August 06, 2014
Masthead 2

 
Contents:
We Asked, You Answered
Fed Survey Shows Easing of Lending Standards
Too Big To Fail
Impact of Opting-In


Crowe-Horwath



A Bank's Private Cloud




6 Bridges




Harland Clarke


Travelers


 
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Real Community Bank
We Asked, You Answered
Last week ACB solicited Arkansas' state chartered banks to sign a petition requiring less burdensome call reporting for highly rated, well-capitalized community banks. And boy did you respond! Over 60 Arkansas banks signed the petition!
 
Emboldened by the response by community bankers nationwide, ICBA called on Congress this week to contact banking regulators to reduce the regulatory requirements of quarterly call reports on community banks.  
 
In the response to Congress, ICBA pointed out the inequity and unfairness that exists between community banks and the nation's largest credit unions. "By contrast, one large national credit union, with over 4.7 million 'members,' over 10,000 employees and with $58 billion in assets filed a recent call report of only 28 pages," the message states. "Yet, a $50 million community bank must compile a quarterly call report of 80 pages in length, for a total of 320 pages annually!"

Rest assured, even though little seems to get done in Washington, community banking is one of few issues each party can agree to support - and do. But we must continually remind our representatives how important community banks are to the economy and the country, and fight against measures that put community banks at risk. Standing together, community banks will persevere and prosper.
Fed Survey Shows Easing of Lending Standards
The latest Federal Reserve Senior Loan Officer Opinion Survey showed rising loan demand and a continued easing of lending standards at several regional and nationwide banks.

The 75 banks surveyed reported stronger demand during the past three months for many more loan categories, as well as easing standards on most commercial real estate loans. A few banks reported easing standards for prime residential mortgages, while their lending standards for nontraditional mortgages and home equity lines of credit remained unchanged from three months ago. Read more.

In a written testimony to the Senate Banking Committee, ICBA highlights various studies and reports that show that too-big-to-fail still exists and presents potential solutions for the problem. The testimony was presented during a hearing which examined a GAO report released on the same day.

"The GAO's report adds to the number of independent studies finding a too-big-to-fail subsidy," the letter states. "All but one - which was conducted by a megabank - confirmed a significant subsidy does exist."  

 

ICBA endorses the Terminating Bailouts for Taxpayer Fairness (TBTF) Act (S. 798), introduced by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.), which would require the largest, riskiest banks to hold more leverage equity capital that will allow them to operate more safely, absorb more losses and avoid a government or taxpayer bailout.   

Impact of Opting-In
The Consumer Financial Protection Bureau (CFPB) released a report Thursday that raises concerns about the impact of opting in to overdraft services for debit card and ATM transactions. The study found that the majority of debit card overdraft fees are incurred on transactions of $24 or less and that the majority of overdrafts are repaid within three days. Put in lending terms, if a consumer borrowed $24 for three days and paid the median overdraft fee of $34, such a loan would carry a 17,000 percent annual percentage rate (APR).

The CFPB's study is based on account data received from several large banks covered by the CFPB's supervisory authority. The data used for the study does not include account information from banks with assets under $10 billion - in other words, community banks. 

"Today's report shows that consumers who opt in to overdraft coverage put themselves at serious risk when they use their debit card," said CFPB Director Richard Cordray. "Despite recent regulatory and industry changes, overdrafts continue to impose heavy costs on consumers who have low account balances and no cushion for error. Overdraft fees should not be 'gotchas' when people use their debit cards."
Thursday, August 21, 2014                                

Risk Management Series: The Importance of Developing a Capital & Contingency Plan
 
Tuesday, August 26, 2014              Free Webinar!               

Q2 Enforcement Actions: What we can learn and how to avoid being the next victim.