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Credit unions’ fuzzy math reveals tax exemption insecurity

While credit unions have a history of playing fast and loose with the facts, they now appear willing to say just about anything to distract from the impact of their taxpayer subsidies, ICBA President and CEO Rebeca Romero Rainey wrote in a new op-ed on LinkedIn.

Romero Rainey cites a recent letter to the editor responding to American Banker coverage of policymakers’ growing skepticism of credit unions amid their historic bank-buying spree. In the letter, America’s Credit Unions claimed its industry contributes more than $2 trillion in tax revenue each year.

 “As it turns out, the credit union trade group appears to be counting all the tax revenue paid by credit union members nationwide to come up with its specious figure,” Romero Rainey writes. “This budgetary creative license surely is a sign that the credit union industry is feeling insecure about the federal tax exemption for more than $2 trillion in credit union assets.”

Source: ICBA

Legislative principles to support community banks

Rep. French Hill (R-Ark.) released a set of principles for the upcoming 119th Congress and incoming Trump administration designed to support community banks.

The principles—which Hill worked with ICBA, ACB and other state community banking groups to develop—include:

• Advancing tiered regulation based on risk and complexity.
• Reforming climate risk regulations.
• Promoting transparency in bank exams.
• Amending and modernizing the CAMELS rating system and call report.
• Mandating an interagency plan to address mail theft-related check fraud.
• Streamlining merger rules.
• Requiring the FDIC to withdraw its 2024 brokered deposit rule.
• Adjusting the FDIC’s rules on least-cost resolutions and the national deposit cap.

Rep. Hill, a top contender to lead Republicans on the House Financial Services Committee, with growing chances of chairmanship under a Republican-led administration, requested comments on the principles by Dec. 31.

ICBA and ACB will continue working with policymakers to advance community banking industry priorities during the lame-duck session and the new 119th Congress.

Source: ICBA; S&P Global Market Intelligence

Community banks are the backbone of the economy

Rep. Andy Barr (R-Ky.), a contender for Chair of the House Financial Services Committee, said he “firmly believes that community banks and deep, liquid capital markets are the backbone of our economy, driving innovation, creating jobs, and strengthening communities.”

In a recently released “Dear Colleague” piece, Barr said he:

• Led efforts to streamline Paycheck Protection Program forgiveness to remove undue burdens that would have disproportionately affected community lenders.
• Strongly opposes the creation of a U.S. central bank digital currency.
• Will promote competition and prevent overconcentration in our banking sector.
• Would rein in the Consumer Financial Protection Bureau and give oversight powers back to Congress.
• Wants to prevent federal financial regulators from importing rules promulgated by foreign standard-setting bodies.
• Believes the U.S. needs a regulatory framework that promotes stability through competition and choice while encouraging innovation and growth.

Source: S&P Global Market Intelligence

An article from ACB Associate Member

What Is A Perfected Lien?

"It has been confirmed that 15-20% of a bank’s metes and bounds descriptions contain language that causes the legal to be incorrect. The errors found within these descriptions can be very expensive for the bank and the customer to correct in the future. Calculate the value of your bank’s portfolio, then apply the 15-20% error rate to determine your risks."  

In this article from the Arkansas Community Banker Brent Melton, CEO and Co-Founder of Vizaline, an ACB Associate Member, discusses the importance of knowing that your real estate collateral is where it claims to be and what it claims to be.

Click here to learn more .

Source: Vizaline; Arkansas Community Banker

Senate farm bill

Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) released her version of the farm bill as lawmakers continue discussing options for a farm bill.

Stabenow said her Rural Prosperity and Food Security Act of 2024 includes:

• $20 billion to strengthen the farm safety net and establish a permanent structure for disaster assistance.
• $8.5 billion to help families make ends meet and improve access to nutrition assistance.
• $4.3 billion to improve quality of life in rural communities.

Senate Agriculture Committee Ranking Member John Boozman (R-Ark.) said the bill is an “11th hour partisan proposal released 415 days after the expiration of the current farm bill.”

