TARP… Banks will be disinclined to participate if this new program is under TARP or if there is any possibility of TARP-related stigma being attached to it.”
Yingling also stated that issues of concern include the need for regulatory approval prior to participation in the program and ensuring that as many banks as possible will be eligible to participate.
February 2, 2010
Obama Budget Proposal Includes Large-Bank Tax, DIF Increase
President Obama yesterday unveiled a $3.8 trillion budget proposal for fiscal year 2011. As expected, the budget includes a provision that would impose an “approximately” 15-basis-point tax on the largest financial institutions.
Somewhat unexpected is a provision suggesting it “may be appropriate to consider raising the [FDIC Deposit Insurance Fund’s] level above 1.5 percent to maintain positive fund balances during future downturns.” An FDIC spokesman said the agency favors the idea, according to press reports. Current law requires the FDIC to maintain the DIF’s level at between 1.15 percent and 1.5 percent of all insured deposits.
The budget also contains positive bank-related provisions that would expand tax credits to match qualified retirement savings, and create a system of automatic workplace IRAs requiring employers to give employees the option of enrolling in a direct-deposit IRA. Another provision would extend the popular New Markets Tax Credit program for 2010 and 2011 and allocate $5 billion for each year.
The budget also would continue -- and make permanent -- most of the 2001 and 2003 tax cuts for the middle class, protecting individuals earning less than $200,000 and households making less than $250,000 a year from tax increases. As in last year’s proposed budget, there are provisions that would make the 2009 estate tax rate and amount exempted from the alternative minimum tax permanent. View budget documents.
Obama to Detail Community Bank/Small Biz Program Today
President Obama today is scheduled to announce the details of his proposal to provide capital to community banks in exchange for more small business lending. The president’s proposal, mentioned in last week’s State of the Union address, would use $30 billion in returned Troubled Asset Relief Program funds to create a new Small Business Lending Fund, according to press reports. Banks with $10 billion in assets or less would be eligible.
AmBA has advised that for any new program to be successful, it must be free of the strings and stigma attached to the Capital Purchase Program, be available to viable banks serving distressed markets, and provide for streamlined approval processes. For more information, contact AmBA’s Mark Tenhundfeld.
January 28, 2010
AmBA Endorses Small-Biz Lending Plan Outlined in Obama's Address
AmBA strongly supports President Obama's goal -- expressed in his State of the Union address last night -- to improve the small-business lending environment and the association stands ready to work with the administration and policymakers to find ways to ensure that small businesses get the credit they need, AmBA President and CEO Ed Yingling said.
AmBA particularly appreciates the initiative the president outlined in his address that would transfer $30 billion in Troubled Asset Relief Program funds "to provide additional capital to community banks that volunteer to use it to provide a base for increased small business lending, and we will work with the administration to develop a successful program," Yingling said.
He also reiterated that AmBA agrees with Obama's assertion last night that financial regulatory reform is needed. "We support key elements of legislation proposed by the president and currently being debated in Congress, including the need to end the concept of 'too-big-to-fail,' providing for a robust resolution process and the creation of a council for overseeing systemic risk," Yingling said. "AmBA is supportive of the bipartisan process underway in the Senate Banking Committee."
During his address, Obama avoided most specifics of what should be in the regulatory reform legislation, and he did not call for the creation of an AmBA-opposed Consumer Financial Protection Agency. The president did, however, promote his proposed 15-basis-point tax on large banks. Read the State of the Union address.
January 27, 2010
State of the Union Address to Focus on Economic Issues
President Obama during his State of the Union address tonight is expected to focus on job-creation initiatives, proposals to curb spending and lower the deficit, and a series of modest tax breaks for the recession-ravaged middle class and small businesses, according to press reports. Some of the bank-related middle-class initiatives the president is likely to talk about include expanding tax credits to match retirement savings, and creating a system of automatic workplace IRAs that would require employers to give employees the option of enrolling in a direct-deposit IRA.
Many pundits believe Obama also will touch on the proposed tax on large financial firms, along with his proposals to restrict the size and activities of big commercial banks. He also will highlight his vow to freeze discretionary federal government spending for three years, starting with fiscal year 2011, and officially announce that he will freeze the salaries of top officials at the White House and in other federal agencies -- a move announced in several media outlets late last night.
