With Congress returning next week after an extended August recess, the community banking industry will be focused on extending unlimited FDIC coverage of noninterest-bearing transaction accounts, according to a new in-depth article on the ICBA Independent Banker website.

The limited, election-year legislative schedule makes extending the Transaction Account Guarantee (TAG) program especially urgent, ICBA Executive Vice President for Congressional Relations and Chief Economist Paul Merski writes. Merski notes that a variety of banking and business organizations have followed in ICBA’s footsteps to advocate an extension.

The industry’s support for the program also is making headlines in other news media. The Birmingham News published a letter from Community Bankers Association of Alabama President and CEO Scott Latham on the importance of the coverage to local community banks. Additionally, Reuters reported on a recent letter from 80 state banking associations calling on Congress to temporarily extend the program.

Community bankers can make their own headlines on the TAG program by localizing and distributing to their local media ICBA’s customizable op-ed on the issue.

The Consumer Financial Protection Bureau extended until Nov. 6 the comment period on proposed changes to the definition of “finance charge” used to calculate the annual percentage rate for mortgage borrowers. The two-month extension from the original Sept. 7 deadline also applies to proposed changes to the coverage test for the high-cost mortgages. All other deadlines for the bureau’s proposed changes to RESPA-TILA disclosures remain in place.

The extension applies to the CFPB’s proposal to develop a more inclusive APR calculation, which the CFPB believes would benefit consumers. ICBA has argued that the APR is a confusing metric that is not used by consumers in comparing mortgage loan offers from multiple lenders. Further, ICBA is concerned that including additional fees in the APR calculation would cause many smaller-balance mortgages to fall into the “higher-priced” mortgage category, which would require additional disclosures and mandatory escrows, both of which are burdensome for community banks.  

The Small Business Administration Office of Advocacy recently told the CFPB that it should listen to community bank concerns with its RESPA-TILA proposals. In a letter to the CFPB, the office cited these ICBA concerns and noted that the proposals would limit credit availability unless reformed.

Regulators should not counter complex financial markets with even more complex regulations, a Bank of England official said last week. Speaking at the Kansas City Fed’s Economic Symposium, Executive Director of Financial Stability Andy Haldane said that complex regulations, such as those in the proposed Basel III rules, spell trouble for financial markets. He noted that complex regulatory standards have not performed well—a “sobering” message to the Basel III architects.

“As you do not fight fire with fire, you do not fight complexity with complexity,” Haldane said. “Because complexity generates uncertainty, not risk, it requires a regulatory response grounded in simplicity, not complexity.”

ICBA is urging community bankers and industry allies to sign a petition calling on regulators to exempt community banks from the proposed Basel III rules and to allow community banks to continue operating under Basel I capital regulations. Sign the Petition. Learn More.

Bad news in the manufacturing and construction sectors did not bode well for the pace of the economic recovery. The Institute of Supply Management reported that economic activity in the manufacturing sector contracted in August, the third consecutive monthly decline. The index’s reading of 49.6 percent was the lowest since July 2009.

Construction spending also was down, declining 0.9 percent in July, according to the Commerce Department. However, spending was up 9.3 percent from a year ago. Spending over the first seven months of the year also was up 9.3 percent compared to the same period a year ago.

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