Senate Advances Small-Biz Lending Fund Amendment
The Senate late last night approved by a 60-37 vote a motion to end debate on an amendment -- sponsored by Sens. Mary Landrieu (D-La.) and George LeMieux (R-Fla.) -- that would allow the AmBA-backed $30 billion lending fund to be restored to the small-business bill (H.R. 5297).

The fund, which had been separated from the original bill as part of a Democratic tactical maneuver, would provide capital for banks with assets under $10 billion to increase their small-business lending. LeMieux and Sen. George Voinovich ( Ohio ) were the only Republicans to join Democrats in garnering the 60 votes needed to advance the measure.

A vote on passage of the underlying small-business legislation is expected next week. The bill also includes AmBA-backed provisions that would increase maximum sizes on the Small Business Administration's 7(a) guarantee loans from $2 million to $5 million; 7(a) express loans from $300,000 to $1 million; 504 loans from $1.5 million to $5.5 million; and micro loans from $35,000 to $50,000.

Other ABA-supported provisions would maintain the 7(a) program's temporary 90-percent loan guarantee, and eliminate 7(a) and 504 borrower fees through Dec. 31. The legislation also includes the Intermediary Lending Pilot Program that enables the SBA to make direct loans to eligible nonprofit lending intermediaries. For more information, contact AmBA 's James Ballentine.

AmBA Expresses Support for Carper-Bennett Data Security Bill
AmBA this week thanked Sens. Tom Carper (D-Del.) and Bob Bennett (R-Utah) for introducing a data security bill (S. 3579) that recognizes it’s not necessary or productive to duplicate data protection and consumer notice requirements that already are in place for banks under the Gramm-Leach-Bliley Act and subsequent regulations.

The bill “would effectively replace the current patchwork of state and federal regulations for identity theft with a national law that provides uniform protections across the country,” Floyd Stoner, AmBA EVP for congressional relations, said in a letter. “This comprehensive approach would better serve consumers by making it easier for businesses and government agencies to take the steps necessary to adequately protect all Americans from identity theft and account fraud.” Read the letter.

July 22, 2010

AmBA-OPPOSED BANKRUPTCY MARKUP POSTPONED
An anticipated markup of two AmBA-opposed bankruptcy bills – planned for the House Judiciary Commercial and Administrative Law Subcommittee this morning – will not be held this week.  Upon learning of the planned markup earlier in the week, AmBA worked with Subcommittee Members to express our opposition to the two bills.  The Subcommittee decided yesterday to postpone the markup.

A markup still may be held in the future, possibly as soon as next week or after the August recess, on the two bills – H.R. 5043, the Private Student Loan Bankruptcy Fairness Act, and H.R. 901, the Medical Bankruptcy Fairness Act. 

Senate Passes Bill to Extend Unemployment Benefits; Tax Extenders Not Included
The Senate last night passed by a 59-39 vote a bill (H.R. 4213) that would extend unemployment benefits for about 2.5 million Americans who have been out of work for six months. The House is expected to approve the legislation today, clearing it for the president’s signature.

AmBA Daily Newsbytes incorrectly reported yesterday that H.R. 4213 also extended for one year about 50 popular tax cuts, and the 90-percent guarantee on the Small Business Administration’s 7(a) loan program through the end of the fiscal year.

Instead, the legislation was modified and scaled-down Tuesday by a substitute amendment that removed the extenders and SBA provision from the original bill. The pared-down Senate version of H.R. 4213 is simply referred to as the Unemployment Compensation Extension Act, and the unemployment extension is its only major provision.

President Signs Dodd-Frank Bill; AmBA Reiterates Disappointment With Legislation
AmBA reiterated its disappointment with the Dodd-Frank Wall Street Reform and Consumer Protection Act that President Obama signed into law yesterday. “While the [legislation] does contain some key reform provisions that bankers support, it also contains a tsunami of new rules and restrictions for traditional banks that had nothing to do with causing the financial crisis in the first place,” AmBA President and CEO Ed Yingling said.

Yingling explained that implementing the bill will be challenging for regulators. “The result will be over 5,000 pages of new regulations on traditional banks and years of uncertainty as to what the massive new rules will mean,” he said. “The impact of these rules will be very real and will be felt not only by banks, but by consumers, businesses and the broader economy.”

Yingling emphasized that AmBA “stands ready to work with regulators to ensure that they have the information they need to make the regulatory process as effective and efficient as possible.” To help bankers prepare for the new rules, AmBA has established a special Regulatory Reform Center web page: aba.com/RegReform. There bankers can find a comprehensive summary of the act along with charts showing rulemaking dates and effective dates.

$30 Billion Fund Will Be Offered as Amendment to Small-Biz Bill
Senate Majority Leader Harry Reid (D-Nev.) last night unveiled a substitute amendment to the AmBA-backed administration small-business lending bill (H.R. 5297) that does not include the original legislation's $30 billion fund.

The fund -- which would provide capital for banks with assets under $10 billion to increase their small-business lending -- will be voted on as a separate amendment, Senate Small Business Committee Chairwoman Mary Landrieu (D-La.) said. Landrieu explained the amendment vote would highlight Republican obstruction of a program that is based on the public-private sector model they usually extol.

"It's using the power of the private sector community banks to lend to healthy businesses," she said. Landrieu added that the legislative package would be made whole again when the amendment is adopted. Senate Republicans have criticized the $30 billion fund because it too closely resembles the unpopular Troubled Asset Relief Program, and they are concerned that the money could be used for purposes other than small-business lending. For more information, contact AmBA 's James Ballentine.

Bernanke: Fed Would Act to Prevent Recovery From Faltering
The Federal Reserve would take action if it was needed to prevent the economic recovery from faltering, Chairman Ben Bernanke told the Senate Banking Committee yesterday during his semiannual report to Congress.

Bernanke said he expects the expansion to continue, but also recognizes that the economic outlook remains unusually uncertain. "We remain prepared to take further policy actions as needed to foster a return to full utilization of our nation's productive potential in a context of price stability," he said.

Actions the Fed could take, Bernanke said, include cutting the interest rate paid on bank reserves; strengthening the Fed's promise to keep short-term interest rates low for the foreseeable future; and buying enough mortgage securities to replace those that are paid off. If it appeared the economy was at risk of returning to recession, the Fed would consider large-scale purchases of Treasury bonds or mortgage-related securities.

"We have not come to the point where we can tell you precisely what the leading options are," Bernanke said. "Clearly, each of these options has got drawbacks, potential costs. So we are going to continue to monitor the economy closely and continue to evaluate the alternatives that we have." Read Bernanke’s testimony.

July 21, 2010

Dodd-Frank Signed Into Law
Today, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act pledging that it ended tax-funded bailouts. The President spent considerable time talking about consumer protection, but noted encouragingly that “The fact is, the financial industry is central to our nation’s ability to grow, to prosper, to compete and to innovate. There are a lot of banks that understand and fulfill this vital role, and there are a whole lot of bankers who want to do right — and do right — by their customers. This reform will help foster innovation, not hamper it. It is designed to make sure that everybody follows the same set of rules, so that firms compete on price and quality, not on tricks and not on traps.” 

President Obama concluded his remarks with the following “In the end, our financial system only works — our market is only free — when there are clear rules and basic safeguards that prevent abuse, that check excess, that ensure that it is more profitable to play by the rules than to game the system. And that’s what these reforms are designed to achieve — no more, no less. Because that’s how we will ensure that our economy works for consumers, that it works for investors, that it works for financial institutions — that it works for all of us. … Ultimately, there’s no dividing line between Main Street and Wall Street. We rise or fall together as one nation. So these reforms will help lift our economy and lead all of us to a stronger, more prosperous future.”

While the President spoke carefully about “unscrupulous lenders” and noted the importance of the banks that do right by their customers, the White House also released a far less measured video to “explain” Wall Street Reform that continued the tone of bank bashing. It remains to be seen where the Administration’s leadership will point the new Bureau.

Going forward, ABA will be active in the implementation of regulatory reform to support common rules that simplify disclosures and improve transaction transparency as well as assure fair treatment of customers that respects their informed and responsible choices.

Senate Breaks Stalemate on Bill to Extend Tax Credits, Unemployment Benefits
The Senate yesterday voted 60-40 to end debate on a bill (H.R. 4213) that would extend for one year about 50 popular tax cuts that expired at the end of 2009, and also extend unemployment benefits for about 2.5 million Americans who have been out of work for six months.

The Senate action came just minutes after Carte Goodwin was sworn in as the new Democratic senator from West Virginia , replacing the late Robert Byrd. Goodwin gave Democrats the 60th vote they needed to overcome a Republican filibuster on the legislation. The Senate could pass the bill as early as today or possibly Thursday.

A few of the tax credits the legislation would extend are the research and development credit; special rule for S corporations making charitable contributions of property; active financing exception; new markets tax credit; look-through treatment of payments between related controlled foreign corporations; and tax-free distributions from individual retirement plans for charitable purposes.

The bill also contains an ABA-backed provision that would authorize $505 million to extend the 90-percent guarantee on the Small Business Administration’s 7(a) loan program and support the reduction or elimination of borrower fees for 7(a) and 504 loans through the end of the fiscal year. For more information, contact ABA 's Larry Seyfried.

Senate Democrats Plan to Drop $30 Billion Fund From Small-Biz Bill
Senate Democrats plan to drop the $30 billion fund from the ABA-backed administration small-business lending bill (H.R. 5297) to attract Republican votes for the legislation, according to reports late yesterday.

After passage of the legislation (H.R. 4213) to extend tax credits and unemployment benefits, Senate Majority Leader Harry Reid (D-Nev.) plans to offer a substitute amendment to H.R. 5297 that would drop the fund -- which would provide capital for banks with assets under $10 billion to increase their small-business lending -- and possibly make other smaller changes, a Reid spokesman and Small Business Committee ranking member Olympia Snowe (R-Maine) said.

Republicans have opposed the legislation, in part, because Reid has used a procedural tactic to block amendments. GOP leaders also say the $30 billion fund too closely resembles the unpopular Troubled Asset Relief Program. The bill would retain $12 billion in tax breaks for small businesses. The legislation contains the State Small Business Credit Initiative Program that would provide $2 billion for new or existing state lending programs.

The measure also would establish a new Small Business Administration program that would provide $1 billion to support early-stage small businesses with equity financing. It also includes ABA-backed provisions that would increase the 7(a) guarantee program’s maximum loan size from $2 million to $5 million, and maintain its temporary 90-percent loan guarantee through Dec. 31. For more information, contact ABA 's James Ballentine.

July 20, 2010

Reg Reform Nears Finish Line as Reid Secures 60 Votes
Senate Majority Leader Harry Reid (D-Nev.) filed for cloture on the regulatory reform bill’s (H.R. 4173) conference report late yesterday, setting up a Thursday morning vote to limit debate on the report and possibly proceed to final consideration.

Sen. Ben Nelson (D-Neb.) yesterday removed any uncertainty that Democrats had the 60 votes needed to pass a cloture motion, when he expressed support for the conference report. Nelson had told reporters Monday night that he was still uncommitted because of concerns he had about the Consumer Financial Protection Bureau that the legislation would create.

Reid said that Senate Republicans could delay a final vote on the bill until Saturday by insisting on their right to 30 hours of post-cloture debate. “I hope to have a vote on it Thursday morning,” Reid said. "I'm hopeful and confident that we'll get cloture on that and I hope that the Republicans won't take the 30 hours. If they do we'll have to come back to finish it on Saturday, but we are going to finish the bill.”

