|
You're receiving this newsletter because you signed up to receive legislative updates from the Tennessee Bankers Association. Not interested anymore?
Unsubscribe .
|
TN BANKERS MAKE ANNUAL TRIP TO WASHINGTON
Read more 
Read more
Read more
Read more
Read more
Read more
Read more
Read more
Read more
| |
 |
TN BANKERS MAKE ANNUAL TRIP TO WASHINGTON
This week, a record 66 bankers and TBA staff attended the annual Government Relations trip in Washington, DC. In addition to having an opportunity to visit with Senators Bob Corker and Lamar Alexander as well as each of Tennessee’s Congressional members, bankers spent their time in DC hearing from representatives of the ICBA, ABA, OCC, CFPB, FDIC Acting Chairman Martin Gruenberg and Federal Reserve Governor Sarah Bloom Raskin.
The key issues addressed during the visit were pending legislation addressing fairness during bank examinations, the credit union industry’s ongoing efforts to increase their business lending cap and various concerns relating to the creation and authority of the CFPB and the plethora of rules by federal regulators that will become final in the coming months.
A more complete commentary about the Government Relations trip will be published in the July issue of TBA’s magazine.
Back to the Top |
|
|
Senate Republicans on Tuesday blocked with a 52-45 party-line vote consideration of a Democratic bill (S. 2343) that would freeze student loan interest rates for another year by offsetting the cost by taxing certain Subchapter S corporations. Sixty votes were needed to begin debate on the legislation.
The bill’s Sub S provision, opposed by ABA and ICBA, would require the active shareholders of service-sector S corporations to pay payroll taxes on all their income from the business – wage and business earnings alike – if the S corporation is a partner in a professional service business or if 75 percent or more of its gross income is attributable to the service of 3 or fewer shareholders.
Without congressional action, the interest rate for subsidized student loans will double to 6.8 percent on July 1. According to recent press reports, Senators have started negotiations to resolve the impasse, but the parties are split on where the funds to maintain a freeze on current rates should come from.
Back to the Top |
|
|
The Federal Reserve has given the go-ahead for state-owned Chinese banks to enter the US banking market. The central bank on Wednesday approved an application by China's biggest bank – the Industrial and Commercial Bank of China (ICBC) – to buy an 80 percent stake in the US branch of the Bank of East Asia. It is the first time a Chinese state-controlled company has been approved to acquire a US bank.
The landmark step comes days after US and Chinese officials held high-level financial talks in Beijing. US officials said during the talks that China has made progress on a number of issues, including taking steps toward a more open and market-oriented financial system.
In making its decision, the Federal Reserve said it concluded that ICBC, which is 70 percent owned by the Chinese government, will be sufficiently supervised and has the resources to adequately support the US branches.
The Federal Reserve on Wednesday also allowed two other Chinese financial institutions to enter the US market, allowing the Bank of China to open a branch in Chicago and the Agricultural Bank of China to set up a branch in New York.
Back to the Top |
|
|
Most credit unions don’t want to double their business-lending cap, and they shouldn’t compete with banks for large business loans, according to two credit union executives, who were quoted in separate question-and-answer-formatted e-mail messages that ABA sent earlier this week to all senators.
“Doubling [lending] limits for natural person credit unions is not something a majority of credit unions want or need. Yet, if a minority of powerful credit unions and industry trade associations get their way…[member business lending] could easily become the next industry crisis,” Dale Kerslake, president and CEO of Cascade Federal Credit Union, Kent, Wash., told the Credit Union Times.
“[Credit unions] shouldn't be doing strip centers, corporate buildings and land development. That’s not who we are. That’s the banks’ business,” Ron Burniske, president and CEO of Chartway Federal Credit Union, Virginia Beach, Va., said to Inside Business magazine after his institution took over a failed credit union.
In an opinion piece this week in the Washington Post, ABA President and CEO Frank Keating wrote that CUs already have ample authority to make small business loans, and that pending legislation would simply allow a new breed of credit unions to go after large commercial loans. This would increase the risk of credit union failures and deepen the deficit as loans shift away from tax-paying community banks to tax-exempt credit unions.
“Fortunately, there is a more reasonable option for credit unions that would like to expand their business lending – convert to a mutual savings bank charter,” Keating said. “This is far more sensible than promoting more tax-dodging that runs up the national debt and damages community banks that are the backbone of their local economies,” he added. Read the op-ed.