ICBA supports passage of a new farm bill with enhancements to USDA farm programs, including higher loan limits on USDA guaranteed loans and a quicker approval process on USDA guaranteed farm loans. ICBA also continues to express strong opposition to proposals to expand Farm Credit System authorities.

House Republicans passed their version of the farm bill on May 24. However, House Agriculture Committee Chairman Glenn “GT” Thompson (R-Pa.) has said he wanted to see legislative text from Stabenow before negotiations can continue.

All legislative action will likely be reset in the new Congress. The current Congress is expected to pass an extension to ensure programs continue.

ICBA encourages community bankers to use its Be Heard grassroots action center to call and write their members of Congress on the industry’s farm bill priorities as the debate continues.

During the recent ACB hosted luncheon for the Arkansas Delegation at the US Capitol, ACB leadership discussed the importance of passing an updated and enhanced Farm Bill with Senator Boozman.

Source: ICBA; ACB

Congress urged to remove or raise federal deposit insurance limit

Congress should remove or raise the limits on federal deposit insurance for certain accounts given the "unfair competitive advantage" that the largest US banks enjoy, Consumer Financial Protection Bureau Director Rohit Chopra said.

The failure of a $100 million asset community bank in October due to fraudulent misconduct caused losses for some depositors. On the other hand, uninsured depositors at two of the nations largest banks, which failed in March 2023, were protected because the failures posed a threat to the entire banking system, Chopra said.

"[B]ig businesses putting their money in big banks enjoy free deposit insurance, and small businesses putting their money in small banks don't," Chopra said during a Nov. 12 closed meeting of the Federal Deposit Insurance Corp. board. "This is fundamentally unfair. The status quo gives an unfair competitive advantage to the largest banks in the country."

Big businesses also have staff that can manage their corporate treasury, but small businesses only need a place to accept and make payments, Chopra said.

"Of all the things a small business should have to worry about, the failure of their bank shouldn't be one of them," he said. "It is time for Congress to remove — or at least dramatically increase — limits on federal deposit insurance for payroll and other non-interest bearing operating accounts."

Source: S&P Global Market Intelligence

Court invalidates overtime rule

The U.S. District Court for the Eastern District of Texas issued a ruling invalidating the entirety of the Department of Labor’s overtime final rule.

In the ruling, Judge Sean Jordan stated:

• While the DOL has the authority to define and delimit the terms of the overtime exemption, that authority is not unbounded.
• The minimum salary level imposed by the 2024 rule effectively eliminates consideration of whether an employee performs bona fide executive, administrative, or professional capacity duties in favor of what amounts to a salary-only test.
• The department’s automatic updates to the minimum salary threshold every three years violates the notice-and-comment rulemaking requirements of the Administrative Procedure Act.

In light of this decision, the minimum salary threshold is once again set to $35,568, and the threshold for highly compensated employees is set to $107,432. The DOL may appeal the decision to the 5th Circuit.

The DOL’s rule, which ICBA opposed, was finalized in April and increased the number of employees who are entitled to overtime compensation.

In a comment letter on the rule, ICBA said the change:

• Would far outpace the rate of inflation and be unduly burdensome to small businesses.
• Could force community banks to reduce staff, shorten business hours, curtail services, close branches, and reduce employees’ hourly pay.
• Likely exceeds the department’s legal authority because it would arbitrarily require millions of employees who work in bona fide executive, administrative, or professional roles to be paid overtime.

Source: ICBA

FDIC Chair to retire

Martin Gruenberg will retire as chairman and a member of the board of the Federal Deposit Insurance Corp. on Jan. 19, 2025.



"It has been the greatest honor of my career to serve at the FDIC," Gruenberg told the employees of the agency. "I have especially valued the privilege of working with the dedicated public servants who carry out the critically important mission of this agency."

Gruenberg, who has been a member of the FDIC board since August 2005, will retire a day before the inauguration of Donald Trump as the US president. Trump may nominate FDIC Vice Chairman Travis Hill as chairman of the agency, Capital Alpha Partners LLC managing director Ian Katz wrote in a Nov. 6 note.

Source: S&P Global Market Intelligence