AmBA , Dechert LLP Publish Comprehensive Summary of Reg Reform Conference Report
In related news, AmBA has posted online a comprehensive summary of the association-opposed reg reform bill’s conference report that the House passed June 30 and the Senate is slated to consider later this week. Dechert LLP, a Washington , D.C. , law firm whose banking attorneys are among the country’s most respected, prepared the in-depth summary in consultation with ABA ’s staff experts.

Bankers can browse the bill by title and find expanded analyses of individual provisions. The association also has posted an executive summary and charts noting what would be the measure’s key effective dates and rulemaking dates – as well as a list of AmBA and Dechert contacts who can provide more-detailed explanations. All of these features are housed on a central web page -- aba.com/RegReform -- that will be updated as events warrant. Visit the web page.

Senate Sets Aside Small-Biz Bill
The Senate has set aside the small-business lending fund bill (H.R. 5297) it was working on last night because Democratic and Republican leaders have been unable to reach an agreement on which amendments would be considered. It is unclear when the chamber will return to the legislation.

According to press reports, Republicans want to force votes on several small-business tax-cut measures, but Senate Majority Leader Harry Reid (D-Nev.) is using a procedural tactic to bar amendments he does not want from consideration.

Senate Minority Whip Jon Kyl (R-Ariz.), for example, said he would press for a vote on an estate tax measure. But Reid has already said he will not allow that amendment to come up. Sen. Mark Udall's (D-Colo.) ABA-opposed amendment that would increase the credit union member business-lending cap from 12.25 percent to 27.5 percent of total assets also is pending.

AmBA continues to ask bankers and their employees to use its automated system to send customized letters to their senators to urge them to oppose the Udall amendment. Please send a letter.

July 13, 2010

Sens. Snowe, Brown to Vote for Reg Reform Conference Report; Senate to Act This Week
Sens. Olympia Snowe (R-Maine) and Scott Brown (R-Mass) yesterday said they would support the regulatory reform bill’s (H.R. 4173) conference report, likely giving Senate Majority Leader Harry Reid (D-Nev.) the 60 votes he needs to shut off debate and bring the report up for a vote. Snowe announced her support last night, while Brown said earlier in the day that he would vote for the conference report.

Following Snowe’s announcement, Reid issued a statement: “We will finish our work on this bill this week to ensure that these critical protections and accountability for Wall Street are in place as soon as possible.” He did not say when a vote would take place. Reid originally was going to wait until West Virginia Gov. Joe Manchin (D) filled the vacancy left by late Sen. Robert Byrd before bringing the conference report up for a vote.

One last potential obstacle for Reid may be fellow Democrat Sen. Ben Nelson ( Neb. ), who last night said that was not yet committed to voting for the conference report because of concerns he has about the Consumer Financial Protection Bureau that the legislation would create. Sen. Charles Grassley (R-Iowa) also was still uncommitted as of last evening. Read Snowe’s statement.  Read Brown’s statement.
AmBA, State Associations Urge Senate to Oppose CU Lending Cap Amendment
AmBA and the state associations yesterday strongly urged the Senate to oppose Sen. Mark Udall’s (D-Colo.) proposed amendment to the small-business lending fund bill (H.R. 5297) that would increase the credit union member business-lending cap from 12.25 percent to 27.5 percent of total assets for certain, mostly larger, credit unions. The Senate is expected to consider the bill this week.

“The primary beneficiaries of expanded business lending authority are the large, aggressive, growth-oriented credit unions that have abandoned their mission of serving people of small means,” the associations said in a letter. “The Udall amendment adds to an already unlevel playing field by increasing the ability of large, tax-advantaged credit unions to take small-business lending away from banks -- the bread and butter of community banks across the country.”

They emphasized that the amendment would be an additional blow to community banks’ viability that comes on top of the new regulatory burdens and costs contained in the Dodd-Frank regulatory restructuring bill.

The associations also explained the Udall amendment would affect only a handful of credit unions. “In fact, only a very small number of the nearly 7,600 credit unions would be directly impacted because they are at or near their congressionally mandated 12.25 percent lending cap,” they said.

Meanwhile, AmBA continues to ask bankers and their employees to use its automated system to send customized letters to their senators to urge them to oppose the Udall amendment.

Read the associations’ letter.  
Please send a letter urging senators to oppose the Udall amendment.
For more information, contact AmBA 's James Ballentine.

July 12, 2010

AmBA Continues Grassroots Push on Reg Reform
With the Senate scheduled to consider the regulatory reform bill’s (H.R. 4173) conference report this week, AmBA continues to ask bankers and their employees to use its automated system to send customized letters to their senators to urge them to vote against the measure.

The Dodd-Frank bill will impose more than 5,000 pages of new regulation on traditional banks that had nothing to do with the financial crisis. This is blatantly wrong. The Senate is the last stop before the bill is sent to the president. Unless the banking industry can beat the bill on the Senate floor, there will be no opportunity to make needed changes in the legislation.

As AmBA spokesman Peter Garuccio told the Wall Street Journal: “You keep playing until the final whistle blows.”

AmBA has provided customizable talking points to help bankers compose effective, individualized letters. Please write your senators today. Time is short. Please send a letter. For more information, contact AmBA 's James Ballentine.

AmBA Outlines Reform Bill’s Effect On Community Banks
Meanwhile, AmBA has developed an outline of the negative effects the Dodd-Frank regulatory reform bill would have on community banks. Those effects include the addition of an estimated 5,000 pages of new regulations; the application of Consumer Financial Protection Bureau rules to all banks; the loss of interchange income on debit transactions; and significant new disclosures and reporting requirements. Read about the bill’s community-bank impact.

July 8, 2010

AmBA Calls for Letters to Oppose CU Business-Lending Expansion
AmBA also is asking bankers and their employees to use its automated system to send customized letters to their senators to urge them to oppose an amendment to the small-business lending fund bill (H.R. 5297) -- offered by Sen. Mark Udall (D-Colo.) -- that would increase the credit union member business-lending cap from 12.25 percent to 27.5 percent of total assets.

As of year-end 2009 -- according to National Credit Union Administration statistics -- only 78 well-capitalized credit unions would be directly affected by the amendment because they are at or near their congressionally mandated 12.25 percent lending cap. They also are the large, aggressive, nontraditional credit unions that act like banks and have abandoned their mission of serving people of small means.

AmBA is encouraging bankers and their employees who are concerned about unfair credit-union expansion into business lending to write their senators immediately. The association again has provided customizable talking points to help bankers and their employees compose effective, individualized letters. Please send a letter. For more information, contact AmBA 's James Ballentine or James Clark.

July 6, 2010

Bankers Urged to Contact Senators on Reg Reform
AmBA is asking bankers and their employees to use its automated system to send customized letters to their senators to urge them to vote against the conference report of the financial regulatory reform bill (H.R. 4173) that the Senate is scheduled to consider next week.

The Dodd-Frank bill will impose more than 5,000 pages of new regulation on traditional banks that had nothing to do with the financial crisis. This is blatantly wrong. The Senate is the last stop before the bill is sent to the president. Unless the banking industry can defeat the bill on the Senate floor, there will be no opportunity to make needed changes in the legislation.

AmBA has provided customizable talking points to help bankers compose effective, individualized letters. Please write your senators today. Time is short. Please send a letter. For more information, contact AmBA 's James Ballentine.

Cantwell to Vote for Reg Reform Conference Report
In related news, Sen. Maria Cantwell (D-Wash.) said late last Thursday night that she would support the regulatory reform bill’s (H.R. 4173) conference report. Cantwell announced her support after meeting with Commodity Futures Trading Commission Chairman Gary Gensler and receiving assurances that his agency would crack down on derivatives-market regulation. Cantwell had opposed the earlier Senate version of the reg reform bill because she believed that it contained loopholes that derivatives traders could exploit.

The total vote count supporting the bill’s conference report is now thought to be 58 -- two short of the 60 needed to shut off debate and bring the report up for a vote. Three Republican supporters of the bill’s earlier Senate version -- Sens. Scott Brown ( Mass. ), Olympia Snowe ( Maine ) and Charles Grassley ( Iowa ) -- remain uncommitted.

AmBA Calls for Letters to Oppose CU Business-Lending Expansion
AmBA also is asking bankers and their employees to use its automated system to send customized letters to their senators to urge them to oppose an amendment to the small-business lending fund bill (H.R. 5297) -- offered by Sen. Mark Udall (D-Colo.) -- that would increase the credit union member business-lending cap from 12.25 percent to 27.5 percent of total assets.

As of year-end 2009 -- according to National Credit Union Administration statistics -- only 78 well-capitalized credit unions would be directly affected by the amendment because they are at or near their congressionally mandated 12.25 percent lending cap. They also are the large, aggressive, nontraditional credit unions that act like banks and have abandoned their mission of serving people of small means.

AmBA is encouraging bankers and their employees who are concerned about unfair credit-union expansion into business lending to write their senators immediately. The association again has provided customizable talking points to help bankers and their employees compose effective, individualized letters. Please send a letter. For more information, contact AmBA 's James Ballentine.

July 2, 2010

Senate Extends National Flood Insurance Program Through Sept. 30
The Senate late Wednesday night passed by voice vote -- and cleared for the president’s signature -- a bill (H.R. 5569) that extends the National Flood Insurance Program, which expired June 1, through Sept. 30. The legislation also makes the extension retroactive to May 31. Since March, the program’s authorization has lapsed three times. The House passed the bill on June 23.

Senate Extends Deadline for Homebuyer Tax Credit
Also on Wednesday night, the Senate approved by voice vote -- and cleared for the president’s signature -- a bill (H.R. 5623) that extends the June 30 closing deadline for the homebuyer tax credit to Sept. 30. The legislation gives homebuyers who signed a purchase agreement by April 30 more time to close their deals and receive the credit that is worth up to $8,000 for first-time buyers and $6,500 for existing owners who move. The House passed the bill on Tuesday.

Action Alert: Senator Udall Offers Amendment to Raise Credit Union Business Lending Cap
Senator Mark Udall (D – CO) offered an amendment (SA 4443) that would lift the member business lending (MBL) cap for credit unions to 27.5 percent of their total assets from the current limit of 12.25 percent of assets.  Udall is seeking to attach this amendment to an AmBA supported bill (H.R. 5297), the Small Business Lending Fund Act.  H.R. 5297 proposes to create a $30 billion fund to provide capital for banks with assets under $10 billion to increase their small-business lending.  Sen. Udall’s amendment is nearly identical to legislative language proposed by the Treasury Department on May 25^th that would permit well-capitalized credit unions with at least a five-year history of making business loans to increase their business lending authority to 27.5 percent of assets.  AmBA strongly opposes the Udall amendment.  Please send a letter to your senators opposing the Udall amendment and also ask your employees to do so.  Click here to send letter.

July 1, 2010

House Passes Regulatory Reform Bill’s Conference Report
As reported in last night’s Newsbytes special edition, the House passed by a 237-192 vote the AmBA-opposed financial regulatory reform bill’s (H.R. 4173) conference report. The conference report now goes to the Senate, where there will not be a vote on the measure until the week of July 12th.

AmBA expressed its continued opposition to the conference report. “As we have consistently maintained throughout the legislative process, there is broad agreement that financial regulatory reform is needed and bankers support the effort to end too-big-to-fail, enhance consumer protections and rein in the shadow banking system. But the good in this legislation is far outweighed by the bad,” AmBA President and CEO Ed Yingling said.

