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ICBA Opposition to Overdraft Rules Makes News

ICBA NewsWatch Today 02/24/2014

OverdraftICBA Opposition to Onerous Overdraft Restrictions Makes NewsICBA’s effort to protect community banks from excessive overdraft regulations and other reporting burdens is making news. Bloomberg reported that ICBA has pushed back on a proposal that would require financial institutions with more than $1 billion in assets to include detailed breakdowns of their revenue from overdraft charges in their call reports. Bloomberg cited last week’s ICBA letter to the federal banking agencies urging regulators to exempt financial institutions with total consolidated assets of $10 billion or less from expanded call report requirements, including expanded reporting on overdrafts. In the letter, ICBA raised questions about the validity and usefulness of the information requested through the proposed call report changes. Bloomberg reported that ICBA and community bank resistance to the proposal led the FDIC and Office of the Comptroller of the Currency to split with the Consumer Financial Protection Bureau and oppose the overdraft change. The agencies’ proposed call report changes would expand reporting of consumer deposit account balances when they are intended for individuals for personal, household or family use. Under the proposal, financial institutions with total assets of $1 billion or more would be required to begin reporting consumer deposit service charges based on overdraft fees, monthly maintenance charges and consumer ATM fees. The agencies previously proposed requiring all financial institutions to provide an increased level of reporting, but they revised the plan to include the $1 billion threshold following pushback from ICBA, Bloomberg noted. Nevertheless, ICBA continues advocating the $10 billion threshold. ICBA wrote last week that the proposal is the latest in a long line of new reporting burdens for community banks caused by policies directed at much larger financial institutions that offer commoditized financial products. The association said the expanded reporting detracts from the safety and soundness reporting that regulators, depositors and other stakeholders use to determine a bank’s overall health. Additionally, ICBA wrote that the types of accounts specified for reporting under the proposal is unclear, especially for community banks.  As relationship lenders, community banks often tailor for their customers financial products that may not be easily categorized based on the agencies’ descriptions, ICBA noted.CapitalICBA: Capital Conservation Buffer Threatens Many Community BanksThe new capital conservation buffer under Basel III capital rules would limit the ability of many community banks to raise capital and serve their communities, ICBA wrote in a letter to regulators. The buffer is designed to curtail capital distributions and certain executive bonus payments when regulatory capital levels fall below preset thresholds. ICBA wrote that the capital conservation buffer would be particularly detrimental to the approximately 2,000 community banks structured as Subchapter S corporations. The buffer’s limitations on paying dividends to shareholders in certain situations would hamper the ability of these institutions to raise capital. ICBA noted that the buffer will force community banks to operate at a disadvantage compared with too-big-to-fail financial institutions and tax-exempt credit unions, which enjoy government subsidies. ICBA wrote that that the Basel III regulatory capital rules were intended to apply to the largest and most complex internationally active banks. The association asked regulators to allow community banks to distribute at least 35 percent of their reported net income for a reporting period. Read ICBA Letter. Read ICBA Release.Personal FinanceICBA Encourages Americans to Save During “America Saves” Week ICBA and community bankers are encouraging Americans to save as part of America Saves Week. The nationwide campaign, which runs through March 1, features a broad coalition of nonprofit, corporate and government organizations that are committed to raising awareness of the importance of saving. In a national news release that community bankers can customize for their communities, ICBA encouraged Americans to build their savings by setting goals, creating a spending plan, and making automatic savings deposits. To learn more about America Saves Week and to follow the conversation this week, follow @ICBA on Twitter. Read ICBA Release. Access Custom Release.ICBA NewsWatch Today is sponsored by FIS:When it comes to serving community banks, FIS is right in your neighborhood.  FIS understands that you’re more than a bank. You’re a vital resource to your community.  That’s why we offer a wide range of integrated solutions that can be tailored to the unique needs of your valued customers.  To stay competitive in an ever-changing banking landscape, you need to be more connected with your customers than ever before and  FIS is focused on connecting the best people, processes and technology to your business to help you succeed.  For more information on FIS’ complete suite of technology solutions, visit ReserveFed Issues Meeting Transcripts from Height of Financial CrisisThe Federal Reserve Board released transcripts of the Federal Open Market Committee’s 14 scheduled and emergency meetings during 2008. The transcripts offer a detailed look at the monetary policy response to the recent financial crisis as it unfolded. The transcripts feature discussions on the magnitude of the crisis and the central bank’s decisions to cut interest rates and launch emergency stimulus programs. The Fed releases policy meeting transcripts with a five-year lag.PaymentsState Regulators Form Payments Task ForceThe Conference of State Bank Supervisors formed an Emerging Payments Task Force to study changes in payment systems to determine the potential impact on consumer protection, state law and state-chartered institutions. The task force will study changing payment systems, engage stakeholders on new entrants and technologies and develop ideas for connecting emerging payments to financial regulation.Federal ReserveYellen Testifying Thursday on Monetary PolicyFederal Reserve Chair Janet Yellen is scheduled to appear before the Senate Banking Committee on Thursday to provide her monetary policy report. The hearing was rescheduled from two weeks ago due to severe winter weather.EconomyExisting-Home Sales Drop More Than 5 PercentExisting-home sales fell in January to the lowest level in a year and a half, according to the National Association of Realtors. Sales dropped 5.1 percent in January and were down 5.1 percent from a year ago on the slowest activity since July 2012. NAR cited disruptive and prolonged winter weather patterns as well as tight credit, limited inventory, higher prices and higher mortgage interest rates.PollTake This Week’s Quick PollTake this week’s Quick Poll on proposed accounting restrictions, and view results from the previous poll on recovering defaulted debts. View the Archive.EducationCommunity Bank Marketing Seminar Slated for MayAn upcoming ICBA seminar offers practical and affordable marketing tactics and best practices. Community Bank Marketing Strategies, scheduled for May 15-16 in Minneapolis, will help marketers and officers whose community banks need to succeed in today’s evolving banking environment. The seminar will cover new tactics for profitable relationships, customer-acquisition strategies and social media best practices. Learn More and Register.Products and ServicesWebinar Thursday Features Emerging Trends in Hardware SecurityWhat’s the next step you need to know to protect your community bank against a data breach? Banks are under scrutiny with heightened questions and concerns from customers demanding protection. One security incident for your bank can be costly to your reputation and your bottom line. ICBA Preferred Service Provider BLM Technology is hosting a webinar at 3 p.m. (Eastern time) this Thursday on how community banks can mitigate this risk with the technology on the market today. Register Now.

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