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In This Issue
IBANYS: On the Move!
Convention early bird due!
Government Relations Update
Regional Meeting Reminder
IBANYS member sets up campaign HQ
When social media attacks!
Quick Links

A helpful banker, is a happy banker.     

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Advertise in CommuNitY

IBANYS is launching a new magazine, CommuNitY, and we could not be more excited! Set to debut with a July/August issue, this magazine will reach ALL community banks in New York State, all IBANYS Members, New York State elected officials, other state banking associations, and more!

 

For more information and ad rates/specs, click here!  


It's that time of year again!

Convention 2012
Turning Stone Resort 
September
9, 10, & 11, 2012
 
 
IBANYS: On the Grow!

FRANKLIN
The
Franklin Club 

 Contribute $100 or more to the our state PAC, you will become a member of the Franklin Club.  

 

Everyone receives a Franklin Club lapel pin and recognition at IBANYS events. We're also adding a part of www.ibanys.net dedicated to Franklin Club members. 

 

Click the link below.     

Inside IBANYS 

July 25, 2012


IBANYS: On the MOVE!

 

For almost two years now, IBANYS has been growing. Our membership is growing, our staff is growing, and with that growth comes the need for more space. We will be moving our offices this week to a new location only about a block from where we currently reside. Staying so close to the center of New York's governmental buildings will give us that distinct edge in politics and policy. 

 

If you have sent something to us at our old address recently, not to worry, our mail will soon reach our new location. Please also note that while we plan to have all electronics on line by Monday, our fax and e-mail response may have a slight lag as we continue to settle in.  

 

We could not be happier to start anew, in a new space that is all our

own. Located inside the former Harmanus Bleeker Library, our office has beautiful charm and wonderful history. We hope you can stop by soon!



As of August 1, our new address is: 

 

Independent Bankers Association of  

New York State 

19 Dove Street, Suite 101

Albany, NY 12210 

  

Early bird registration reminder and special guest news! 

 

The deadline for early bird registration is this Friday, July 27th. When you register as an early bird, you save almost $100 per person for the conference. If you are an exhibitor, the savings are $300 per booth!

 

Register today, save some money, and get excited for the biggest and best IBANYS event of the year! IBANYS is On The Grow! Come celebrate with us!
 

New York State Department of Financial Services (DFS) Superintendent Benjamin Lawsky will address IBANYS'  39th Annual Convention Monday morning. Mr. Lawsky is New York's first Superintendent of DFS, which includes the former New York State Banking and Insurance Departments. He supervises all New York State-chartered depository institutions, all insurance companies in New York, and the majority of U.S. based branches and agencies of foreign banking institutions. He also regulates all of New York State's mortgage brokers, mortgage bankers, check cashers, money transmitters, budget planners, and similar providers of financial services. All told, the entities supervised by the DFS number approximately 4400, with assets of about $6.2 trillion.   

 

Superintendent Lawsky led Governor Cuomo's initiative to make it into a modern unified financial regulator. His objectives include three main goals-keeping New York on the cutting edge as the financial capital of the world, protecting consumers better than ever before, and serving as a model of efficient government. Prior to his current position, Superintendent Lawsky was Governor Cuomo's Chief of Staff. He previously was Deputy Counselor and Special Assistant to then-NYS Attorney General Cuomo, and earlier spent over five years as an Assistant United States Attorney in the Southern District of New York, where he prosecuted white collar crime, organized crime, and terrorism cases. He began his career as Chief Counsel to Senator Charles Schumer on the Senate Judiciary Committee and as a Trial Attorney in the Civil Division of the Department of Justice.

 

We are so excited Mr. Lawsky can join us at this year's convention. His knowledge of New York's political machine and insight into the world of banking is surely not to be missed.  

Government Relations Update: Governor Cuomo Signs "CDARS" Deposit Placement Program Legislation Into Law   

By Steve Rice, IBANYS Director of GR, Policy & Services Development  

 

Governor Cuomo last week signed into law the legislation (A8971  - Magnarelli) to authorize the state, local governments and public authorities to arrange for redeposit of moneys through a deposit placement program. It amends the State's General Municipal Law, Finance Law and Public Authorities Law to authorize the State of New York, its local governments and public authorities to use a reciprocal matching deposit taking program to provide additional FDIC deposit insurance as security for their deposits. The law, now Chapter 128 of the Laws of 2012, enables New York banks and municipalities to take advantage of FDIC coverage for their deposits. IBANYS strongly supported the bill as one of our top priorities this legislative session, and wrote to the Governor strongly urging him to sign it into law.  The new law will allow New York State and its subdivisions to take advantage of the FDIC's requirements for pass-through deposit insurance coverage, and  provide an additional investment option for placement of municipal funds. The use of FDIC insurance to collateralize municipal deposits provides a safe and secure option for municipalities to use in maintaining collateral. By authorizing a reciprocal deposits program with other banks, the bill offers an alternative to a bank providing its own collateralization, freeing up those funds to make local loans.