Yingling emphasized that the bill will do severe damage to traditional banks and to Main Street , and said that AmBA will continue to make its case to the Senate. The conference report’s status in that chamber is still unsettled because the death of Sen. Robert Byrd (D-W.Va.) and the wavering support of Sen. Scott Brown (R-Mass.) -- who voted for the Senate version of the bill in May -- could leave Democrats short of the 60 votes needed to proceed to a final vote.

Brown’s opposition to the original $19 million bank tax in the conference report forced Democratic leaders to reopen the conference committee late Tuesday. Conference negotiators eliminated the tax, and replaced it with measures to end the Troubled Asset Relief Program and to increase premium rates to raise the Deposit Insurance Fund’s minimum reserve ratio from 1.15 percent to 1.35 percent by Sept. 30, 2020. (Banks with consolidated assets greater than $10 billion would pay the increased premiums.)

But Brown still remains noncommittal. "I appreciate the conference committee revisiting the Wall Street reform bill and removing [the tax]. Over the July recess, I will continue to review this important bill," he said in a statement.

Among the other three Republican supporters of the bill’s Senate version, Sen. Susan Collins ( Maine ) said in a press release that she was inclined to support the final bill. But it is still unclear how the other two -- Sens. Olympia Snowe ( Maine ) and Charles Grassley ( Iowa ) -- will vote. Read the Newsbytes special edition.

AmBA : Reform Bill to Generate Over 5,000 Pages of Regs for Traditional Banks
In related news, AmBA projected yesterday that the regulatory reform bill (H.R. 4173) will generate more than 5,000 pages of new regulations for traditional banks. The projection does not include the parts of the legislation that focus on Wall Street, nonbank institutions or other matters. “Congress consistently underestimates the complexity and size of the regulations resulting from new laws,” AmBA President and CEO Ed Yingling said.

AmBA ’s projection is based on comparisons with previous laws and the size of the regulations they generated. AmBA compared the statutes for the Community Reinvestment Act, the Truth-in-Lending Act, the Truth-in-Savings Act, the Electronic Funds Transfer Act, and the Credit Card Act with the pages of regulations each law generated.

The association then applied the comparison to only three parts of the current legislation: new provisions for regulating holding companies (Title VI), consumer regulations under the Consumer Financial Protection Bureau (Title X), and new regulations relating to mortgages (Title XIV).

“Traditional banks are already being crushed by existing regulations, including 50 new or expanded regulations in the last two years,” Yingling said. “Adding 5,000 pages of new regulations to even the smallest banks, which had nothing to do with the financial crisis, constitutes a massive overkill.”

The projection is not scientific, but since it includes only parts of the legislation and does not include all the regulations the CFPB will issue under its more general authorities, AmBA believes it clearly understates the magnitude of the burden.

June 30, 2010

Reg Reform Conferees Reconvene; Vote to Raise Premiums for Banks Over $10 Billion
Faced with losing Senate support needed to pass the regulatory reform bill's (H.R. 4173) conference report, top House and Senate negotiators hurriedly reconvened the conference yesterday and voted to fund the measure by ending the Troubled Asset Relief Program, and increasing premium rates to raise the Deposit Insurance Fund's minimum reserve ratio from 1.15 percent to 1.35 percent by Sept. 30, 2020. Banks with consolidated assets greater than $10 billion would pay the increased premiums.

Democratic leaders decided to reconvene the conference after Sen. Scott Brown (R-Mass.) said he would oppose the conference report because its original $19 billion "bank tax" on large financial firms and hedge funds used to cover the bill's costs would likely be passed on to consumers. Brown had provided key support to pass the Senate version of the legislation, and his reversal, along with the death of Sen. Robert Byrd (D-W. Va. ), could leave Democrats short of the 60 votes needed to proceed to a vote on the conference report.

AmBA immediately expressed deep concerns about the funding approach the conferees approved. "Bankers have paid tens of billions of dollars to keep the FDIC fund strong, and we are committed to continue to do so. However, this is yet another regulatory cost imposed on the many traditional banks that had nothing to do with causing the financial crisis," AmBA President and CEO Ed Yingling said.

Yingling listed AmBA 's concerns

Manipulating FDIC premiums as a budget "pay for," and doing so without any hearings or chance for debate, risks undermining the integrity of the basis for insurance premiums. Consumer confidence in the FDIC will be undermined if it is seen as a political pot to be used for other purposes.

This approach sets a dangerous precedent for using the FDIC as a source of revenue to offset other government programs.

This approach indirectly uses FDIC premiums to offset, or "pay for," the cost of the Consumer Financial Protection Bureau. At the same time, nonbanks subject to CFPB rules will pay nothing.

This approach is still, in terms of its impact, a tax on bank capital, and every dollar of bank capital serves as the basis for making loans of $8 or more.

While banks under $10 billion would not be required to pay to increase the fund from 1.15 to 1.35, the cost to maintain the ratio at the higher level would be borne by all banks under the normal premium structure.

If the Congress determines that it wants to move the FDIC minimum ratio to 1.35, should it not make the equivalent change for the credit union's National Credit Union Share Insurance Fund, especially since credit unions have already received a government loan to support their insurance fund? Does Congress intend for the FDIC fund to be better capitalized than NCUSIF?

The extra assessment is roughly projected to raise more than $5 billion and would likely be implemented by extending the current high premium rates -- for banks over $10 billion in assets -- for an extra five quarters, beginning the last quarter of 2017. This estimate is based on current FDIC projections and premiums and could change.

Letters, Calls Needed on Conference Report: ‘Keep Playing Until the Final Whistle Blows’
Yesterday’s change to the reg reform bill’s funding and today’s likely House vote on the bill’s conference report make it absolutely crucial that bankers -- who haven’t already done so -- use AmBA’s automated system to send customized letters to their members of Congress to ask them to vote against the conference report. “You keep playing until the final whistle blows,” said AmBA spokesman Peter Garuccio, summing up the association’s battle cry in yesterday’s Wall Street Journal.

The reg reform bill will impose 30 new or expanded areas of regulation on traditional banks that had nothing to do with the financial crisis, and they are 30 very good reasons to play hard until that final whistle. That added reg burden is blatantly wrong, and bankers have one last chance to take their shot and do something about it.

AmBA also is asking bankers to call their members of Congress to ask them to vote against the H.R. 4173 conference report. The association has set up an automated call-alert page that looks up the House and Senate member’s phone numbers, instructs callers to ask for the member’s banking legislative assistant and provides short talking points on the conference report.

Please send a letter.
Please use the call-alert page and make a call.
For more information, contact AmBA 's James Ballentine.

WSJ Op-Ed: Reform Bill's New Regs Could End Community Banking
The regulatory reform bill's new regulations, along with the regs issued in the past year, could signal the end of people-oriented community banking, AmBA banker Sarah Wallace said in a Wall Street Journal opinion piece yesterday.

"Less credit will be available, costs will increase, and we will be less able to make loans to regular people who were creditworthy in the past. This is the perfect storm for the small retail banking customer," wrote Wallace, chair of the $200-asset First Federal Saving and Loan Association, Newark , Ohio .

Going forward, she said, First Federal will no longer be able to evaluate loan applications based solely on a borrower's creditworthiness. "We will be making regulation compliance decisions instead of credit decisions," Wallace said. "This is not in the best interest of the consumer."

She also explained that the reform bill will reduce interchange-fee income -- often used to offset electronic banking costs at small institutions -- an estimated 75 percent. "Institutions will be faced with one of two choices: Either increase fees on checking accounts and continue to offer electronic banking, or stop providing the service altogether," Wallace said.

She added that to comply with the slew of new regulations, the 55-employee First Federal will need a proportionately higher number of people -- rather than the current lone compliance specialist -- working daily to interpret and implement the new federal rules.

"This in itself, because of the sheer volume, has the potential to destroy community banking," Wallace said. Read the opinion piece.

Senate Votes to Begin Debate on AmBA-Backed Small-Business Lending Bill
The Senate yesterday voted 66-33 to begin debate on the AmBA-backed administration bill (H.R. 5297) that would create a $30 billion fund to provide capital for banks with assets under $10 billion to increase their small-business lending. Democratic leaders had hoped to pass the legislation before adjourning for the congressional July 4th recess. But funeral services for Sen. Robert Byrd (D-W.Va.) are likely to postpone final action on the bill until after the break.

Under H.R. 5297, which the House passed on June 17, 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.

The legislation also contains the State Small Business Credit Initiative Program that would provide $2 billion for new or existing state lending programs. The measure also would establish a new Small Business Administration program that would provide $1 billion to support early-stage small businesses with equity financing. The Senate version of H.R. 5297 includes AmBA-backed provisions that would increase the 7(a) guarantee program’s maximum loan size from $2 million to $5 million, and maintain its temporary 90-percent loan guarantee through Dec. 31.

Meanwhile, Senate Finance Committee Chairman Max Baucus (D-Mont.) and Small Business Committee Chairman Mary Landrieu (D-La.) late yesterday proposed adding a number of tax breaks to the bill. Among other things, they proposed doubling expensing limits for small business equipment to $500,000 and expanding eligibility for the higher limits to leasehold, restaurant and retail property. The senators also proposed extending through the end of 2011 a 50 percent write-off of equipment purchases in the first year.

For more information, contact AmBA 's James Ballentine.

June 29, 2010

AmBA , State Associations Urge Congress to Vote Against Reg Reform Conference Report
AmBA and the state bankers associations yesterday urged all House and Senate members to vote against the conference report of the financial regulatory reform bill (H.R. 4173). The legislation’s laudable reforms “are overshadowed by a number of other provisions in the bill that run far afield from Wall Street reform and will ultimately harm Main Street ,” the associations said in a letter.

“The consequences involved are very real and will have a very negative impact on traditional banks, on consumers, and on the broader economy,” they said. “Above all, the capability of traditional banks to provide the credit needed to move the economy forward has been undermined in numerous ways.”

For examples, the associations cited the negative effects of the bill’s interchange amendment and the creation of the Consumer Financial Protection Bureau. “More generally, the conference report includes provisions that add more than 30 new and expanded regulations that will limit the ability of banks, particularly smaller institutions, to extend credit,” they said. Read the letter.

AmBA Asks Bankers to Express Opposition to Conference Report
AmBA continues to urge bankers to use its automated system to send customized letters to their members of Congress to ask them to vote against the conference report of financial regulatory reform bill (H.R. 4173) that House and Senate conferees approved Friday. The House -- now scheduled to vote Wednesday -- and the Senate still must approve the conference report before the bill can be sent to the president.

The bill, which largely ignores the concerns of the traditional banking industry, will impose 30 new or expanded areas of regulation on traditional banks that had nothing to do with the financial crisis. This is wrong, and bankers have one last chance to do something about it.

AmBA also is asking bankers to call their members of Congress to ask them to vote against the H.R. 4173 conference report. The association has set up an automated call-alert page that looks up the House and Senate member’s phone numbers, instructs callers to ask for the member’s banking legislative assistant and provides short talking points on the conference report. Please send a letter.
Please use the call-alert page and make a call.
For more information, contact AmBA 's James Ballentine.

AmBA to Host Telephone Briefing Thursday on Reg Reform Bill
The full House will vote Wednesday -- and the Senate soon after -- on the conference report of the reg reform bill (H.R. 4173) that conference committee approved Friday. To update its members on this sweeping measure, AmBA is inviting bankers to participate in a one-hour telephone briefing at 11 a.m. EDT on Thursday, July 1.

