FDIC hits up industry for three years of payments

By Geert De Lombaerde Posted on September 29, 2009 at 1:28 pm

Rather than impose another special one-time assessment to replenish its coffers, the Federal Deposit Insurance Corp. is proposing that banks pay their dues for 2010, 2001 and 2012 before the end of this year. It’ll hurt, but not as much as the alternative.

“It’s certainly a better solution than taking a large chunk of money out of banks’ income and capital,” James Chessen, chief economist at the American Bankers Association, said after the meeting.

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Tags: American Bankers Association, banking, Federal Deposit Insurance Corp., financial regulation  

On being a start-up banker in these times

By E. Thomas Wood Posted on July 19, 2009 at 9:07 pm

Claire Tucker, veteran Nashville banker and president and CEO of one-year-old CapStar Bank, shares these observations from last week’s American Bankers Association De Novo Bank Conference, held in Washington, D.C.:

Notable officials at the meeting were Ed Yingling, president and CEO of the American Bankers Association, Diane Casey-Landers, COO of the ABA, and of course, Dr. De Novo himself, Bob Turicchi. I was a bit surprised that there were fewer than 40 bankers at the conference, a figure that may be directly correlated to the relatively low number of banks that have been formed of late, particularly in the last year.

There were several themes that quickly emerged as THE hot topics:

• The content of legislation currently being debated in the Committee on Financial Services in the House of Representatives must focus on three areas of reform: the creation of a systemic oversight regulator; the creation of a mechanism for resolving troubled systematically important institutions (a/k/a “too big to fail”) and filling in gaps in the regulation of the shadow banking system. In a conversation I had with Mr. Yingling on Monday evening, he reinforced the need for bankers to weigh in on the issues to place focus on what really caused the crisis in the financial industry. The bottom line, which I subscribe to, is that traditional banks are the solution, not the problem.

• Ms. Casey-Landry honed in on the discussions occurring between the Financial Accounting Standards Board (FASB) and the ABA regarding “mark-to-market” accounting rules. It is the position of the ABA that there must be a distinction between “market values” and “economic values.” Traditional banking typically entails making loans and accepting customer deposits… not active participation in the daily trading of securities. What it all boils down to is that mark-to-market is applicable when there is a willing buyer and a willing seller. Otherwise, the result can be unrealistic and understated valuations. My take is that shareholders will be negatively affected by the current proposed rules.

• The issue that hit closest to home for me, as CEO of a de novo bank, was the pending additional assessment that may be levied on all banks by the Federal Deposit Insurance Corporation. In essence, regardless of a bank’s financial performance, balance sheet composition, or level of capital, all must pay into the FDIC fund to replenish the funds that have been dispersed to the depositors of failed banks. I can attest to the negative financial implications of using valuable capital to cover the failures of others.

My take-away from the conference is that we must stay actively involved, giving feedback to our representatives in D.C. regarding the destructive effects to our core banking system, in Nashville, in Tennessee and in our entire region, that will result if we are caught up in the web and end up paying for the irresponsible behavior and business decisions of those operating in a less regulated environment than the traditional community bank.

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Tags: American Bankers Association, banking, CapStar Bank, Claire W. Tucker, commercial banking, Edward L. Yingling, financial regulation, startup banks