 

In Washington

The ICBA has asked the federal banking regulators to extend by 90 days the current Sept. 7 comment deadline on proposed Basel III capital requirements because the size, scope and impact of the proposals represent a challenge for community banks and have been introduced at a time of extensive economic difficulty.  The ICBA noted the changes to the levels of community bank regulatory capital by the proposals present complex questions and challenges that require thorough analysis. The association wrote that redefining the components of core regulatory capital and imposing capital risk weights for residential mortgage assets are particularly concerning. Read ICBA Letter. 

 

FDIC Holds Regional Community Bank Roundtable

Last week, I attended the FDIC's regional roundtable in New York on the "Future of Community Banking."  FDIC Chairman Martin Gruenberg and a number of the agency's board members and senior officers, including Regional Director Doreen Eberley, were joined by representatives from community banks, state banking regulators and trade association executives from New York, New Jersey, Connecticut, Massachusetts, New Hampshire, Vermont, Maine, Maryland, Pennsylvania and Delaware for the half-day program.

 

The discussions focused on a range of topics, including financial and operational challenges and opportunities facing community banks, as well as a dialogue on regulatory interaction. FDIC officials noted the region was marked by the lowest number of bank failures nationally, and was populated by well-managed institutions - and, that 40 percent of small business lending was being done by community banks.

 

A number of the bankers offered strong support for the extension of TAG. (Legislation calling for a five-year extension, strongly supported by IBANYS, is still pending in Congress.) The issue of long-term success and stability of community banks was also addressed. Many participants noted the long-term future of their institutions and the industry would be enormously impacted by the increasing levels of regulatory burden, and by the escalating cost of compliance.

 

Many community banks have been forced to hire additional compliance personnel, whose time is spent not on generating revenue, or making small business, consumer, mortgage or educational loans, but on tracking the onslaught of an onslaught of increasingly complex new rules and regulations. It was noted that every dollar spent by a bank on compliance is a dollar less that they have to lend and invest in their local communities.  The cost of regulatory burden is found not just in the need for additional employees dedicated to compliance, but is reflected in the added costs of enhanced risk management, training, and education for all areas of the bank.  

 

There was general satisfaction with the performance of the FDIC's field examiners. However, the need for continued cooperation with other regulatory agencies to avoid duplication and overlap was stressed. Significantly, at this spring's Community Bank Forum in Syracuse, NYS Department of Financial Services Superintendent Benjamin Lawsky (who will address IBANYS' Annual Convention this September) also noted the need for enhanced cooperation between the DFS and federal regulators.  Lastly, there was also a consensus among the participants on the need for regulators to try to conduct and complete examinations  in a shorter time frame whenever possible.  

Reminder: Regional Meeting rescheduled

 

Our Finger Lakes Regional Meeting, originally scheduled for tomorrow, July 26th, has been rescheduled. Summer scheduling conflicts with our members prompted the change, and we are happy to make sure everyone can attend.  

 

The new date for the Finger Lakes Regional Meeting will be Thursday, October 18th. It will still be held at the Geneva Lakefront Ramada, in Geneva, NY. We hope you will join us at this beautiful location this fall! 

 
IBANYS Member to open new campaign office

 

Bob Dieterech, SVP and CFO of 1st National Bank of Scotia, has announced plans for a grand opening of a new campaign headquarters in Albany. Bob is running for a 20th Congressional District seat against incumbent Paul Tonko. 

 

The campaign headquarters grand opening is said to bring "a fun night of music, food and meeting others committed to electing a true representative of the people to Congress!"  

 

If you would like to attend the opening:  

Thursday, July 26th, 2012
6:00-8:00pm
Shoppers Park
145 Wolf Road
Albany, NY 12205

  

If you would like to know more about Bob's campaign for Congress, head to his website at: http://dieterichforcongress.com 

When Social Media Attacks

 By Barry Thompson, Managing Partner, Thompson Consulting Group

 

The CEO pulls into the bank's parking lot to find angry protestors lined up and carrying signs warning customers to bank elsewhere. As he reaches the main door, reporters push forward to interrogate him regarding comments recently made about his bank on social media websites. When he finally gets inside the bank, the first question the confused CEO asks his staff is, "What the heck happened?"

 

Our CEO has just discovered the power of social media. Up to this point, he has been discouraging his institution from establishing a social media presence, only to find that social media has now been used against him in an attempt to discredit the institution.  

 

Using Facebook, Twitter, or LinkedIn is an effective way to connect millions of people cheaply and easily, yet some institutions are afraid of taking that first step into the world of social media.   But whether they know it or not, and whether they like it or not, they're already there.    

 

If you have staff members under the age of thirty (or staff members who use social media at any age), your organization is already in play. For example, somewhere on the Internet, your staff members have already identified themselves as your employees, perhaps mentioning their job titles online, and sometimes even describing their daily duties. Your account holders are also already there making comments about your service, and sometimes even making their account numbers visible online.