The free telephone briefing -- conducted by AmBA Chairman Art Johnson, chairman and CEO, United Bank of Michigan , Grand Rapids , Mich. , and association President and CEO Ed Yingling -- is an opportunity for bankers to learn more about the legislation and ask questions. We strongly urge you to participate to better understand a bill that will affect every bank in the country.

A limited number of listening sites will be available for this live program, so bankers are encouraged to register early. Register for the call.

Senate to Consider AmBA-Backed Small-Business Lending Bill
The Senate today is expected to begin consideration of the AmBA-backed administration bill (H.R. 5297) that would create a $30 billion fund to provide capital for banks with assets under $10 billion to increase their small-business lending. The legislation, however, could be slowed down by a number of amendments, including some provisions from a measure (H.R. 4213) that would extend for one year about 50 popular tax cuts that expired at the end of 2009.

Under H.R. 5297, 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.

The legislation also contains the State Small Business Credit Initiative Program that would provide $2 billion for new or existing state lending programs. The measure also would establish a new Small Business Administration program that would provide $1 billion to support early-stage small businesses with equity financing. For more information, contact AmBA 's James Ballentine.

June 28, 2010

AmBA Urges Bankers to Oppose Reg Reform Conference Report
AmBA is urging bankers to use its automated system to send customized letters to their members of Congress to ask them to vote against the conference report of financial regulatory reform bill (H.R. 4173) that House and Senate conferees approved Friday. The House and the Senate still must approve the conference report before the bill can be sent to the President. The House could vote as early as Tuesday.

The bill, which largely ignores the concerns of the traditional banking industry, will impose 30 new or expanded areas of regulation on traditional banks that had nothing to do with the financial crisis. This is wrong, and bankers have one last chance to do something about it.

AmBA also is asking bankers to call their members of Congress to ask them to vote against the H.R. 4173 conference report. The association has set up an automated call-alert page that looks up House and Senate member’s phone numbers, instructs callers to ask for the House and Senate member’s banking legislative assistant and provides short talking points on the conference report. Please send a letter.
Please use the call-alert page and make a call .
For more information, contact AmBA 's James Ballentine.

Johnson and Yingling: Battle for the Industry’s Future Is Not Over
In a CEO Alert on Friday, AmBA Chairman Art Johnson -- chairman and CEO, United Bank of Michigan, Grand Rapids, Mich. -- and association President and CEO Ed Yingling provided perspective on the conference report of the reg reform bill that conferees approved earlier that day.

Johnson and Yingling expressed their great appreciation to the bankers nationwide and the state associations that worked so hard during the legislative process, and assured them that the fight will continue. “We will continue to oppose this bill on the House and Senate floors, but this is not the end of the process. There never is an end in Washington ,” they explained. “In the next Congress, no matter how difficult it may be, we will be moving aggressively to try to fix problems in this legislation.”

AmBA ’s large, experienced regulatory team also will be working, in coordination with the states, on the steady stream of regulations that will result from this bill, Johnson and Yingling said. “Finally, beginning with a soon-to-be released comprehensive summary of the bill, AmBA will be providing all our members with detailed information on the regulations as they are rolled out, including tools to help you comply,” they said.

Johnson and Yingling also provided a reprise of the legislative process that spawned the bill, its positive reforms, the onerous proposals that were defeated or stopped, and its negative provisions. They said that among several questions that elected leaders should answer are: “ If traditional banks … did not cause the crisis and are needed to support our troubled economy, why are these banks being hit with such onerous new burdens and restrictions?”

The battle for the industry’s future, for the future of our communities, and for economic growth is not over, they emphasized. “More than ever, bankers need to be involved in the political process,” Johnson and Yingling said. Read the CEO Alert.  Read the conference report on the reg reform bill.

June 25, 2010

Conferees Finish Work on Sweeping Reg Reform Bill
House and Senate conferees approved the conference report of the 2,000-page financial regulatory reform bill at about 5:40 a.m. today after a 20-hour marathon session. The House is expected to begin considering the final legislation on Tuesday. AmBA remains strongly opposed to the bill even though it includes the laudable key principles the association's bankers have supported since the beginning of the reform debate. They include creating a systemic risk council, creating a robust method for handling the failure of large institutions, ending the concept of too-big-to-fail, closing gaps in regulatory oversight, and enhancing consumer protection. “But these important provisions are overshadowed by a number of other provisions in the bill that run far afield from Wall Street reform and will ultimately harm Main Street," AmBA President and CEO Ed Yingling said. "The consequences involved are very real and will have a very negative impact on traditional banks, on consumers and on the broader economy. Above all, the capability of traditional banks to provide the credit needed to move the economy forward has been undermined in numerous ways."Yingling added that AmBA , banks nationwide and the state associations have worked tirelessly to ensure that members of the House and Senate understood and recognized these concerns. "While we have had some success in this regard, in the final analysis, the legislation in question simply does more harm than good and will make it exceedingly difficult for banks to be the drivers of economic growth and recovery going forward,” he said. AmBA 's legislative experts will be analyzing the bill and will provide a detailed summary. Meanwhile, here are some general descriptions of a few key provisions:

Collins amendment on capital -- The amendment originally would have excluded trust preferred securities and other financial instruments from holding-company Tier 1 capital. The conferees agreed to grandfather existing trust preferred securities for all bank holding companies with less than $15 billion in total assets. Holding companies with more than $15 billion in total assets would have five years to comply with the measure, including a three-year phase-in period.

Durbin interchange fee amendment -- The AmBA-opposed amendment would direct the Federal Reserve to set prices on debit-card interchange fees. The Fed would be required to consider the cost of protecting against fraud when determining whether fees are “reasonable and proportional,” and merchants would be allowed to offer discounts for certain payment types.

Preemption -- Conferees adopted preemption language that would allow the Office of the Comptroller of the Currency to preempt state laws if they "prevent or significantly" interfere with the business of banking. AmBA fought for the strongest possible preemption language.

Accounting oversight -- Thanks to AmBA 's intense efforts, accounting oversight would be a function of the reg reform bill's Systemic Risk Oversight Council. One of the council's duties will be to “review and, as appropriate ... submit comments to the Securities and Exchange Commission and any standard-setting body with respect to an existing or proposed accounting principle, standard, or procedure."

SOX Section 404(b) exemption -- Conferees agreed to a long-sought AmBA-backed provision that would permanently exempt companies with less than $75 million in market capitalization from complying with the Sarbanes-Oxley Act’s Section 404(b) auditor attestation requirements.

Thrift charter -- The bill preserves the thrift charter going forward.

Volcker rule -- Conferees adopted a modified version of the measure that would ban certain types of proprietary trading. It also would cap a bank's investment in private equity or hedge funds at 3 percent of the institution's tangible private equity.

Risk retention -- The bill subjects lenders to a 5 percent risk retention requirement on securitized loans sold into the secondary market. But conferees agreed to retain an AmBA-backed safe harbor for traditionally underwritten residential mortgage loans -- a key AmBA priority.

Derivatives -- Conferees agreed to allow banks to continue using derivatives to hedge banks’ own risk, but other derivatives business must be conducted in separately capitalized subsidiaries of the holding company. A m A fiercely opposed stricter language that would have forced all derivatives activities out of the bank.

CFPB -- The final bill creates a new Consumer Financial Protection Bureau housed under the Federal Reserve with authority to regulate all consumer financial products sold by banks. Banks with less than $10 billion in assets are subject to CFPB rules, but prudential regulators will cover such banks’ examination and enforcement.

Deposit insurance -- The final bill changes the assessment base to assets minus tangible capital. It also permanently increases deposit insurance coverage to $250,000, retroactive to Jan. 1, 2008, and it extends the Transaction Guarantee Program through 2012.

Business checking -- The bill authorizes banks to pay interest on corporate checking accounts, effective one-year from the date of enactment.

·         Bank Tax -- The bill pays for itself by authorizing a special assessment on financial institutions with more than $50 billion in assets and hedge funds with more than $10 billion in assets. FDIC will collect the fees -- which could total up to $19 billion -- over the next five years.

Tax-Credit Extenders Bill Stymied Again in Senate
Senate Democrats yesterday fell three votes short of the 60 needed to shut down debate on the third pared-down version of a bill (H.R. 4213) that would extend for one year about 50 popular tax cuts that expired at the end of 2009. Senate Finance Committee Chairman Max Baucus (D-Mont.) trimmed about $22 billion from the legislation in an effort to win more support. Senate Democratic leaders said they would not try to take up the measure again until after the July 4 recess.

A few of the tax credits the legislation would extend are the research and development credit; special rule for S corporations making charitable contributions of property; active financing exception; new markets tax credit; look-through treatment of payments between related controlled foreign corporations; and tax-free distributions from individual retirement plans for charitable purposes.

The bill also contains an AmBA-backed provision that would authorize $505 million to extend the 90-percent guarantee on the Small Business Administration’s 7(a) loan program and support the reduction or elimination of borrower fees for 7(a) and 504 loans through the end of the fiscal year. For more information, contact AmBA 's Larry Seyfried.

June 18, 2010

CONSUMER AGENCY, INTERCHANGE ON TUESDAY’S CONFERENCE AGENDA
House Financial Services Committee Chairman Barney Frank (D-MA) announced yesterday that regulatory restructuring conferees will reconvene on Tuesday to consider the consumer protection agency, interchange, mortgage lending, risk retention, and access to banking services.

AmBA strongly opposes the legislation’s creation of an independent Consumer Financial Protection Bureau.  We also strongly oppose the Durbin interchange amendment included in the Senate-passed bill, and continue to urge bankers to use our automated system to send customized letters to their Senators and House Members in opposition to the amendment.

Conferees Fail to Reach Agreement on Changes to Collins Amendment
The House and Senate regulatory reform bill conferees yesterday failed to reach an agreement on modifications to the Collins amendment on capital requirements, and left the issue unresolved until their next scheduled meeting on Tuesday.

Under one provision of the House conferees' original offer, the Collins amendment -- which would exclude trust preferred securities and other financial instruments from holding-company Tier 1 capital -- would be modified to grandfather capital held as of May 19, 2010, by holding companies with consolidated assets of less than $15 billion or by mutual holding companies. Holding companies under $15 billion would continue to hold trust preferred securities as Tier 1 capital.

Reps. Dennis Moore (D-Kan.) and Gary Peters (D-Mich.), however, took that language a step further by offering an AmBA-backed amendment, which the House conferees approved by voice vote, that would grandfather the existing capital held by all institutions under the Collins amendment.

But Senate Banking Committee Chairman Chris Dodd (D-Conn.) said the House had gone too far with the Moore-Peters measure. Instead, Dodd said the Senate would draw the line at grandfathering capital held at bank holding companies with under $10 billion in assets.

Sen. Mike Crapo (R-Idaho) countered by offering an amendment to adopt the Moore-Peters measure, but lost on a 6-6 vote. Dodd acknowledged, however, that efforts to tweak the Collins language would continue.

He also said the Senate could accept House language that would leave small bank holding companies -- generally those with $500 million or less in total assets -- and the Federal Home Loan Banks unaffected by the Collins amendment.

AmBA Efforts Reach Fruition: Senate Conferees Approve Accounting Measure
In related news, AmBA 's intense effort to make accounting oversight a function of the reg reform bill's Systemic Risk Oversight Council reached fruition last night. That's when Senate conferees approved by voice vote Sen. Bob Corker's (R-Tenn.) amendment that would require the oversight council to monitor domestic and international financial regulatory proposals and developments, including insurance and accounting issues.

