Staff Visit to Washington D.C. Reinforces Support for Illinois Community Bank Positions and Initiatives

July 22-25, 2013

CBAI's David Schroeder, vice president federal governmental relations, recently called on the offices of every member of the Illinois Congressional delegation and federal regulators to urge support for positions and initiatives which are vitally important to Illinois’ community banks.

Support resolving the issue of too-big-to-fail (TBTF)

Support regulatory relief contained in ICBA’s Plan for Prosperity and tiered regulation for community banks

Oppose expanded powers for tax-exempt credit unions

Oppose expansion of the Farm Credit System (FCS)

Support for our positions and initiatives will allow community banks to encourage additional small business lending, fuel job creation, help create economic stability, and more fully serve their communities.

Support resolving the issue of too-big-to-fail (TBTF)
CBAI urges the continue reform of our financial system to significantly reduce the probability and severity of a future financial crisis. The taxpayer bailout of big banks and financial firms must never happen again!

Support for resolving too-big-to-fail is growing among banking regulators, a bipartisan group of legislators, and distinguished thought leaders. This chorus has been fueled by the taxpayer-funded bailouts of the mega banks and also by their numerous misdeeds. No financial institution, its directors, officers, or employees should be too-big-to-manage, too-big-to-regulate, too-big-to-fail, too-big-to-prosecute, too-big-to-jail, and should certainly not be too-big-to-change.

Senator Sherrod Brown (D-OH) joined with Senator David Vitter (R-LA) in introducing the Terminating Bailouts for Taxpayers Fairness Act of 2013 (S. 798). This legislation will help eliminate the threats posed by too-big-to-fail financial institutions with capital guidelines appropriately scaled to the size, scope and risks of the institutions, and offers much-needed regulatory relief to community banks. CBAI thanks Illinois Senator Richard Durbin for taking a leadership position by co-sponsoring this important legislation.

Support regulatory relief contained in ICBA’s Plan for Prosperity and tiered regulation for community banks
The steady increase in regulations threatens community banks and their communities. CBAI supports regulatory relief and tiered regulation for community banks. The financial crisis clearly demonstrated that the material risks of Wall Street mega banks are very different from those of community banks, and they should not be treated the same way.

CBAI has joined 37 state and regional community bank associations in endorsing ICBA’s Plan for Prosperity, a policy platform for the 113th Congress that promotes a regulatory environment in which community banks can thrive and lend more robustly to small businesses and residents, thereby helping their communities grow and thrive.

Many Plan for Prosperity provisions have made their way into legislation, the most encompassing to-date is the Community Lending Enhancement and Regulatory Relief Act of 2013 (H.R. 1750 and S. 1349). CBAI thanks Illinois Senator Mark Kirk for taking a leadership position by co-sponsoring this important legislation.

Oppose expanded powers for tax-exempt credit unions
The original credit union model has become outdated as credit unions have long since strayed from their founding purpose of serving individuals of modest means and with a common bond. Their federal tax-exempt status, in exchange for serving their original mission, is clearly no longer justified. Their tax subsidy should be eliminated and they should all pay their fair share.

Credit unions are seeking to expand their commercial lending powers by increasing the percentage of assets cap on member business lending (H.R. 688 and S. 968). If authorized, any growth will likely come at the expense of tax-paying community banks. In addition, credit unions are seeking to raise capital from outside investors (H.R. 719), discarding their longstanding reliance on retained earnings. This change would fundamentally alter the exclusive member-focused character of credit unions – a condition for their original tax exemption. Credit unions should not be granted these or any additional powers as long as they remain exempt from taxation.

Oppose expansion of the Farm Credit System (FCS)
CBAI opposes the expansionist agenda of the Farm Credit System (FCS) which would allow FCS lenders to become the equivalent of commercial banks while retaining their Government Sponsored Enterprise (GSE) status. The FCS’s funding advantage as a GSE constitutes an unfair competitive advantage over rural community banks.

The FCS should follow its historical mission of serving bona fide farmers, ranchers, and young, beginning and small farmers and their farmer-owned cooperatives. If it chooses not to follow this mission, it should be subject to taxation and should also face regulatory safeguards, disclosures and controls equal to community banks, including CFPB oversight.