January 26, 2010
Administration to Propose Automatic Workplace IRAs
President Obama yesterday said he would propose several policy initiatives aimed at helping the middle class. The initiatives, which he will talk about in his State of the Union address on Wednesday, include expanding tax credits to match retirement savings, and creating a system of automatic workplace IRAs that would require employers to give employees the option of enrolling in a direct-deposit IRA. The proposed initiatives are based on information gathered by the White House Task Force on Middle Class Families, which will issue its final report and full recommendations in February. Read more.
January 25, 2010
Obama Echoes AmBA Message on Overzealous Examiners
President Barack Obama on Friday echoed a key AmBA message when he said bank regulators may be hindering the flow of credit to small businesses by erring too much on the side of caution. “The banks feel as if regulators are looking over their shoulder, discouraging them from lending," Obama told a town-hall style meeting in Elyira, Ohio. The president said that while he didn’t intend to interfere with bank supervision, he had told Treasury Secretary Timothy Geithner to make sure that the country has not “seen the [regulatory] pendulum swing too far.”
AmBA has consistently emphasized in congressional testimony and in talks with administration officials that banks continue to lend despite the difficult economy, but their ability to make loans is being hurt by a regulatory environment that has tightened dramatically. The association also has urged regulators in numerous meetings and letters to give banks sufficient flexibility to work with their borrowers.
January 21, 2010
Obama to Propose New Restrictions on Large Institutions
In related news, President Obama today is expected today to propose reforms advocated by former Federal Reserve Chairman Paul Volcker that would limit large institutions’ proprietary trading and impose stricter capital requirements on them, according to press reports last night. The president also will support the idea of giving regulators the authority to break up large institutions if their activities threaten the financial system, the reports said. Volcker, who heads Obama’s Economic Recovery Advisory Board, has expressed concerns about the risks and conflicts involved in commercial banks investing their money in securities, commodities, derivatives and hedge funds.
Obama Weighs Strategy on Reg Reform
President Obama has reinforced his support for creating a stand-alone Consumer Financial Protection Agency, according to front-page story in yesterday’s New York Times. An administration official told the Times that the president’s proposal for a consumer agency is “nonnegotiable.” The president reportedly weighed in on the issue Tuesday at a White House meeting with Senate Banking Committee Chairman Chris Dodd (D-Conn.). Press reports last week said Dodd might drop plans to create a stand-alone CFPA from the emerging Senate regulatory reform bill in order to attract support from Republicans and some centrist Democrats on his committee.
Many consumer groups and activists are pushing the administration to take a hard line on the CFPA. Elizabeth Warren, Harvard law professor and chair of the TARP Congressional Oversight Panel, said in the Times story that the CFPA is “the litmus test” for the administration. But AmBA President and CEO Ed Yingling told the Times: “Maybe the administration will decide that they want to turn this into a partisan battle but, coming out of health care, I don’t think the majority of senators want to have a partisan battle. They want a bipartisan bill.”
January 14, 2010
Obama to Announce Fee on Large Financial Firms Today
President Obama at 11:45 a.m. EST today is scheduled to announce a plan to impose a fee on the 20 to 25 largest financial firms over 10 years to recoup as much as $120 billion that administration officials expect to lose from the government’s $700 billion Troubled Asset Relief Program. The fee also is intended to constrain risk-taking and discourage outsized bonuses, and will be based on the amounts such institutions have borrowed to finance lending and other activities, press reports said. It is expected to be included in the administration’s fiscal year 2011 budget proposal, set for release early next month.
AmBA yesterday continued to point out that taxpayers have lost no money on TARP investments in banks, and that no matter how the tax is structured it will lower the availability of credit -- the opposite of what the administration says it wants to do.
“There are no losses, zero, with respect to the banking industry,” AmBA President and CEO Ed Yingling emphasized to the American Banker newspaper, noting that that the largest banks that received TARP funding have repaid the government in full and taxpayers will make a profit. Banks should not have to pay for “losses on two auto companies and an insurance company and the mortgage [modification] program,” Yingling said.
December 23, 2009
DEFENSE SPENDING BILL INCLUDES ABA-SUPPORTED SBA FUNDING
President Obama signed a Defense Department appropriations bill into law on Saturday that includes $125 million to extend through February 28 the Small Business Administration (SBA) 90-percent guarantee on 7(a) program loans. The AmBA-supported funding also allows the SBA to waive borrower fees on most 7(a) and 504 program loans until the money is exhausted or the end of the 2010 fiscal year, whichever comes first, SBA officials said.
The House-passed jobs bill (H.R. 2847), which the Senate is expected to consider early next year, contains an additional $354 million for the programs, as well as a provision to extend the 90-percent guarantee through fiscal year 2010.