The measure also would require the council to advise Congress and make recommendations in those areas that will enhance the integrity, efficiency, competitiveness and stability of U.S. financial markets.

The legislation's base text also includes Rep. Ed Perlmutter's (D-Colo.) AmBA-backed amendment that would require the oversight council to review and comment on existing and proposed accounting standards. While both measures are still in play for the final bill, their presence indicates that there is an agreement in principle among lawmakers that accounting rules profoundly affect financial stability.

AmBA has long maintained that mark-to-market accounting's deleterious effect on bank capital was a key contributor to the financial crisis, and effective systemic oversight must factor in the impact of accounting standards.

House Passes AmBA-Backed Small-Business Lending Bill
The House yesterday passed by a 241-142 vote the AmBA-backed administration bill (H.R. 5297) that would create a $30 billion fund to provide capital for banks with assets under $10 billion to increase their small-business lending.

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 legislation also contains the State Small Business Credit Initiative Program that would provide $2 billion for new or existing state lending programs. The measure also would establish a new Small Business Administration program that would provide $1 billion to support early-stage small businesses with equity financing.

H.R. 5297 still must be passed by the Senate, where it faces an uncertain future. For more information, contact AmBA 's James Ballentine.

June 17, 2010

AMENDMENT TO GRANDFATHER EXISTING CAPITAL UNDER THE COLLINS AMENDMENT EXPECTED TODAY
AmBA has learned that Rep. Dennis Moore (D-KS) and Rep. Gary Peters (D-MI) plan to offer an amendment during today’s regulatory restructuring conference session that would grandfather the existing capital held by all institutions under the Collins amendment on capital requirements.  AmBA supports the amendment, which would modify yesterday’s House offer on Collins.

AmBA urges state association executives, bankers, and LLAC members to contact conferees, asking them to support the Moore-Peters amendment.

Under the House offer released yesterday, covering issues for today’s session, the Collins amendment would be modified to grandfather capital held as of May 19, 2010, by a holding company with consolidated assets of less than $15 billion or by a mutual holding company.  Holding companies under $15 billion could continue to hold trust preferred securities as Tier 1 capital.  The Moore-Peters amendment would extend the grandfathering provision to all institutions.

Under the House offer, the Collins provisions would not affect “small” bank holding companies – generally those with $500 million or less in total assets – enabling a small holding company to continue to be assessed based on the capital adequacy of its subsidiary bank.  The House offer also would phase-in the Collins provisions for bank holding companies over $15 billion in assets that already are subject to the Fed’s jurisdiction.  The Collins amendment would not be effective for such companies until January 1, 2013, and there would be a three-year phase-in after that.  Any capital held by a non-grandfathered bank holding company that is not treated as Tier 1 capital for banks would have to be completely phased out of the holding company’s Tier 1 capital by the end of 2015. 

For holding companies not currently regulated by the Fed and for foreign-owned holding companies, the effective date would be five years following enactment of the legislation. 

AmBA Victory: Conferees Approve Permanent Section 404(b) Exemption
The House and Senate conferees on the regulatory reform bill last night agreed to include an AmBA-backed provision in the final reform legislation that would permanently exempt companies with less than $75 million in market capitalization from complying with the Sarbanes-Oxley Act’s Section 404(b) auditor attestation requirements.

Senate Banking Committee Chairman Chris Dodd (D-Conn.) initially rejected the House-offered provision. But Sen. Mike Crapo (R-Idaho) offered an amendment to overturn Dodd's rejection and accept the House provision that passed by 7-5 vote. Democratic Sens. Tim Johnson (S.D.) and Blanche Lincoln ( Ark. ) joined Republican Sens. Crapo, Richard Shelby ( Ala. ), Bob Corker ( Tenn. ), Judd Gregg (N.H.) and Saxby Chambliss ( Ga. ) in supporting the measure.

AmBA has been instrumental in obtaining Section 404(b) compliance-date extensions for small companies. For three years, the association has repeatedly advocated for such extensions, and in meetings, letters and congressional testimony it has argued that the extensions should made permanent because the costs of Section 404’s regulatory burden on smaller banks far outweigh the benefits.

In other action, House and Senate conferees agreed to remove Rep. Maxine Waters' (D-Calif.) provision that would have enhanced investors' ability to bring  lawsuits against those who knowingly or unknowingly provided "substantial assistance" to primary violators in securities fraud.

The measure would have effectively reversed the Stoneridge Supreme Court case, which found that such secondary parties were not liable, and would have allowed lawsuits against banks which innocently lent to someone accused of fraud.

Dodd offered to substitute a GAO study on private liability for aiding and abetting actions. Waters agreed to adopt the study if it reviewed the effects of current statutes intended to reduce frivolous securities lawsuits.

Today the conference committee is slated to consider systemic risk regulation, resolution authority, and payments-clearing-settlement issues The AmBA-opposed Collins amendment, which would exclude trust preferred securities and other financial instruments from holding-company Tier 1 capital, also is on the agenda.

131 House Members Send AmBA-Backed Letter to Conferees Opposing Interchange Amendment
Some 131 House members yesterday sent an AmBA-backed letter to the regulatory reform bill conferees, urging them to oppose including Sen. Richard Durbin’s (D-Ill.) interchange fee amendment in the final reform legislation. The letter -- originated by Reps. Debbie Wasserman Schultz (D-Fla.) and Kenny Marchant (R-Texas) -- emphasizes that the amendment would “devastate … community banks, while providing no discernable benefits for consumers.”

AmBA had rallied state association executives and grassroots bankers to contact their House members to ask them sign the Schultz-Marchant letter. The association also continues to ask bankers nationwide to use its automated system to send customized letters urging their lawmakers to remove the Durbin amendment from the final regulatory reform bill. Read the Schultz-Marchant letter.   Please send a letter on the Durbin amendment.

House to Consider Small-Business Lending Bill Today
The House today is expected to vote on the AmBA-backed administration bill (H.R. 5297) that would create a $30 billion fund to provide capital for banks with assets under $10 billion to increase their small-business lending.

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. The program also includes a new state small-business credit that would support efforts by state governments to provide loans to small businesses.

The House yesterday approved by voice vote an amendment to the bill -- offered by Reps. Ed Perlmutter (D-Colo.), Luis Gutierrez (D-Ill.), Ron Klein (D-Fla.) and Steve Kagen (D-Wis.) -- that would allow small banks to amortize losses or write-downs on commercial real estate loans over a 10-year period, freeing up more capital for such institutions to lend to small businesses.

AmBA appreciates the fact that members of Congress understand the pressure community banks are under when it is so difficult to raise capital, and the impact it is having on the availability of credit and in affected communities.  AmBA will continue to work with Congress to address this issue and to do so in a way that addresses concerns raised by regulators.

While the House is likely to pass H.R. 5297, the legislation faces an uncertain future in the Senate. For more information, contact AmBA 's James Ballentine.

Senate Could Vote on Pared-Down Tax-Credit Extenders Bill
The Senate could vote today -- but more likely Friday -- on a pared-down version of a bill (H.R. 4213) that would extend for one year about 50 popular tax cuts that expired at the end of 2009.

A few of the tax credits the legislation would extend are the research and development credit; special rule for S corporations making charitable contributions of property; active financing exception; new markets tax credit; look-through treatment of payments between related controlled foreign corporations; and tax-free distributions from individual retirement plans for charitable purposes.

The bill also contains an AmBA-backed provision that would authorize $505 million to extend the 90-percent guarantee on the Small Business Administration’s 7(a) loan program and support the reduction or elimination of borrower fees for 7(a) and 504 loans through the end of the fiscal year.

The Senate yesterday approved by a 60-37 vote an amendment to the legislation -- offered by Senate Majority Leader Harry Reid (D-Nev.) -- that would extend by three months to Sept. 30 the first-time homebuyer tax credit. For more information, contact AmBA 's Larry Seyfried.

June 16, 2010

Conferees Make $250,000 Insurance Limit Permanent; Preserve Thrift Charter
The House and Senate conferees on the regulatory reform bill last night agreed to increase the deposit insurance limit permanently to $250,000 and make the increase retroactive to cover the period between Jan. 1, 2008 and October 3, 2008, when the limit was first temporarily raised to $250,000. The retroactive change means that depositors with between $100,000 and $250,000 in the 16 bank failures during the time frame will be entitled to some recovery.

The conferees also agreed to eliminate the 1.50 percent hard cap on the Deposit Insurance Fund and give the FDIC full discretion to decide whether to rebate any excess over that amount. The provision also eliminates the automatic braking system on the growth of the fund which required partial dividends after the reserve ratio exceeded 1.35 percent.

Both the Senate and House conferees also agreed to preserve the federal thrift charter going forward, a top AmBA priority.

They disagreed, however, on the Transaction Account Guarantee program. The House conferees proposed making the program permanent for all banks, while the Senate representatives would agree only to a two-year extension beyond its current Dec. 31, 2010, expiration date.

The House conferees did not accept the Senate’s limitation. House Financial Services Committee Chairman Barney Frank (D-Mass.) said the House would consult with Congressional Budget Office to determine if there would be significant government cost savings if the program was made permanent. The conferees will "wait and see" on TAG, he said.

In other action, House and Senate conferees agreed to grandfather mutual holding companies' dividend waiver policies for policies in place as of Dec. 1, 2009. Senate conferees, however rejected the House offer to include language in the final bill to establish a mutual national bank charter.

The conference committee today is scheduled to consider investor protection, executive compensation and oversight of the Federal Reserve.

AmBA Rallies Grassroots to Support Letters Opposing Collins Amendment
Sen. Mark Pryor (D-Ark.) and Rep. Randy Neugebauer (R-Texas) are asking their respective Senate and House colleagues to sign letters urging the regulatory reform conferees to remove Sen. Susan Collins’ (R-Maine) amendment on capital standards from the final regulatory reform bill.

Both letters point out that the Collins amendment, which would exclude trust preferred securities and other financial instruments from holding-company Tier 1 capital, would eliminate well over $100 billion in capital from the banking system and limit the availability of credit to small businesses and consumers.

Meanwhile, AmBA has been urging state association executives and grassroots bankers to contact their Senate and House members to ask them to sign the letter in their chamber. Read the Pryor letter.  Read the Neugebauer letter.

AmBA Requests SOX Section 404(b) Exemption in Final Reg Reform Bill
AmBA and 10 other trade groups and companies yesterday asked key reg reform bill conferees to include a provision in the final reform legislation that would permanently exempt companies with less than $75 million in market capitalization from complying with the Sarbanes-Oxley Act’s Section 404(b) auditor attestation requirements. The conference committee is slated to consider the exemption today.

The implementation of Section 404(b) continues to impose a disproportionately negative cost burden on smaller public companies, the trade groups and companies said in a letter. A 2009 [Securities and Exchange Commission] study, found that Section 404 costs companies an average of $2.3 million each year in direct compliance costs,” they said. “Moreover, the study found that the long-term burden on companies with less than $150 million in public float is greater than seven times that imposed on large firms.”

AmBA has been instrumental in obtaining Section 404 compliance extensions for small companies. For nearly three years, the association has repeatedly advocated for such extensions in meetings, letters and congressional testimony, arguing that the costs of Section 404’s regulatory burden on smaller banks far outweigh the benefits. Read the letter. For more information, contact AmBA 's Donna Fisher.

