Too big to fail, CFPA top issues this fall, ICBA says

Congress will be dealing with banking issues at record pace this fall; the Independent Community Bankers of America is using the platform offered by state conventions to articulate its distinguishing positions. Cynthia Blankenship, immediate past chairman, told bankers in Chicago that the stakes are high.."This fall is going to be like a super freight train and your franchises are tied to the track," she said during a luncheon presentation Sept. 25 at the annual meeting of the Community Bankers Association of Illinois. She predicted Congress will enact "the most sweeping reform that we have seen in our lifetime." Blankenship is vice chairman and chief operating officer of Bank of the West in Irving, Texas..Noting that U.S. Rep. Barney Frank, chairman of the House Financial Services Committee, already has scheduled 11 hearings this fall, Blankenship said the two most important issues for bankers are ending too big to fail, and minimizing the potential impact of the proposed consumer financial protection agency..Although bankers already have made one special assessment payment to the FDIC this year, Blankenship said: "Make no mistake, you will pay more into the fund this year, whether it is through a special assessment or some other way." Days after her speech, the FDIC announced its proposal to require banks to pre-pay three years' worth of DIF premiums on Dec. 30, raising $45 billion..Blankenship argued that the formula used by the FDIC to assess DIF premiums "must be changed." She explained: "At Citibank, their domestic deposits make up 16 percent of their balance sheet. At our community banks, domestic deposits make up upwards of 90 percent of our balance sheet. How fair is that when they are paying on 16 percent of their balance sheet and you are paying on 90 when it is based on domestic deposits? Bring that to the attention of your congressman and senators. There are huge inequities. We have to get this changed. We will call for the change and we will continue to send that message to Capitol Hill.".Blankenship said ICBA will continue to fight against the onerous provisions in the CFPA. "The bad news is, it probably will pass. It is on a high speed track. President Obama wants it to pass. We may not get out from under CFPA but we may be able to carve out a provision" to make it more palatable to banks, she said. .Blankenship acknowledged different legislative approaches within the industry. "When we make these deals, there may be banks that don't get included. You may hear the American Bankers Association say we are dividing the industry. We are not. We are trying to look out for you, community banks, and your franchise. They may say changing the assessment formula is not fair. It is not beneficial to all banks. Well, that may be true based on the composition of your balance sheet but it is certainly more fair than that domestic deposit formula currently being used where the largest banks in the country only pay on 16 percent of their balance sheet and you are paying on the majority of yours."