Digging Deep and Making a Difference This Holiday Season

While many Americans are gearing up for the holiday season, ICBA and community bankers are gearing up for a bustling couple of weeks in Washington. Three top-priority industry initiatives are coming to a head in roughly as many weeks: blocking a backdoor tax hike on Federal Reserve members, modifying a dangerous rewrite of accounting standards, and advancing community bank regulatory relief. We need community bankers nationwide to make their voices heard loud and clear above the din on Capitol Hill.

First off, ICBA is working to ensure that community banks aren’t forced to pay for a federal highway bill that House and Senate lawmakers are in the middle of finalizing. An ICBA-advocated amendment that passed in the House would remove a Senate-passed cut to dividends paid on Federal Reserve Bank stock. The amendment not only drops the $17 billion backdoor charge on community banks, but also removes a provision to extend higher guarantee fees on mortgages sold to Fannie Mae and Freddie Mac. We also want to ensure a separate House-passed amendment that advances several ICBA regulatory relief provisions is included in the final version of the bill.

Meanwhile, ICBA is calling on community bankers to continue leading the charge against a costly accounting revamp that is expected to be finalized by the Financial Accounting Standards Board as soon as next week. The Current Expected Credit Loss model would require banks of all sizes to set aside reserves the day they make a loan or investment, resulting in an increase in loan-loss reserves of up to 50 percent, according to the Office of the Comptroller of the Currency. We’re calling on community bankers nationwide to contact FASB and advocate ICBA’s alternative plan, which would base community bank loan-loss provisions on historical losses. Meanwhile, I encourage community bankers to attend ICBA’s complimentary audio conference on the FASB proposal on Monday, Nov. 30.

Last but not least, ICBA is making a major push to advance our Plan for Prosperity regulatory relief priorities all the way through Congress before lawmakers break in December. Because the House has already passed numerous ICBA-advocated measures, such as relief from new mortgage rules and Basel III, the Senate is the key to getting them over the finish line. Whether it’s using the appropriations process ahead of the Dec. 11 budget deadline or old-fashioned regular order, now is the time for us to pull out all the stops.

The rest of the country might be cleaning out their ovens to cook Thanksgiving dinner, but it’s time for ICBA and community bankers to strike while the iron is hot. Community bankers have sent 15,000 letters to Capitol Hill against the Fed dividend cut and for our regulatory relief proposals, and nearly 5,000 signed ICBA’s petition on FASB’s accounting plan—clearly demonstrating our industry’s ability to rally when it matters most. So while we’re making room for turkey and stuffing, let’s all dig deep and redouble our advocacy efforts. With strong collective action, we can ensure a lasting holiday gift to Main Street communities.

A Different Perspective

I hold no animus toward anyone or any group that defends its members’ best interests. After all, that is the fundamental reason why associations are formed. That is why ICBA was formed. Therefore, it came as no surprise that five very prominent national financial trade groups wrote a 161-page letter to the Federal Reserve Board vigorously defending systemically important financial institutions (aka, SIFIs or too-big-to-fail firms). The five trade groups that signed the letter—the American Bankers Association, the Clearing House Association, the Financial Services Forum, the Financial Services Roundtable and the Securities Industry and Financial Markets Association—have the very largest financial firms in the world as members. Of course they are going to advocate for them. However, when the interests of the very largest banks and financial firms clash with the interests of our nation’s community banks, how is that reconciled? How can one defend and promote the best interests of both groups equally when the best interests of one will hurt the other?

ICBA also sent a letter to the Fed. Our letter was seven pages, and our position was clearly stated. We renounce the position taken by the megabanks, and we support the Fed’s proposals for bringing more rigorous financial discipline, higher capital standards and greater transparency to those institutions deemed most dangerous to our nation’s financial system and economy. So yes, we believe the Fed is on the right track, and financial sector luminaries, such as a two former Fed chairmen, several former Fed governors, at least two Fed district bank presidents, an FDIC director and some famous academics, apparently agree with ICBA.

If you read my previous blog post this week, you know already that community banks are still suffering from the fallout of the nation’s greatest financial calamity since the Great Depression—a calamity triggered in large part by the very financial firms the Fed now seeks to oversee more closely. You already know how unequal the treatment of a community bank and its staff is compared to a SIFI and its staff when stress occurs in those institutions. All one needs to do is watch the “60 Minutes” piece on Lehman Brothers to see it or read how several Wall Street moguls are doing today, even though their banks were given massive amounts of taxpayer dollars to keep them from collapsing.

Many books and scholarly articles set out in great detail the truth of what happened on Wall Street in this latest crisis. Every community banker has suffered to one extent or another by what happened over the past four years. ICBA understands that and is clear and straightforward in its vigorous defense of the community banking industry. No double standards, no obscure language. We know who we represent and in whose interest we act. Thus our letter to the Federal Reserve on their proposed regulations for controlling the SIFIs stands in stark contrast to those trade groups whose mission is to protect and defend the SIFIs. They do their mission. We do ours.

Strike Zones, 60 Votes and the Interchange Amendment

When I was young I was a baseball player—a southpaw pitcher. I learned early on that each umpire had a slightly different variation on the strike zone. As a player and pitcher, there was nothing I could do about that. You could not complain, you could not whine, you either adjusted to it or you lost. It’s that simple. The only thing I hoped was that regardless of where each umpire set his strike zone, he would be consistent.

No one can say that the Senate is not consistent when it comes to the 60-vote rule. Once used only on the highest-profile votes, a 60-vote threshold for winning legislative measures has been the norm for more than a decade now. We all know that—we all know where the “strike zone” is. In the case of the interchange issue, we were not able to get the 60 votes we needed to win.

So now is not the time to whine or complain that the strike zone changed. It was consistent with the Senate’s modern idea of a majority. We just were not able to get the “strike out.” We came close, but in baseball and politics, close does not get it done.

So rather than complain about strike zones and supermajorities, ICBA will move forward—not back. We will find other ways to win this issue for our community banks—and ultimately we will prevail. Just like a good pitcher, you learn from your setbacks and you keep your eyes focused on the next batter. Because the object is to win the game.

Interchange Legislation—A Reason to Dig Deep

The will of the nation’s community bankers to make their voices heard in Congress has never ceased to amaze me. Once again, it is time for community bankers to stand up, fight, scream and be heard on the terribly misguided and dangerous interchange rules that threaten our ability to continue to serve Main Street customers.

Bipartisan legislation is pending in both the House and Senate to delay the draconian Federal Reserve proposed rule on debit card interchange. The legislation also would require federal banking regulators to study the rule’s impact on community banks and their customers. I can tell you without a study that the impact will be severe indeed—and the consumer will be the biggest loser—and I am not talking about a TV reality show—I am talking real life!!

ICBA has fought tooth and nail against debit card interchange price fixing from the moment Sen. Durbin announced his intentions to offer his misguided amendment, and now we have legislation we can get behind to slow this lethal financial virus of a rule. That’s why I am asking every community banker in the nation to rattle your member of Congress’s cage—House and Senate—to co-sponsor these critical measures. MAKE YOUR VOICE HEARD ON THIS ISSUE! DO NOT WAIT FOR THE OTHER GUY—YOU ARE THE OTHER GUY—DO IT!

With a positive reputation among lawmakers, community bankers are effective advocates. This effort on interchange is as important as any in my memory to ensure that community banks and their customers are not harmed and that our nation’s Main Street communities continue to thrive. Dig deep and leave no doubt in any member of Congress of where we stand.