June 15, 2010

Conference Committee to Consider Permanent Increase in Deposit Insurance Coverage
Regulatory reform conference committee chair Rep. Barney Frank (D-Mass.) yesterday released a House proposal for amending four titles of the bill -- including one dealing with the federal thrift charter and merger of the OCC and OTS -- that the committee is set to consider today.

Among other things, the House proposal would permanently increase the deposit insurance limit to $250,000 and make the increase retroactive to cover the period between January 1, 2008 and October 3, 2008, when the limit was first temporarily raised to $250,000. The retroactive change means that depositors with between $100,000 and $250,000 in the 16 bank failures during the timeframe would be entitled to some recovery.

The House proposal also would permanently and fully insure transaction accounts for all institutions, effective December 31, 2010, when the current Transaction Account Guarantee program is set to expire. These two permanent changes in coverage would lower the reserve ratio and thus require more premiums to rebuild the reserve ratio to a minimum of 1.15 percent.

The proposed amendment also eliminates the hard cap on the Deposit Insurance Fund of 1.50 percent, and gives FDIC full discretion to decide whether to rebate any excess over that amount. It also eliminates the automatic braking system on the growth of the fund which required partial dividends after the reserve ratio exceeded 1.35 percent. The proposal also would set a minimum designated reserve ratio of 1.15 percent, while removing the current maximum ratio.

The Senate would have to accept the House proposal -- which includes provisions that weren’t in either the House- or Senate-passed bill -- in order for it to become part of the final reform legislation. Read more.

AmBA , 55 State Associations Send Joint Letter Opposing Collins Amendment
The Collins amendment to the Senate’s regulatory reform bill would wipe out $177 billion of capital held by more than 1,550 companies, and significantly restrict credit to small businesses and consumers, AmBA and 55 state bankers associations said yesterday in a letter to regulatory reform bill conferees. The groups represent banks of all sizes in every state.

“Given the potential for serious unintended adverse consequences, we believe the best course of action is to strike [the amendment] and review carefully whether there is a better way to achieve the objective of strengthening the capital of our country’s financial institutions,” the trade groups wrote.

The Collins amendment would apply bank capital rules to bank holding companies and in the process disqualify trust preferred securities and Capital Purchase Program investments from holding company capital, the groups explained. Eliminating such capital would force banks to either replace it – which is unrealistic for small holding companies -- or shrink, which would impede the economic recovery. Read the letter.

Bipartisan Group Backs Preemption Compromise
A bipartisan group of 13 senators yesterday urged regulatory reform bill conferees to retain the Senate bill’s provisions on federal preemption of state law for national banks.

“This was a hard-fought compromise that will provide national banks with greater certainty and predictability while seeking to strengthen consumer protections,” the members wrote. They noted that the Senate amendment, which AmBA supports, preserves the spirit and intent of the preemption standard in the Supreme Court’s ruling in the 1996 Barnett Bank case, and it clarifies the role state attorneys general may play in enforcing certain laws against national banks.

“[W]e feel that the amendment adopted by the Senate… provides needed clarification and certainty to make these changes workable for consumers, states, businesses and other stakeholders,” the senators said. Read the letter.

June 14, 2010

Conference Committee to Begin Negotiations on Tuesday
House Financial Services Committee Chairman Barney Frank (D-Mass.) last week said that the regulatory reform bill conference will begin formal negotiations on Tuesday by addressing the Office of the Comptroller of the Currency-Office of Thrift Supervision merger and also the federal thrift charter (Title III).

The base text of the reform bill that the committee is working from includes an AmBA-supported provision from the House-passed version that would preserve the thrift charter going forward. The conference on Tuesday also will work on insurance (Title V), hedge funds and private investment funds (Title IV), and credit rating agencies (Title IX, Subtitle C).

During the remainder of its very tentative schedule, which is subject to abrupt change, the conference is slated to address:

Wednesday, June 16: investor protection, executive compensation and corporate governance.

Thursday, June 17:  systemic risk regulation, resolution authority and payments/clearing/settlement issues.

Tuesday, June 22:  The Consumer Financial Protection Bureau, predatory lending, remittances, interchange fee and access issues.

Wednesday, June 23:  prudential regulation.

Thursday, June 24:  derivatives.

Conference leaders plan to complete work on the bill on or before Saturday, June 26. The House and Senate then would vote on the final version of the legislation during the last week of June, and send it to the president before the July 4th congressional recess.

AmBA Rallies Grassroots to Support Letter Opposing Interchange Amendment
Reps. Debbie Wasserman Schultz (D-Fla.) and Kenny Marchant (R-Texas) are asking their House colleagues to sign a letter urging the regulatory reform bill conferees to oppose including Sen. Richard Durbin’s (R-Ill.) interchange fee amendment in the final reform legislation. The letter emphasizes that the amendment would “devastate … community banks, while providing no discernable benefits for consumers.”

Meanwhile, AmBA has been urging state association executives and grassroots bankers to contact their House members to ask them sign the Schultz-Marchant letter. The association also continues to ask bankers nationwide to use its automated system to send customized letters urging their lawmakers to remove the Durbin amendment from the final regulatory reform bill. Read the Schultz-Marchant letter.  Please send a letter on the Durbin amendment.

Senators Urge Dodd, Frank to Eliminate Collins Amendment
Seven senators last week urged Senate Banking Committee Chairman Chris Dodd (D-Conn.) and House Financial Services Committee Chairman Barney Frank (D-Mass.) -- the leaders of the reg reform conference committee -- to strike Sen. Susan Collins’ (R-Maine) amendment on capital standards from the final regulatory reform bill.

The Collins amendment, which would exclude trust preferred securities and other financial instruments from holding-company Tier 1 capital, takes a “one-size-fits-all approach [that] would have serious consequences for our financial system,” the senators said. They noted that under the amendment the Tier 1 capital ratios of bank holding companies that have issued trust-preferred securities would fall by an estimated average of 2 percentage points.

“This would result in approximately $129 billion in capital, supporting $1.3 trillion in assets, being removed from the banking system. In total, 644 small- to medium-sized banking firms, serving communities across the United States , will be harmed,” they said. Read the letter.

June 11, 2010

REGULATORY BILL CONFERENCE BEGINS; THRIFTS UP NEXT WEEK
The House-Senate conference on the regulatory restructuring legislation (H.R. 4173) got underway yesterday, with conferees attending to organizational matters and opening statements.  The Conference Committee released the base text that will be used as the basis for negotiations, consisting primarily of the Senate-passed bill with some changes.  AmBA has prepared a short summary highlighting some of those changes.

Conference Chairman Barney Frank (D-MA) announced yesterday that conferees will begin formal negotiations on Tuesday in an open session to address the OCC and OTS merger and the thrift charter (Title III).  The base text includes an AmBA-supported provision from the House bill that would preserve the federal thrift charter going forward.  Also on Tuesday, the conference will work on insurance (Title V), hedge funds and private investment funds (Title IV), and credit rating agencies (Title IX, Subtitle C).

Following Tuesday’s session, the following is a tentative schedule for the rest of the conference (subject to change).

·         Wednesday, June 16^:  investor protection, executive compensation, and corporate governance.

·         Thursday, June 17:  systemic risk regulation, resolution authority, and payments/clearing/settlement issues.

·         Tuesday, June 22^:  consumer protection bureau, predatory lending, remittances, interchange, and access issues.

·         Wednesday, June 23^:  prudential regulation.

·         Thursday, June 24^:  derivatives.

Conference leaders still plan to complete work on the bill on or before Saturday, June 26, with the goal of having both chambers debate the conference report during the last week of June and presenting the bill to the President by July 4.

SENATORS SEEK REMOVAL OF COLLINS CAPITAL STANDARDS AMENDMENT
A group of seven Senators wrote to Banking Committee Chairman Chris Dodd (D-CT) and Chairman Frank yesterday regarding the Collins amendment on capital standards, stating that the amendment’s “one-size-fits-all approach would have serious consequences for our financial system.”

The letter notes that bank holding companies currently are allowed to treat a limited number of trust-preferred securities as Tier 1 capital.  “If these securities are disqualified, the Tier 1 capital ratios of bank holding companies that have issued trust-preferred securities will fall by an estimated average of two percentage points,” the letter says.  “This would result in approximately $129 billion in capital, supporting $1.3 trillion in assets being removed from the banking system.  In total, 644 small- to medium-sized banking firms, serving communities across the United States , will be harmed.”

The letter asks the conference leaders to strike the amendment from the legislation and to “support the process to develop enhanced capital standards on a globally-coordinated basis,” taking into account institutional risk.

AmBA opposes the Collins amendment and also is urging the conferees to strike it.

Reg Reform Bill Base Text Includes AmBA-Backed Provision to Preserve Thrift Charter
The House Financial Services Committee yesterday released the base text that the conference-committee will use as the foundation for reconciling the differences between the House- and Senate-passed financial regulatory reform bills. While the base text is derived from the Senate legislation, it contains several provisions from the House-passed bill, including an AmBA-backed measure that would preserve the federal thrift charter going forward and related Home Owners’ Loan Act provisions.

That is a decided improvement over the Senate bill provisions that would impose restrictions on existing thrifts and prohibit new thrift charters. AmBA will continue fighting to preserve the House language during conference-committee deliberations.

The base text also includes an AmBA-backed House provision that would exclude the Federal Home Loan Banks from a prohibition in both bills on institutions lending an amount to any unaffiliated company that exceeds 25 percent of the lending institution’s capital stock and surplus. The Senate reg reform bill does not include a comparable FHLB exclusion provision, and AmBA will work to preserve the House language.

The new base text, however, also retains the laundry list of key problem measures that AmBA -- in concert with the state associations and bankers nationwide -- will work hard to address. They include, among others, the Durbin interchange fee amendment, the application of national bank lending limits to state banks, swaps push-out provisions, and the Collins amendment excluding trust preferred securities and other financial instruments from holding-company Tier 1 capital. Read an AmBA summary of some key issues in the base text.

AmBA : Please Urge House Members to Sign Thrift Charter Letter
In related news, AmBA yesterday asked thrift executives to urge their House members to sign  Rep. Stephen Driehaus' (D-Ohio) "Dear Colleague" letter on the federal thrift charter. The letter asks the regulatory reform bill conferees to preserve in the final legislation the House bill's language that would allow the granting of new thrift charters going forward. "Restricting the thrift charter to only those currently in existence will inhibit economic recovery and growth, and deprive consumers of important financing options from institutions specifically devoted to homeownership and community development," the letter says. Read more.   Read the "Dear Colleague" letter. For more information, contact AmBA 's Bob Davis.

AmBA Continues Urging Bankers to Send Letters on Reg Reform, Interchange
AmBA also continues urging bankers to use its automated system to send customized letters to their members of Congress to express their concerns about the increased burdens that the House- and Senate-passed financial regulatory reform bills could impose on traditional community banks. While there will be a limited number of members participating in the Senate-House conference to resolve the differences between the two bills, AmBA believes it’s crucial that bankers communicate to all members of Congress the deep concerns they have.

AmBA also is asking bankers to send letters urging their lawmakers to remove from the final regulatory reform bill Sen. Richard Durbin’s (D-Ill.) amendment that would direct the Federal Reserve to set prices on debit-card interchange fees. If the retailer-backed Durbin amendment becomes law, banks’ ability to provide a variety of financial services to customers at low or no cost will be eliminated.

