Thankful to Be in the Company of Bankers

November 25, 2015

It is always a great pleasure to witness the success of Indiana banks. I regularly review dozens of bank ratings and rankings on every imaginable measurement to determine if any Indiana banks have qualified. It makes me proud to see IBA-member banks being recognized, especially for their acts of community service. Indiana banks have won multiple awards on both the state and national levels.

Recently a particularly notable event took place. The ABA Foundation, at the American Bankers Association annual convention in Los Angeles, honored six banks and one banker for exceptional community outreach. Bank awards were presented in six categories: affordable housing, community and economic development, financial education, serving nontraditional borrowers and the underbanked, protecting older Americans, and volunteerism. I am proud to report that Old National Bank of Evansville, Indiana, earned top recognition in the category of financial education. The bank was recognized for its 12 Steps to Financial Success program that empowers at-risk adults, specifically those incarcerated for non-violent offenses, to take control of their futures and achieve financial success. This program not only empowers participants with financial knowledge, but also encourages them to empower others once they re-enter society. Congratulations to Bob Jones, chief executive officer of Old National Bank, and his talented team.

The icing on this cake at the awards ceremony, though, was the individual George Bailey Distinguished Service Award. This award was created by the ABA Foundation to recognize a banker ‒ not a CEO ‒ who demonstrates outstanding initiative, effectiveness and inspiration to others. It was named after the George Bailey character, memorably played by Jimmy Stewart, in the movie classic, “It’s a Wonderful Life.” This year the second annual George Bailey Distinguished Service Award was presented to Ben Joergens, financial empowerment officer at Old National Bank, who well embodies the spirit of community banking. Mr. Joergens has partnered with 27 nonprofit and educational organizations to make 144 financial education presentations to over 5,000 individuals this year alone. An example of his outreach is his work with the Henderson County Detention Center’s Substance Abuse Program, for which he developed the above-referenced 12 Steps to Financial Success program. Additionally he volunteers with HOPE Hall, the Salvation Army, Churches Embracing Offenders and area domestic abuse shelters. Congratulations to Ben Joergens for this prestigious award.

It was a proud moment to witness an IBA-member bank receive these top national awards. About 40 bankers from Indiana were present at the awards ceremony, along IBA’s Amber Van Til and myself. The event was yet another reason to be thankful to live and work in the company of Indiana bankers, who give so much to their communities.

– S. Joe DeHaven


Marking Indiana Statehood With a Medal

November 18, 2015

Medal bronze midsizeThe holidays are quickly approaching, and the Indiana Bankers Association has good news to share. By early December, the IBA will be shipping Indiana  bicentennial medal order kits to all IBA-member banks in Indiana. Since last summer, the IBA has been working with the Indiana Bicentennial Commission on sponsorship of a bicentennial medal, in keeping with a long tradition of past sponsorships.* This means that IBA-member banks will be the exclusive distribution points for official order forms for the Indiana bicentennial medal.

More good news: Minting of the bicentennial medal has begun, and prototypes promise a stunning collector’s keepsake. Designed by an Indiana artist, the medal features iconic Hoosier imagery on the obverse side, with our state seal inscribed on the reverse. The medal will be available in two sizes ‒ a smaller size of 1¾ inch diameter, and a larger size of 3 inches ‒ with both sizes available in antique bronze and limited-edition silver.

Bicentennial medal order kits will include instructions, a price list, order forms, promotional placards and an IBA logo for window display. Note that the IBA will not be sending the actual medals, because the medals themselves are to be processed and distributed by the state of Indiana. Therefore your bank will not be keeping inventory, collecting funds or shipping medals. Also forthcoming is an IBA website page with downloadable images for optional statement stuffers, posters and advertising. Additionally the IBA will provide a link to online ordering through the state of Indiana, which you may make available on your bank website.

It was on Dec. 11, 1816, that Indiana joined the United States of America. This year, as we enter into the excitement of the holidays, let us remember to pause and reflect on our rich blessings. It is a comfort to live and work in this great state, where Hoosiers have rightly earned a reputation for stability, sound principles and warm hospitality. We hope you will join the IBA in celebrating our state’s heritage by helping to make the bicentennial medal available to Hoosiers everywhere.

– S. Joe DeHaven

* One century ago, a young Indiana Bankers Association sponsored a centennial medal in celebration of Indiana statehood. Fifty years later, in 1966, commemorative sesquicentennial medals also were made available through IBA-member banks.

The Highway Funding Bill ‒ Compromises, Amendments and Possible Regulatory Relief

November 11, 2015

Happy Veterans Day to all who serve or have served. This great country, an experiment in democracy, continues to survive and thrive because of the sacrifices of millions of individuals who have answered the call to defend and serve her. Thank you for your service, and God bless you all!