President Obama Meets With Community Bankers
AmBA Board member Dorothy Bridges and six other AmBA community bankers attending a White House meeting yesterday told President Obama that better, not more, regulation was needed to relieve banks’ crushing regulatory burden and that lending is being impeded by overzealous examiners who have required banks to classify some good loans. Bridges is president and CEO of City First Bank of D.C, Washington, D.C.
The bankers said President Obama and other administration officials in attendance were receptive to their messages, agreeing that regulators are being too aggressive on exams and appreciating the role traditional banks play in their communities. “We are looking to see if there are possibilities to cut some of the red tape,” Obama said in a statement following the meeting.
Regulatory reform was also raised, and Obama stated his opposition to exempting community banks from the new Consumer Financial Protection Agency. “I did emphasize to them that community banks do have a responsibility to their customers and that many of these consumer protections and efforts to … create a single Consumer Financial Protection Agency would apply to them,” the president said. “And we think that’s important, because every bank, large and small, is providing credit cards and providing debit cards and providing mortgage loans.”
The president’s comments reinforce the concerns AmBA has had about the CFPA, which AmBA continues to vigorously oppose.
In addition to Bridges, the other AmBA bankers attending the meeting were: Deborah Chequeta Wright, chairman and CEO, Carver Federal Savings Bank, New York; Paul Mello, president and CEO, Solvay Bank, Solvay, N.Y.; Rebecca Romero Rainey, chairman and CEO, Centinel Bank of Taos, Taos, N.M.; Deloris Sims, chairman and CEO, Legacy Bank, Milwaukee; Gene Kirby, president, NewAlliance Bank, New Haven, Conn.; and William Pierce, president and CEO, Monadnock Community Bank; Peterborough, N.H. Read Obama’s statement. Read AmBA’s statement. For more information, contact AmBA’s Diane Casey-Landry.
December 21, 2009
AmBA Community Bankers to Meet with President Obama
President Obama on Tuesday will meet with AmBA board member Dorothy Bridges, president and CEO of City First Bank of D.C, Washington, D.C., and six other AmBA community bank CEOs to discuss increasing lending to small businesses. The meeting follows a similar one that Obama held last week with the heads of large banks.
In related news, AmBA this morning is sending President Obama a letter outlining several ways in which supervisory and regulatory changes could help remove impediments to smaller banks making more loans.
The AmBA letter recommends: not using distressed sales prices when valuing performing loans; rationalizing the rules governing brokered deposits; considering all insured deposits as core deposits; permitting more of a bank’s reserves to be counted as capital; avoiding procyclical capital rules; and using a small amount of Troubled Asset Relief Program funds to help viable community banks. The AmBA Community Bank Solutions Task Force helped develop the recommendations. Read the letter. For more information, contact AmBA’s Mark Tenhundfeld.
December 15, 2009
Obama Urges Large Banks to Find Ways to Increase Lending
President Obama at a White House meeting yesterday urged leaders of the nation’s largest banks to find creative ways to free up lending, and asked them to “take a third and fourth look” at their small-business lending. “Given the difficulty business people are having as lending has declined and given the exceptional assistance banks received to get them through a difficult time, we expect them to explore every responsible way to help get our economy moving again,” Obama said.
Bank of America CEO Kenneth Lewis pledged to Obama that his bank would lend $5 billion more to small- and mid-sized businesses in 2010 than it did in 2009, bank officials said. They said the move is part of the bank's broader effort to support an economic recovery. JPMorgan said last month that it would boost such lending by $4 billion. Obama will meet next week with representatives of smaller banks.
AmBA, whose representatives participated in the Nov. 18 White House Small Business Financing Forum and the Dec. 3 White House Jobs Forum, continues to advocate that the administration expand bank eligibility for its capital and small business lending initiatives and ensure that regulatory policy doesn't discourage banks from making good loans to creditworthy borrowers.
December 3, 2009
Two AmBA Bankers to Participate in Today’s White House Jobs Forum
AmBA bankers Dorothy Bridges and Jesse Turner today will join business, labor and financial experts at the White House Jobs Forum to discuss job creation and economic growth. Bridges, an AmBA board member and president and CEO of City First Bank of D.C., Washington, D.C., will provide a bankers’ perspective during a breakout session on spurring small-business job growth. Turner, president and CEO of Tri-State Bank, Memphis, Tenn., will present his ideas during a session on encouraging business competitiveness and job creation.
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