AmBA has provided customizable talking points to help bankers compose effective, individualized letters. Please send a letter on reg reform.  Please send a letter on the Durbin amendment. For more information, contact AmBA 's James Ballentine.

House Passes Bill to Recapitalize FHA Fund
The House yesterday passed by a 406-4 vote a bill (H.R. 5072) that would put the Federal Housing Administration on firmer financial footing by allowing the agency to raise the cap on the annual premium it charges borrowers from 0.55 percent to 1.55 percent. FHA officials said that if the legislation became law, it would gradually raise the premium to 0.90 percent for borrowers who make a down payment of 5 percent or less, and to 0.85 percent for borrowers who put down more than that.

The FHA’s Mutual Mortgage Insurance Fund has capital reserves equal to just 0.53 percent of the value of the thousands of outstanding home mortgages it insures, well below the 2.0 percent required by law. The agency estimates that the changes in the bill would generate an additional $4.1 billion in fiscal year 2011. The Senate still must act on the legislation.

June 10, 2010

House Leaders Name Reg Reform Conferees
House leaders yesterday named 31 conferees -- 20 Democrats and 11 Republicans -- to the conference committee that will reconcile the differences between the Senate- and House-passed versions of the financial regulatory reform bill. The conference will begin this afternoon with opening statements.

House Speaker Nancy Pelosi (D-Calif.) said Democrats from the Financial Services Committee are: Chairman Barney Frank (Mass.) and Reps. Paul Kanjorski (Pa.), Maxine Waters (Calif.), Carolyn Maloney (N.Y.), Luis Gutierrez (Ill.), Mel Watt (N.C.), Gregory Meeks (N.Y.), Dennis Moore (Kan.), Mary Jo Kilroy (Ohio) and Gary Peters (Mich.).

Democrats named to oversee specific sections of the bill are: Agriculture Chairman Collin Peterson (Minn.) and Rep. Leonard Boswell (Iowa); Energy and Commerce Chairman Henry Waxman (Calif.) and Rep. Bobby Rush (Ill.); Judiciary Chairman John Conyers (Mich.) and Rep. Howard Berman (Calif.); Oversight and Government Reform Chairman Edolphus Towns (N.Y.) and Rep. Elijah Cummings (Md.); and Small Business Chairman Nydia Velazquez (N.Y.) and Rep. Heath Shuler (N.C.).

House Minority Leader John Boehner (R-Ohio) said Republicans from the Financial Services Committee are: Ranking member Spencer Bachus (Ala.) and Reps. Ed Royce (Calif.), Judy Biggert (Ill.), Shelley Moore Capito (W.Va.), Jeb Hensarling (Texas) and Scott Garrett (N.J.). 

Republicans named to oversee specific sections of the bill are: House Agriculture ranking member Frank Lucas; Energy and Commerce ranking member Joe Barton ( Texas ); Judiciary ranking member Lamar Smith ( Texas ); Oversight and Government Reform ranking member Darrell Issa ( Calif. ); and Small Business ranking member Sam Graves ( Mo. ).

The Senate named seven Democrats and five Republicans to the conference on May 25.

Bernanke: Start Planning Now to Address Budget Deficit
The economic recovery appears to be on solid footing, but Congress must begin planning to address an unsustainable federal budget deficit, Federal Reserve Chairman Ben Bernanke told the House Budget Committee yesterday.

As the economy improves and federal stimulus measures are phased out, the budget deficit should narrow over the next few years, Bernanke said. Even after financial conditions have returned to normal, however, the decreasing ratio of working taxpayers to older people receiving benefits from various government programs will make it difficult to balance the budget, he explained.

"To avoid sharp, disruptive shifts in spending programs and tax policies in the future, and to retain the confidence of the public and the markets, we should be planning now how we will meet these looming budgetary challenges," Bernanke said. Read Bernanke’s testimony.

Ten State Treasurers Join Opposition to Durbin Amendment
In related news, 10 state treasurers last week asked Senate Banking Committee and House Financial Services Committee leaders to strike Sen. Richard Durbin’s (D-Ill.) interchange fee amendment from the final financial regulatory reform bill because it would hurt their states’ ability to disburse government benefits using prepaid debit cards.

“The Durbin amendment would undermine federal and state efforts to enfranchise millions of low-income Americans into the financial mainstream,” the treasurers said in a letter. “The effect of this change would likely shift the cost of card usage to those who can least afford it. For states that have grown to rely on the savings realized through these programs, reverting to a paper-based system would be extremely expensive and inefficient.”

The treasurers of Arizona, Georgia, Indiana, Maryland, New Hampshire, New Mexico, Nebraska, South Dakota, Utah and West Virginia signed the letter. Read the letter.

AmBA Supports Small- Business Lending Bill; Suggests Improvements
AmBA supports the administration’s bill (H.R. 5297) that would create a $30 billion fund to provide capital for banks with assets under $10 billion to increase their small-business lending, the association said yesterday in a memo to all House members. “This legislation will serve as another tool for community banks to meet the needs of small businesses in their communities, and we urge the House to pass [it],” Floyd Stoner, AmBA EVP for congressional relations, said.

Stoner explained that given the severity of the economic downturn, it is very difficult if not impossible for community banks to find new sources of capital. Some banks therefore must reduce their size to maintain regulatory capital-to-assets ratios, and that can mean making fewer loans. “H. R. 5297 would allow banks to avoid that result and continue meeting the needs of their communities,” he said.

Stoner added that the bill’s Small Business Lending Fund would be more effective if it recognized the dynamic nature of a bank’s loan portfolio. “Roughly 20 percent of a community bank’s small-business loan portfolio is repaid each year. Under H.R. 5297, a bank would not be viewed as increasing its small business lending until it made enough loans to replace that 20 percent,” he said. “Recognizing all of a bank’s small business lending would make the program more attractive to many community banks.”

Stoner also emphasized that the program’s success will hinge on whether the banks that would benefit the most from it -- particularly those in the economically hardest-hit parts of the country -- will be allowed to participate. “Past initiatives have left [these] banks on the sidelines and, in many cases, have made it more difficult for them to attract private capital,” he said. “We encourage you to support making the Treasury program available to banks that are viable on a post-investment basis.” Read AmBA’s memo.

Minority-Owned Bank Trade Group Opposes Durbin Amendment
The National Bankers Association, which represents minority-owned institutions, sent letters to Treasury Secretary Timothy Geithner and the leaders of the Congressional Black and Hispanic Caucuses yesterday, urging them to oppose Sen. Richard Durbin’s (D-Ill.) interchange fee amendment because of the harm it would do to both their banks and the disadvantaged communities they serve.

“While this issue has primarily been identified as targeting larger banks and the card networks, the most harm will occur to minority depository institutions, that Treasury and the banking regulators have a duty to preserve and protect,” NBA President and CEO Michael Grant said in the letter to Geithner. Grant asked that the administration oppose including the Durbin amendment in the final regulatory reform bill.

He explained that if the amendment is adopted, many minority-owned banks will have to raise costs for customers, cut back on services, and reduce vital capital allocations for neighborhood and business development. “The real consequences of acting now have not been fully considered by the administration or Congress, and the survival of some our most disadvantaged communities and institutions is at stake,” Grant said.

In the letter to the two congressional caucuses, he urged them to oppose the amendment and then study its likely effects. “The House and Senate should first conduct a number of hearings to fully appreciate the negative impact interchange regulation would have on minority owned-institutions and the communities where they are located,” Grant said. Read the letter.

June 9, 2010

MINORITY-OWNED BANKERS GROUP OPPOSES INTERCHANGE AMENDMENT
The National Bankers Association, which represents minority-owned institutions, wrote to Treasury Secretary Timothy Geithner and the leaders of the Congressional Black Caucus and Congressional Hispanic Caucus this morning, to state the association’s “strong opposition” to the Durbin interchange amendment in the Senate-passed regulatory restructuring bill.

“While this issue has primarily been identified as targeting larger banks and the card networks, the most harm will occur to minority depository institutions (MDls), that Treasury and the banking regulators have a duty to preserve and protect,” the letter to Sec. Geithner said.  “It is for these reasons that the National Bankers Association respectfully requests that the Administration oppose inclusion of interchange regulation as part of any final financial reform package.  The real consequences of acting now have not been fully considered by the Administration or Congress, and the survival of some our most disadvantage communities and institutions is at stake.”

The letter to the two Congressional caucuses urged them to oppose the interchange amendment, stating that the “House and Senate should first conduct a number of hearings to fully appreciate the negative impact interchange regulation would have on minority owned institutions and the communities where they are located.”

STATE TREASURERS JOIN OPPOSITION TO INTERCHANGE AMENDMENT
Ten state Treasurers wrote to the Senate Banking Committee and House Financial Services Committee leaders last week, to state their concerns about the impact of the interchange amendment on prepaid debit card programs that states use to disburse government assistance and benefits.

“The Durbin amendment would undermine Federal and State efforts to enfranchise millions of low income Americans into the financial mainstream,” their letter said.  “The effect of this change would likely shift the cost of card usage to those who can least afford it.  For States that have grown to rely on the savings realized through these programs, reverting to a paper-based system would be extremely expensive and inefficient.”

The Treasurers of Arizona, Georgia, Indiana, Maryland, New Hampshire, New Mexico, Nebraska, South Dakota, Utah, and West Virginia signed the letter.

Frank, Dodd Agree on Final Reg Reform Bill Schedule
House Financial Services Committee Chairman Barney Frank (D-Mass.) and Senate Banking Committee Chairman Chris Dodd (D-Conn.) yesterday agreed on a conference committee schedule intended to enable House and Senate conferees to send a final financial regulatory reform bill to President Obama before Congress departs for July 4th recess. Frank also said the House will appoint its conferees today.

The schedule the two lawmakers agreed on calls for conference members to meet Thursday for opening statements. They will then meet June 15-17 for day-long sessions to resolve the differences in the various sections of House- and Senate-passed reg reform bills. That process is slated to continue June 22-24, although Frank said the conference could stay in session until Saturday, June 26, to complete its work. The schedule is designed to allow the House and Senate to take final votes on the legislation during June’s closing days or the first two days of July.

AmBA Continues Urging Bankers to Send Letters on Reg Reform, Interchange
AmBA continues urging bankers to use its automated system to send customized letters to their members of Congress to express their concerns about the increased burdens that the House- and Senate-passed financial regulatory reform bills could impose on traditional community banks. While there will be a limited number of members participating in the Senate-House conference to resolve the differences between the two bills, AmBA believes it’s crucial that bankers communicate to all members of Congress the deep concerns they have.

AmBA also is asking bankers to send letters urging their lawmakers to remove from the final regulatory reform bill Sen. Richard Durbin’s (D-Ill.) amendment that would direct the Federal Reserve to set prices on debit-card interchange fees. If the retailer-backed Durbin amendment becomes law, banks’ ability to provide a variety of financial services to customers at low or no cost will be eliminated.

AmBA has provided customizable talking points to help bankers compose effective, individualized letters. Please send a letter on reg reform. Please send a letter on the Durbin amendment. For more information, contact AmBA 's James Ballentine.

Sen. Lincoln Wins Arkansas Democratic Runoff Election
Senate Agriculture Committee Chairman Blanche Lincoln last night defeated Lt. Gov. Bill Halter in the Arkansas Democratic runoff election. With 90 percent of the state's precincts reporting, Lincoln had 52 percent of the votes to Halter's 48 percent. She will run against Rep. John Boozman, the Republican nominee, in the general election Nov. 2.

