The House began debate on ICBA-advocated legislation requiring the FDIC inspector general and Government Accountability Office to study the effect of regulations on bank failures and the exam environment. H.R. 2056, sponsored by Rep. Lynn Westmoreland (R-Ga.), would focus the studies on several ICBA concerns, including the effect of "paper losses," or write downs that cause an institution to raise more capital. A vote on the bill could come as early as today.

The bill recently passed the House Financial Services Committee. In a letter to the committee and in recent congressional testimony,  ICBA wrote that the pendulum has swung too far in the direction of overregulation and that H.R. 2056 will help identify solutions to the oppressive exam environment.  Read More

ICBA is disappointed with the recent release of final rules from the FDIC and Federal Reserve repealing Regulation Q, which prohibits the payment of interest on demand deposits. The rules take effect this Thursday. ICBA, the Independent Bankers Association of Texas and other community bank groups had pressed hard to find a way to postpone the rescission of Reg Q.

In a comment letter delivered in May to the agencies and every congressional office, ICBA urged regulators to indefinitely postpone the Reg Q repeal. A June 17 letter from ICBA and its affiliated state community banking associations urged the Fed to postpone the repeal and formally study the safety-and-soundness implications of allowing the regulation to expire. The associations expressed concerns in its letters and in meetings with regulators that the repeal would have serious implications for many community banks and for the stability of the banking system.

ICBA also surveyed its membership on this issue and led a grassroots campaign to postpone the repeal, including making it one of the top priority issues at the 2011 Washington Policy Lobbying Summit. The association has worked with lawmakers to introduce legislation requiring a delay, though the initiative continues to face an uphill battle on Capitol Hill, where lawmakers have repeatedly voted overwhelmingly in support of the repeal.

The Fed said that it does not believe the final rule presents issues of systemic risk or safety-and-soundness concerns, so it made no changes as a result of public comments.

ICBA has learned that one of its publicly held members-a bank holding company that is a pink sheet company-was fined for not providing timely notice of a corporate action (in this case, a dividend) in advance to the Financial Industry Regulatory Authority. Under SEC Rule 10b-17, which is not a new rule and which was not promulgated by the Wall Street Reform Act, issuers must notify one of the exchanges if they are listed on an exchange or FINRA if they are unlisted.

What is new is that beginning this year, FINRA is imposing penalties on issuers of a class of publicly trading securities if they are not filing timely notifications of company-related actions, such as dividends, stock splits or other distributions to shareholders. The penalties range from $1,000 for not notifying FINRA five calendar days before a corporate action date to $5,000 for not filing in advance at all. ICBA has learned that there are no provisions for waivers.

This particular bank recently received notice of a fine related to its first-quarter dividend and was informed that it will be fined again for a dividend declared in June. FINRA Regulatory Notice 10-38 offers a complete description of the requirements and penalty fees.  More ICBA News