 

If you still think you can avoid social media, let me assure you: That time has passed.

 

Many articles have been written about the benefits of utilizing social media, but few describe how it can be used to attack your financial institution. Yes, most people use social media for benign reasons: to tell the world about their day, where theywent on vacation, or even what they're having for dinner.   Some people, however, will use social media to tell the world about how you have "wronged" them.  

 

Every financial institution has a system in place to handle account holders' complaints, but pressure from users of social media will force you to institute a system that guarantees you go above and beyond to handle every account holder's complaints immediately and effectively - or else.   Of course, most institutions probably think they already have a good system in place, but now is the time to take a second look at what you do.

 

For example, on consulting assignments I've encountered frontline staff members who didn't know to whom they should report various problems, who didn't know how to handle an upset account holder, and who didn't know if they even had the authority to question a person's transactions. I've also encountered management who felt they weren't obligated to report problems because they were "decision makers" who didn't feel the need to follow established procedures.  

 

With this in mind, let's review some simple situations that could escalate into a full-blown social media attack:

  • A customer believes the financial institution has mistreated him in some way
  • An account holder has had money removed from her account in error
  • A repossessed car ends up being the wrong car, or it was repossessed on the same day payments were brought current
  • A shareholder decides the bank's management is overpaid
  • A check clears that had a stop payment placed against it eight months ago. The staff member who usually handles these situations is on vacation, so the one person on your staff for whom you wouldn't select this duty explains the problem to your upset account holder -- only the explanation isn't phrased diplomatically

In the past, customers who found fault with an institution might demand to talk to the manager; call the main office; or in the worst-case scenario, retain a lawyer. But most unsatisfied customers would simply walk away angry at the bank for years to come, informing maybe seven to ten family members or friends about what happened. Today, those comments will be posted on social media websites, where thousands (potentially even millions) of people will have access to them. In fact, "Bank Transfer Day" was created by a disgruntled Bank of America customer who encouraged 500 of her closest Facebook friends to transfer their accounts to credit unions, and the Facebook page she created for the event subsequently received 54,900 "likes."   Perhaps not coincidentally, on November 5, 2011, the day scheduled for the event, 40,000 people opened new credit union accounts.   This incident has become a case study for anyone who is considering publicly attacking a financial institution.  

 

The customers who are most likely to launch this kind of attack will take a passive-aggressive approach. These customers will let someone know they're unhappy, or maybe even write a letter to the CEO. But if they're dissatisfied with your response, they won't just walk away. They'll study your bank from a distance, performing background checks on management, looking for donations the bank made to groups that don't have a positive image within the local community, or befriending your staff members on social media websites in order to uncover some kind of vulnerability.

 

When they discover your weaknesses, they'll expose them on social media websites accompanied by a call to action. For example, if a senior manager of your institution has faced a DWI charge, lied about his/her accomplishments, received special treatment, or made some other mistake, the attacker has hit the jackpot. Every person reading this article knows about some incident their financial institution would rather not have publicized. This is the piece of information our attacker is looking for to initiate an attack.  

 

Once these attackers post that first bit of information on a social media website, they'll make a series of subsequent and related posts over an extended period of time as a way of hammering their message home. Thousands upon thousands of people might then be exposed to it. If properly executed, this tactic could force the financial institution to operate in crisis mode on a daily basis. Not knowing how to handle such an attack could cause the bank to lose account holders (by not responding properly or quickly enough to the charges levied against it), and the old standby solution of having a lawyer contact disgruntled customers might not work in this case for several reasons:

  1. You don't know who these attackers are.   If they are Internet savvy, finding them might take days -- if you can find them at all.
  2. These attackers often retain attorneys in advance of the attack and know you may not have any legal grounds to stop them.
  3. Attackers like this are often so mad that they don't care about repercussions. They know your reputation will be severely damaged before you can hurt them.

It is important for every financial institution to establish a system for monitoring social media, and that customer complaints are all handled the same way. Frontline staff, call centers as well as management, must know how to report problems with no deviations from policy so no one can claim that they didn't know what/where/to whom to report. When an attack is levied against an institution, a response must be made quickly, honestly, and with an open offer to the aggrieved party to have a dialogue with you. You must know the full story of what happened and if this has ever happened to another account holder before you respond. A response asserting that it was an "isolated incident" when it actually wasn't will permanently ruin your credibility.

 

Although you may not think your institution is susceptible to attacks via social media, the fact is, the game has changed: If you don't monitor social media, social media will monitor you.

Frank J. Capaldo              
President / CEO
  
Victoria Miller
Director of Administration & Membership

Erin Clark
Director of Communications, Development & Marketing

Steve Rice
Director of Government Relations, Policy & Services Development 

William Y. Crowell, III
Legislative Counsel