Lincoln, a member of the financial regulatory reform bill conference committee, authored derivatives provisions in the Senate version of the legislation that, among other things, would require banks to spin off their swaps desks.

Senate Democrats Unveil Substitute Tax-Credit Extenders Bill
Senate Finance Committee Chairman Max Baucus (D-Mont.) yesterday unveiled a substitute version of a bill (H.R. 4213) the House passed May 28 that would extend for one year about 50 popular tax cuts that expired at the end of 2009. A final vote on the Senate legislation is not expected until next week.

A few of the tax credits the legislation would extend are the research and development credit; special rule for S corporations making charitable contributions of property; active financing exception; new markets tax credit; look-through treatment of payments between related controlled foreign corporations; and tax-free distributions from individual retirement plans for charitable purposes.

The bill also contains an AmBA-backed provision that would authorize $505 million to extend the 90-percent guarantee on the Small Business Administration’s 7(a) loan program and support the reduction or elimination of borrower fees for 7(a) and 504 loans through the end of the fiscal year.

Senate Democratic leaders eliminated provisions in the House-passed bill requiring disclosures on fees incurred in connection with defined contribution plans such as 401(k)s. There were concerns -- which AmBA shared -- that the provisions could force the Labor Department to delay issuing rules on such fee disclosures that it was close to finalizing.

The Senate bill also modifies a revenue-offset provision in the House legislation requiring investment fund managers to pay ordinary income tax rates rather than capital gains rates on “carried interest” income from investment management services. The House measure requires 75 percent of carried interest to be taxed at income tax-rates, but the Senate legislation cuts it to 65 percent. Read a bill summary. For more information, contact AmBA 's Larry Seyfried.

June 8, 2010

AmBA, Trade Groups Urge Adoption of FHLB Exclusion Provision
AmBA and nine other trade groups yesterday told Senate Banking Committee and House Financial Services Committee leaders that they strongly support a provision in the House-passed financial regulatory reform bill (H.R. 4173) that would preserve the Federal Home Loan Banks’ ability to help fund the economic recovery and continue providing much-needed liquidity to the economy.

The House provision would exclude the FHLBs from a prohibition in both bills on institutions lending an amount to any unaffiliated company that exceeds 25 percent of the lending institution’s capital stock and surplus. The Senate-passed regulatory reform legislation (S. 3217) did not include a comparable FHLB exclusion provision, the trade groups explained in a letter.

“If the House provision is not adopted in the final reform package, the bill would have an immediate impact on many banks, insurance companies and credit unions, forcing them to reduce their advance positions to comply with the cap,” they said. “Some institutions would experience a more than 80 percent reduction in [FHLB] advances, while the system as a whole would see its total outstanding 2010 first-quarter advances reduced by over $250 billion or nearly 50 percent.” Read the letter. For more information, contact AmBA 's Joe Pigg.

June 7, 2010

House Leaders Expected to Name Reg Reform Conferees This Week
House leaders this week are expected to name conferees to a conference committee that will reconcile the differences between the Senate- and House-passed versions of the financial regulatory reform bill. The Senate on May 25 named seven Democrats and five Republicans to the conference. The conference committee could begin discussions later this week with the goal of sending the president a final reg reform bill before the congressional July 4th recess.

AmBA Continues to Urge Letters on Reg Reform, Interchange
AmBA continues urging bankers to send letters to their members of Congress to express their concerns about the increased burdens that the House- and Senate-passed financial regulatory reform bills could impose on traditional community banks. While there will be a limited number of members participating in the Senate-House conference to resolve the differences between the two bills, AmBA believes it’s crucial that bankers communicate to all members of Congress the deep concerns they have.

AmBA also is asking bankers to send letters urging lawmakers to remove from the final regulatory reform bill Sen. Richard Durbin’s (D-Ill.) amendment that would direct the Federal Reserve to set prices on debit-card interchange fees. If the retailer-backed Durbin amendment becomes law, banks’ ability to provide a variety of financial services to customers at low or no cost will be eliminated.

AmBA has provided customizable talking points to help bankers compose effective, individualized letters. Please send a letter on reg reform.   Please send a letter on the Durbin amendment. For more information, contact AmBA 's James Ballentine.

Senate to Act on Tax-Credit Extenders Bill
The Senate this week is expected to consider a bill (H.R. 4213) that would extend for one year about 50 popular tax cuts that expired at the end of 2009, and also extend unemployment benefits through November. The House passed the legislation by a 215-204 vote on May 28.

A few of the tax credits the legislation would extend are the research and development credit; special rule for S corporations making charitable contributions of property; active financing exception; new markets tax credit; look-through treatment of payments between related controlled foreign corporations; and tax-free distributions from individual retirement plans for charitable purposes.

The bill also contains an AmBA-backed provision that would authorize $505 million to extend the 90-percent guarantee on the Small Business Administration’s 7(a) loan program and support the reduction or elimination of borrower fees for 7(a) and 504 loans through the end of the fiscal year.

One of the legislation’s provisions intended to offset the cost of the tax breaks would require Subchapter S corporations to pay Social Security and Medicare taxes on their total income. The provision, however, would not affect Sub S banks, and AmBA strongly opposed including any measure in the legislation that would do so. For more information, contact AmBA 's Larry Seyfried.

June 4, 2010

SOUTH DAKOTA GOVERNOR URGES REMOVAL OF INTERCHANGE AMENDMENT
South Dakota Governor Michael Rounds wrote to the leaders of the Senate Banking and House Financial Services committees yesterday, asking them to remove the Durbin interchange amendment from the regulatory restructuring legislation during conference negotiations.

“By regulating interchange on debit cards, the Durbin amendment unintentionally undermines prepaid card programs, including government programs that provide aid to vulnerable citizens and saves hundreds of millions in taxpayer dollars,” Gov. Rounds wrote.  “For states, a regulated debit interchange rate would decrease or eliminate the ability of financial institutions to offer these cost-effective programs to the public sector.  As a result, financial institutions issuing these cards may raise fees on cardholders or states to recoup lost revenue.”

Iowa State Treasurer Michael Fitzgerald also wrote to the committees this week opposing the amendment, and Nebraska State Treasurer Shane Osborn sent a similar letter last week.  AmBA urges state association executives and LLAC members to contact their state Treasurers or Governors to encourage them to send similar letters.  We also encourage bankers to send customized letters to Congress opposing the interchange amendment.

Senate Passes Bill to Ensure Funding for USDA Section 502 Program
The Senate late last week passed by a 67-28 vote an amended version of the fiscal year 2010 Supplemental Appropriations Bill (H.R. 4899) that includes AmBA-backed provisions that would ensure that the Agriculture Department’s Section 502 Single Family Housing Guaranteed Loan Program will have sufficient funds to continue operating for the rest of the fiscal year.

The legislation would enable the program -- administered by the USDA’s Rural Housing Service -- to pay for itself by, among other things, increasing the loan guarantee fee up to 3.5 percent, and collecting an annual fee of up to 0.5 percent of the loan’s outstanding principal balance. The bill also allows the Agriculture Secretary to waive fees for the program’s “very low- and low-income borrowers.”

H.R. 4899 also contains $31.5 million in AmBA-supported funding for the USDA’s Farm Service Agency guaranteed loan programs. The funding will support an additional $1 billion in lending authority and should cover projected shortfalls in the FSA’s programs through this fiscal year. The Senate and House still must reconcile the differences between their respective versions of H.R. 4899 before final passage. Meanwhile, the USDA is issuing “conditional commitments” that will allow lenders to continue accepting and processing Section 502 loan requests while the agency awaits congressional funding. Read the USDA memo on conditional commitments. For more information, contact AmBA 's Seaver Sowers.

June 1, 2010

HOUSE PASSES TAX EXTENDERS PACKAGE

The House passed legislation (H.R. 4213) on Friday, by a 215-204 vote, that would extend for one year about 50 popular tax cuts that expired at the end of 2009.  The bill also would extend unemployment benefits through November.  The Senate must still act on the legislation, which it is expected to do after it returns from recess next week.
The bill would extend, among others, the research and development credit, the special rule for Subchapter S corporations making charitable contributions of property, the active financing exception, the new markets tax credit, look-through treatment of payments between related controlled foreign corporations, and tax-free distributions from individual retirement plans for charitable purposes.

The bill also contains an AmBA-supported provision that would authorize $505 million to extend the 90-percent guarantee on the Small Business Administration’s 7(a) loan program and support the reduction or elimination of borrower fees for 7(a) and 504 loans through the end of the fiscal year.

Revenue offsets in the bill include requiring an Subchapter S corporations engaged in a professional service business principally based on the reputation and skill of three or fewer individuals or that is a partner in such a business to pay Social Security and Medicare taxes on their total income.  The provision, however, would not affect Sub S banks, and AmBA strongly opposed including any measure in the legislation that would do so.

In addition, the bill includes fee disclosure provisions that would require expansive new disclosure obligations for retirement accounts.  Because the Labor Department  is close to issuing final rules on fee disclosures, AmBA believes it would be disruptive to the process to include further statutory changes to fee disclosure at this time.

AmBA to Conduct Telephone Briefing Today on FASB Mark-to-Market Proposal
AmBA today at 2 p.m. EDT will hold a free one-hour, telephone briefing -- for AmBA bank and state association members only -- on the AmBA-opposed mark-to-market accounting proposal that the Financial Accounting Standards Board released last Wednesday. The briefing, which will be conducted by AmBA accounting experts Donna Fisher and Mike Gullette, will walk participants through the proposal’s major sections, point out the related business and operational challenges in each section, and describe how they can get involved in standard-setting process.

Register for the briefing.
Read more at AmBA’s FASB proposal resources page.

Letters Needed to Urge Congress to Remove Durbin Interchange Amendment
AmBA also is asking bankers to use its automated system to send customized letters to their congressional lawmakers to urge them to remove from the final regulatory reform bill Sen. Richard Durbin’s (D-Ill.) amendment that would direct the Federal Reserve to set prices on debit-card interchange fees.

The amendment would harm banks of all sizes, but it would particularly hurt traditional community banks and their ability to serve local communities. Interchange fees allow banks to provide numerous services to their customers. If the retailer-backed Durbin amendment becomes law, banks’ ability to provide a variety of financial services to customers at low or no cost will be eliminated.

AmBA has provided customizable talking points to help bankers compose effective, individualized letters on why the Durbin amendment should be struck from the final reg reform bill. Please send a letter. For more information, contact AmBA 's James Ballentine.




May 3, 2010

Senate Debate on Reg Reform Bill Amendments to Begin This Week
The Senate is scheduled to start debating amendments to the financial regulatory reform bill (S. 3217) this week, starting with one offered by Sen. Barbara Boxer (D-Calif.) that would prohibit using any more taxpayer money to bail out troubled financial companies. No votes are expected until at least Tuesday.

Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) have not yet agreed to any specific number of amendments that will be allowed, the order in which they will be considered or -- perhaps, most important -- whether they will be allowed to pass with a simple majority or will require 60 votes. The debate on the legislation is expected to last at least two weeks.

AmBA to Testify on Proposed Large-Bank Tax
AmBA Chief Economist Jim Chessen will testify Tuesday at a Senate Finance Committee hearing on President Obama's proposal to levy a tax on large financial firms with more than $50 billion in assets that received government assistance -- either capital from the Troubled Asset Relief Program or debt guaranteed by the Temporary Liquidity Guarantee Program. Other witnesses include Treasury Secretary Timothy Geithner and Iowa Bankers Association President and CEO John Sorensen.