Advocacy Basel III Letters, Signatures Key as Deadline Looms ICBA continues calling on community bankers to submit comment letters and sign its petition on Basel III regulatory capital guidelines before the Oct. 22 comment deadline.
A calculator released by federal regulators allows community bankers to estimate the impact of the proposed rules on their bank. 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, including a template and insertable talking points, can be found on the ICBA website. ICBA also continues to call on community bankers to sign its petition urging regulators to exempt community banks from the Basel III proposals.
Deposits Former FDIC Chairman Bair Backs TAG Extension Congress should extend full FDIC coverage of noninterest-bearing transaction accounts, former FDIC chairman Sheila Bair said. In a video interview with American Banker, Bair said that allowing the Transaction Account Guarantee coverage to abruptly expire at year-end would be unwise because of instability in the financial markets.
Bair said that while the TAG program was designed to be temporary, it should not be allowed to end on its Dec. 31 expiration deadline. She noted that allowing the coverage to expire prematurely would negatively affect community banks, which do not enjoy the implied government guarantee of other financial institutions. Rather than allowing the TAG coverage to expire abruptly, Bair said, policymakers should phase it out in the coming years.
ICBA continues working with lawmakers to procure an extension of this important deposit coverage. The association encourages community bankers to continue expressing their support for extending the program by urging their members of Congress approve an extension. Write Congress Today.
Regulation Fed’s Tarullo Backs Liability-Based Size Limits on Large Institutions A Federal Reserve governor called on lawmakers to limit the size of the nation’s largest financial institutions. Congress should cap the size of these institutions by limiting their non-deposit liabilities to a specified percentage of the U.S. gross domestic product, Fed Governor Daniel Tarullo said.
In addition to imposing simplicity in the financial system, this approach would tie the limitation on growth of financial firms to the growth of the national economy and its capacity to absorb losses, Tarullo said. The difficult question would be determining the applicable percentage of GDP, he said. Tarullo said that policymakers would have to judge how much of an impact the economy could absorb and how large and complex a firm needs to be to achieve economies of scale and scope that carry social benefit.
“Even good answers to all these questions would produce a policy instrument that could seem excessively blunt to some,” Tarullo said. “But this is a debate well worth having.”
Lending Small-Business Fund Boosts Lending by $6.7B Banks that received capital through the Small Business Lending Fund have increased their small-business lending by $6.7 billion over baseline levels, Treasury reported. Lending was up by $1.5 billion over the previous quarter.
Treasury said it invested more than $4 billion in 332 institutions with less than $10 billion in assets through the ICBA-advocated SBLF. The program encourages community banks to increase their lending to small businesses.
Regulation OCC Revises Investment-Fund Rules The Office of the Comptroller of the Currency published a final rule that revises the requirements for short-term investment funds. STIFs are collective investment funds that operate pursuant to a plan that governs a bank’s management and administration of the fund. The final rule revises and adds to requirements related to net asset value and average portfolio maturity.
Economy Beige Book Finds Modest Economic Growth Economic activity generally expanded moderately in recent weeks, according to the latest Federal Reserve Beige Book of regional economic conditions. Overall loan demand was steady to stronger in most districts. Credit standards were little changed, and a number of districts noted improvements in loan quality or steady to declining delinquency rates.
Residential real estate conditions improved since the last report. Most districts reported stronger existing-home sales, while prices were described as steady to increasing. Commercial real estate markets were reportedly mixed.
Consumer spending was flat or up slightly since the last report, and a number of districts reported that retail sales expanded modestly. Conditions in the manufacturing sector were somewhat improved, while agricultural conditions were mixed.
Economy Wholesale Inventories Up 0.5 Percent Wholesale inventories rose 0.5 percent in August and were up 5.3 percent from a year ago, the Commerce Department reported. August inventories of durable goods were up 0.1 percent from the previous month and 7.5 percent from a year ago. Inventories of machinery, equipment and supplies were up 1.7 percent from last month, while inventories of computer and computer peripheral equipment and software were down 5.1 percent.
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