Back to the Top |
|
|
The CFPB late Wednesday outlined rules it expects to propose this summer and finalize next January that are intended to simplify mortgage points and fees.
“Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” CFPB Director Richard Cordray said in a press release. “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.”
The proposals the bureau is considering would require an interest-rate reduction when consumers elect to pay discount points; ban origination charges that vary with the loan's size; and mandate that lenders offer consumers a no-discount-point loan option.
Other proposals the bureau is looking at would establish qualification and screening standards for mortgage loan originators. The CFPB also plans to reaffirm the Federal Reserve's rule prohibiting steering incentives while clarifying some issues in it that have created confusion.
Back to the Top |
|
|
Congress can take several steps to preserve and improve access to agricultural credit in the 2012 Farm Bill, ABA Chairman-Elect Matt Williams told the House Agriculture’s Department Operations, Oversight and Credit Subcommittee Thursday.
ABA recommends repealing borrower term limits on participation in the USDA Farm Service Agency’s guaranteed loan program, and preserving the Federal Crop Insurance Program, said Williams. He noted that in the early 1990s Congress inserted term limits into the FSA guaranteed loan program that cap the time farmers and ranchers are eligible to participate.
“As a result of term limits, an increasing number of farmers and ranchers are no longer eligible for additional credit under the program, which could make access to credit in the future very difficult, if not impossible, for these producers,” Williams said.
He also emphasized that the Federal Crop Insurance Program is a key risk-management tool used to protect against volatile weather and catastrophic losses. It provides “my customers with the certainty they need to make responsible planting decisions and provides my bank with the confidence we need to extend credit to our customers. … If federal crop insurance was … diminished, our ability to lend – in some cases – would be curtailed,” Williams said.
Back to the Top |
|
Congress should pass three administration-backed legislative proposals that would make it easier for homeowners to refinance their mortgages, HUD Secretary Shaun Donovan told the Senate Banking Committee Tuesday. “There’s a real urgency here because interest rates today are at the lowest level they have ever been for a 30-year mortgage,” Donovan said.
Sen. Dianne Feinstein (D- Calif.), he said, is crafting a proposal that would allow homeowners with mortgages that aren’t backed by Fannie Mae, Freddie Mac or the FHA to refinance through a new FHA program. President Obama, during his State of the Union Address, proposed paying for the program with a tax on large banks, but that concept hasn’t attracted much congressional support.
Donovan added that Sens. Robert Menendez (D-N.J.) and Barbara Boxer (D-Calif.) are planning to introduce a measure that makes changes to HARP to provide streamlined refinancing for homeowners who are current on their payments and have loans backed by Fannie or Freddie.
Sen. Jeff Merkley (D-Ore.), he said, also is expected to introduce a proposal that would allow underwater borrowers whose loans are not government-backed to refinance into new mortgages with the FHA. The bill, among other things, would enable underwater homeowners to apply savings from refinancing to rebuild their equity.
Back to the Top |
|
If a systemically important financial institution (SIFI) collapsed, the FDIC would transfer assets and some liabilities to a temporary bridge holding company, leaving the SIFI’s subsidiaries to conduct business, agency Acting Chairman Martin Gruenberg announced earlier this week.
Under the FDIC’s plan, original shareholders would be wiped out and debt holders would be given equity in the emerging entity, he said. The agency would appoint from the private sector a temporary new board of directors and chief executive for the bridge company. The new equity holders then would elect a permanent board for the reconstituted company.
“We believe this strategy holds the best possibility of achieving our key goals of maintaining financial stability, holding investors in the failed firm accountable for the losses of the company, and producing a new, viable private-sector company out of the process,” Gruenberg said.
“ABA has always believed that no bank, or company, should be too big to fail, and the FDIC’s resolution strategy represents an important step in that direction,” association President and CEO Frank Keating said. “In any failure, it’s the equity owners that should take losses. This strategy assures that but would continue the operations of the firm going forward to minimize market disruptions.”
He added that the FDIC plan emphasizes private-sector responsibility. “It’s critical that equity owners in firms large and small understand their principal is at risk, and that they will bear all losses – with no taxpayer assistance,” Keating said.
Back to the Top |
|
FinCEN this week reminded all financial institutions subject to the Bank Secrecy Act that they are required to use electronic filing for certain agency reports no later than July 1. FinCEN issued a notice on February 24 re-affirming that such institutions must submit agency reports electronically unless they are eligible to ask for a temporary exemption as described in the final rule. Read the Feb. 24 notice.
Back to the Top |
|
|
