Advocacy ICBA Meets with Senate Panel on Basel III ICBA met with Senate Banking Committee staff to outline the community banking industry’s concerns with proposed Basel III capital guidelines. In a joint briefing with the American Bankers Association, ICBA said that the Basel III proposed rules would have a negative impact on community bank profitability and credit availability, which would directly affect their customers and communities.
ICBA noted that Basel III was designed for large, internationally active financial institutions, though proposed regulations would apply the rules on all banks regardless of size. Higher and more complex capital requirements would mean less funding available for lending as well as less profitable loans, which would force community banks to curtail lending, the association said. This will inhibit the economic recovery and drive industry consolidation.
While community banks hold the highest capital levels in the banking industry, ICBA noted, they will nevertheless be affected because of lost regulatory capital. As a result, community banks should be exempt from the Basel III guidelines and allowed to retain the Basel I capital rules, the association said.
ICBA strongly opposes the proposed rules and is calling on community bankers and their allies to make their opposition known via comment letters and by signing an ICBA petition. Learn More and Take Action.
Advocacy Less Than Two Weeks for Basel III Comment Letters, Signatures ICBA continues urging community bankers to submit comment letters on the proposed Basel III capital standards and to encourage everyone they know to sign ICBA’s Basel III petition. With the Oct. 22 comment deadline approaching, comments and signatures are crucial to exempt community banks from the proposed regulations.
A calculator released by federal regulators allows community banks to estimate the impact of the Basel III proposed rules. ICBA is encouraging community banks to use the calculator and write a comment letter describing how the Basel III proposal will affect their risk-based capital ratios. Guidelines for drafting a comment letter are available on the ICBA website.
Additionally, ICBA continues to call on community bankers and their allies to sign a petition urging regulators to exempt community banks from the Basel III proposals. The petition from community bank executives, presidents, directors, employees, business partners and customers advocates allowing community banks to continue operating under Basel I capital regulations.
Campaign 2012 ICBA Tax Study Makes Presidential Debate Appearance The first presidential debate between President Barack Obama and Republican nominee Mitt Romney featured an ICBA-commissioned study on small-business tax rates. Romney highlighted the facts presented in the study twice, noting the study findings that raising tax rates on Americans earning more than $250,000 and raising the top rates on capital gains and dividends would cost more than 700,000 jobs.
The study also found that the proposed tax increase, scheduled to take effect on Jan. 1, would have a particularly negative impact on small businesses taxed at the individual income tax rate, such as Subchapter S corporations. Subchapter S corporations, which include more than 2,300 community banks, would see their top tax rate rise from 35 percent to 44.7 percent next year.
Romney also noted that the study found that roughly a quarter of the American workforce is employed by Subchapter S and other “pass-through” firms whose owners are taxed at the top two rates. The study also found that the higher tax rates would reduce investment in the United States by 2.4 percent, lead to a 1.8 percent decline in wages and shrink the economy by 1.3 percent, the study found.
The Ernst & Young Study was prepared on behalf of ICBA, the National Federation of Independent Businesses, the S Corporation Association and the U.S. Chamber of Commerce. ICBA sent the study to Congress and the federal financial regulators in July to illustrate the negative impact of the proposed tax increases on community banks and their small-business customers.
Credit Unions FHFA Proposes New Secondary Mortgage Market Infrastructure The Federal Housing Finance Agency is seeking public input on a proposed framework for a common securitization platform and a model pooling and servicing agreement. The FHFA white paper seeks to identify the core components of mortgage securitization that will be needed in the housing finance system going forward.
The agency said the core components are linked to two cornerstone operational features:
a securitization platform to process payments and perform other functions that could be used by multiple issuers, and
a contractual framework supporting the new infrastructure.
The agency said developing a new securitization infrastructure is top priority and builds on other initiatives to align and improve the business practices of Fannie Mae and Freddie Mac. Public input must be received by Dec. 3.
Regulation FOMC Minutes Show QE3 Debate The minutes of the Federal Open Market Committee’s Sept. 12-13 meeting feature deliberations over the Federal Reserve’s third round of quantitative easing. The FOMC announced last month that it would launch the policy to purchase $40 billion of agency mortgage-backed securities each month.
Staff presenting the proposal said it could be effective in fostering more rapid progress toward the committee's objectives, according to the minutes. The staff presentation also said that significant additional asset purchases should not adversely affect the ability of the committee to tighten its policy accommodation.
However, some members of the panel said that they were skeptical that the program would help and that it could complicate the committee’s efforts to withdraw monetary policy accommodation when appropriate.
In addition to the third round of asset purchases, the FOMC also announced that it will maintain its Operation Twist program of swapping short-term securities for longer-term ones. Additionally, the panel said it will keep target interest rates at zero to 0.25 percent “at least through mid-2015,” beyond its previous pledge to maintain record-low rates through late-2014.
Economy Consumer Credit Up 8 Percent in August Consumer credit advanced at a seasonally adjusted rate of 8 percent in August, the Federal Reserve reported. Revolving credit, such as credit cards, increased at an annual rate of 5.9 percent. Nonrevolving credit was up 9 percent.
Economy Payrolls Up 114K as Unemployment Rate Drops Nonfarm payroll employment rose by 114,000 in September, the Labor Department reported. Employment increased in health care and in transportation and warehousing but changed little in most other major industries.
The unemployment rate decreased 0.3 percentage points to 7.8 percent, and the number of unemployed persons decreased by 456,000 to 12.1 million. The number persons who lost their job or completed temporary jobs decreased by 468,000 to 6.5 million.
Regulators Freddie: FRM Rates Again at Record Lows Freddie Mac said fixed mortgage rates fell to record lows for the second consecutive week on mortgage securities purchases by the Federal Reserve and indicators of a weakening economy. Rates on 30-year fixed-rate mortgages averaged 3.36 percent last week, down from 3.40 percent the previous week and 3.94 percent a year ago. Rates on 15-year FRMs averaged 2.69 percent, down from 2.73 percent the previous week and 3.26 percent last year.
ICBA News ICBA Chooses EtherTel Networks as the Newest PSP ICBA announced that it has selected EtherTel Networks as a Preferred Service Provider. EtherTel Networks is an independent telecommunications consulting firm that provides telecom procurement and management services to more than 400 clients nationally, including community banks with multiple branches. This new member benefit provides telecommunication services solutions that enable ICBA member banks to reduce and better manage their telecommunication expense overhead. Read ICBA Release.
Poll Take This Week’s Quick Poll Take this week’s Quick Poll and view results from the previous poll on ATM fee disclosure lawsuits.