SDBA Seeks Candidates for 2010-2011 Board Officers
Are you interested in becoming an officer of the South Dakota Bankers Association? SDBA officers include the chairman, chairman-elect, vice chairman and immediate past chairman. The SDBA is currently seeking people who are interested in running for the vice chairman position, which will be elected at the Annual Convention on June 15, 2010, in Fargo, N.D. Chairman-elect Dave Zimbeck, Citibank, Sioux Falls, will automatically assume the position of chairman on June 15. The current vice chairman, Bruce Byrum, First Interstate Bank, Spearfish, will be eligible to run for chairman-elect. The current chairman, Bob Rutten, Citizens State Bank, Arlington, will automatically become the immediate past chairman. If you are an executive officer of any SDBA member bank, you are eligible to run for vice chairman. If you are interested in running for the position, contact a member of the nominating committee for more information and submit a letter of intent to the SDBA. Read more.

Obama Provides Details
on Community Bank Small-Business Program
President Obama at a town hall forum in Nashua, N.H., this week unveiled details of his proposed program to provide capital to community banks in exchange for more small-business lending. The proposal, mentioned in last week's State of the Union address, would transfer -- through legislation -- $30 billion in repaid Troubled Asset Relief Program funds to a new Small Business Lending Fund. Banks with $10 billion or less in assets that receive primary-regulator approval would be eligible to participate in the program, which would be separate and distinct from TARP. Under the program, banks with less than $1 billion in assets could receive capital investments up to 5 percent of their risk-weighted assets, and those with between $1 and $10 billion in assets could receive up to 3 percent. Existing Capital Purchase Program participants with less than $10 billion in assets would be permitted to convert their capital to the new program. Institutions that use the funds would receive incentives to boost lending. For every 2.5 percent increase in lending, the dividend the bank would have to pay the government would drop by one percentage point. For example, if a bank increased its lending by 10 percent, the initial 5 percent dividend would drop to 1 percent.

The program addresses some previously expressed ABA concerns -- that the asset threshold for participation should be higher than the originally proposed $1 billion to include more banks, and that it should be free of TARP conditions. But there are other stumbling blocks. Congressional Republicans oppose using repaid TARP money to fund the program, arguing that such money should be returned to Treasury to pay down the deficit. ABA President and CEO Ed Yingling said other issues of concern include the need for regulatory approval prior to participation and ensuring that as many banks as possible will be eligible for the program. "It remains a very difficult environment for community banks to raise capital and that affects their ability to lend," Yingling said. "We are hopeful that these issues can be addressed and look forward to working with Congress and the administration to make this program viable." Read more. Read a White House fact sheet. Read Yingling's statement. u

Obama Budget Proposal
Includes Large-Bank Tax, DIF Increase
President Obama this week unveiled a $3.8 trillion budget proposal for fiscal year 2011. As expected, the budget includes a provision that would impose an “approximately” 15-basis-point tax on the largest financial institutions. Somewhat unexpected is a provision suggesting it “may be appropriate to consider raising the [FDIC Deposit Insurance Fund’s] level above 1.5 percent to maintain positive fund balances during future downturns.” An FDIC spokesman said the agency favors the idea, according to press reports. Current law requires the FDIC to maintain the DIF’s level at between 1.15 percent and 1.5 percent of all insured deposits. The budget also contains positive bank-related provisions that would expand tax credits to match qualified retirement savings, and create a system of automatic workplace IRAs requiring employers to give employees the option of enrolling in a direct-deposit IRA. Another provision would extend the popular New Markets Tax Credit program for 2010 and 2011 and allocate $5 billion for each year. The budget also would continue -- and make permanent -- most of the 2001 and 2003 tax cuts for the middle class, protecting individuals earning less than $200,000 and households making less than $250,000 a year from tax increases. As in last year’s proposed budget, there are provisions that would make the 2009 estate tax rate and amount exempted from the alternative minimum tax permanent. View budget documents. u

FDIC Community Bank Advisory
Committee Details Regulatory Concerns
FDIC's Community Bank Advisory Committee -- a 14-person group which includes Jack Hopkins, CorTrust Bank, N.A., Mitchell -- discussed a range of issues affecting community banks and their customers last Thursday at its second meeting. The bankers heard some details of the president's plan to offer capital to community banks in exchange for increased small business lending. They warned that the Treasury Department will have to work hard to distinguish this program from the stigma-stained Troubled Asset Relief Program. The bankers also cautioned about creating incentives to lend in a market with few good unbanked credits. The committee also discussed hot-button examination issues, including unclear expectations about reserve levels and the unintended effects of examiners' increased scrutiny of commercial real estate concentrations. Bankers expressed general concern that an over-reaction on the part of examiners is restricting banks' ability to serve customers. Other topics covered included challenges in raising capital in the current environment; the merits of extending the Transaction Account Guarantee Program; the impact of new interest rate caps for banks that are less than well capitalized; the need for a change in how reciprocal deposits such as CDARS are treated; and a review of regulatory reform legislation. Read a list of committee members. u

Fed Launches New Web Site
for Community Bank Directors
The Federal Reserve this week launched a new Web site -- BankDirectorsDesktop.org -- to help new community bank directors learn how to ensure the safety and soundness of their institutions. The Web site includes links to the interactive course “Training for Bank Directors,” and the latest edition of the guide Basics for Bank Directors to help new directors better understand the issues and challenges associated with serving on a bank board. Read more. Go to the Web site. u
 

ABA Opposition Efforts Cited
in Story on Fading Chances for CFPA
Chances are fading for legislation to create a separate Consumer Financial Protection Agency as Senate Banking Committee Chairman Chris Dodd (D-Conn.) considers alternatives in order to win bipartisan support, according to a story in The Washington Post on Sunday. The story chronicles the origin and evolution of the CFPA proposal and cites ABA's opposition efforts. "Business groups – most vociferously the U.S. Chamber of Commerce and the American Bankers Association – have campaigned fiercely against what they describe as an unneeded, intrusive new agency that would increase the cost of doing business," the story said. The reporter also referenced ABA President and CEO Ed Yingling's concerns that a new agency would inevitably come into conflict with prudential regulators, and that such conflict could undermine banks' safety and soundness. Read the story. u