ABA Gets To The Issues
The 140-member council, which has banker representatives from every state, raises legislative and regulatory issues it feels the ABA ought to address and makes recommendations on the stance the ABA board ought to take on the issues.
Three bankers in
James Fast, president and CEO of Ionia County National Bank in Ionia, and Dennis Angner, board member of Isabella Bank and Trust in
Council members keep
"Sometimes legislative or regulatory things that are happening in one state can have an impact on the national scene and certainly have an impact on member banks from those states. A lot of those things can have a tendency to filter from one state to another."
The banking industry is particularly watchful of
"Because it's such a large state with such a large contingent in the House of Representatives, bad ideas in
The ABA Government Relations Council originally had nine major issues on its plate at the start of the year, but two have already been resolved to the council's liking. One was passage of the Class Action Fairness Act on Jan. 25, which is intended to curb lawsuit abuse. The other was passage of new bankruptcy reform legislation, which President Bush signed into law April 20. Most of the bill's provisions take effect in October this year.
Among the issues the
"Because our economy and people's financial well-being are so important to our industry, Social Security reform is an issue we absolutely have to have an interest in," Johnson said. "The idea is that the Social Security system will be in trouble some significant number of years down the road. One thing that bankers generally know is that the sooner you start solving a future financial problem, the easier it will be to solve."
Present law requires the Bank Insurance Fund and Savings Association Insurance Fund to maintain at least a 1.25 percent designated reserve ratio, which translates to $1.25 against $100 of insured deposits, according to the
As the deposit insurance system is currently structured, growth of the insurance funds is unlimited. The
There are some problems in the way banks pay premiums for the insurance for their depositors, as well, Johnson said. If the reserve ratio falls below 1.25 percent, the Federal Deposit Insurance Corp. board must charge premiums sufficient to restore the reserve ratio. As he sees it, it tends to be an all-or-nothing type of situation: Either banks are paying very, very low premiums and, in some instances, no premiums at all in a particular year, or they're paying very, very high premiums following some stress on the funds.
"We'd really rather have that leveled out over time so that the premiums that we have to pay don't go up in an economic downtime when it would be disadvantageous for that cost to go up. We think those improvements can be better dealt with now, at a time when the industry and the insurance fund are both in very good shape."
"But it is important on the federal level for us to defend the ability of our regulators to expand the products and services we can offer in a rapidly evolving financial marketplace," he added.
"Most of the large real estate firms have their own mortgage companies, and what we're asking is simply to be able to offer the same range of services to new homebuyers that the large real estate brokerage companies can. Bankers will still have to hire real estate professionals to do all that, so nobody should worried about their jobs."
As things are now, it's simply not a level playing field, Johnson said. United Bank of
"I don't mind competing with anybody. In fact, I think competition is great. As a community banker I have to relish competition, because if it wasn't in play, little community banks wouldn't be around. But there is a place for us, and we pay our fair share of taxes."
The heart of the problem is that restricting credit unions' ability to grow is really the only tool banks have at the moment. If credit unions paid taxes just like banks do, then all the argument about their ability to grow would go away, Johnson said.
"The thing that is particularly galling is that they want to grow at the banking industry's expense and use a taxpayer-provided pricing advantage to do that. Most of the roadblocks that we try to throw in their way when they're seeking additional powers are simply to stop the advantage that they have from becoming any greater."
Regulatory relief for banks is another issue on the
One other issue is consumer privacy. The