Last week was a good week for the business of banking in our nation’s capital. The highway funding bill, which contained bank-related provisions in both the House and Senate versions, passed the House on Thursday, but the language that would have lowered the interest paid on capital held by Federal Reserve-member banks was overwhelmingly amended out. There will now be a conference committee to reconcile differences between the House and Senate versions of the bill, so we are still not out of the woods. However, in a positive twist of fate, also amended into the bill were some important banking regulatory relief measures. Among the 15 regulatory relief measures now included in the House version are the elimination of redundant privacy notice annual notifications, expansion of the 18-month examination cycle for qualifying banks, and equalizing of the SEC registration and de-registration thresholds for savings and loan holding companies.

In addition it was reported that Sen. Richard Shelby, chairman of the Senate Committee on Banking, Housing & Urban Affairs, met behind closed doors with select committee members about a compromise regulatory relief bill that presumably would replace the bill that Shelby had marshaled out of the committee last spring. Among those purportedly to have participated in this important meeting was Sen. Joe Donnelly of Indiana. Sen. Donnelly has been an untiring supporter of bank regulatory relief and has crossed over to vote with Republicans on amendments to the bill passed out earlier. Donnelly additionally has co-sponsored many individual bills that would provide much-needed regulatory relief to banks.

With all of this good news, the IBA is more optimistic regarding the passage of regulatory relief. There are concerns, however, regarding the amount of time available to pass anything in 2015. With few legislative days remaining in this calendar year, passage could slip into next year. Complicating matters is that 2016 is an election year, and a presidential election year at that. Historically little is accomplished in Congress during presidential election years, as congressional members are busy campaigning for both primary and general election victories, which siphons time away from Washington, DC. For this reason, presidential elections shine a bright light on the political process.

The other issue with this particular regulatory relief effort is that it is difficult to see a logical process for replacing the bill that has already passed the Senate Banking Committee with a compromise bill. There is no time to go back through the committee process, and there are few bills that a compromise could be attached to remaining to be voted on. Then there is the question of how the handling of a compromise attachment would be viewed in the House of Representatives. Clearly those of us who represent the banking industry legislatively, and those bankers who work hard to provide grassroots lobbying support, will need to remain vigilant throughout the remainder of 2015 if we are to achieve any degree of success. Yet I know how hard bankers work to serve their communities, and I believe that bankers will step up to the challenge to make 2016 a very Happy New Year.

– S. Joe DeHaven

One Obstacle Gone, but Massive Debt Remains

November 4, 2015

Remaining true to what he said during the IBA Annual Washington Trip, former House Speaker John Boehner was able to procure, along with Senate Majority Leader Mitch McConnell, a deal with President Obama that has now passed both the House and the Senate. This deal calls for a two-year budget and raising of the debt ceiling. The importance of this budget cannot be overstated. It should help calm the financial markets, by creating certainty that the federal government will not be forced to shut down and will not default on its debt payments. However, the budget also increases overall spending by $80 billion, which has subjected both Boehner and McConnell to criticism by the more fiscally conservative members of both Chambers.

Also true to his word, Boehner has officially resigned as speaker and as a member of the House, and the House elected Paul Ryan as its new speaker on Oct. 29. Interestingly, Ryan was one of the critics of the new deal reached ‒ more for the secretive atmosphere in which it was negotiated than for the content ‒ but he stands to be its biggest beneficiary. Essentially this deal removes the largest obstacle that he would have faced next year, allowing him the freedom to foster harmony within the House Republican caucus.

While this package is significant, yet remaining is an omnibus spending bill that needs to pass in December to set specific budget levels for a variety of government agencies within the guidelines of the overall budget bill. The omnibus spending bill is basically a combination of the various agency-level budgets. Without it, separate bills to fund each agency of the federal government would need to be passed.

This new budget marks an important event in modern history. Unfortunately it does nothing to lighten the heavy debt the U.S. government has saddled onto the backs of future taxpayers. Instead it could bring us dangerously close to $20 trillion in debt, and that figure does not count the unfunded liabilities of Social Security and other government obligations. At some point, there simply will have to be cuts to government programming, so that we can reduce our debt level over time. I am befuddled that we continue to add programs such as the Consumer Financial Protection Bureau and the Affordable Care Act, while we remain mired in debt. The time to go on a shopping binge is not while deep in debt and struggling to make ends meet ‒ whether you are a business, a consumer or a government.

We can all hope that Speaker Ryan, plus a new administration in 2017, will bring fresh perspective as to how to manage the federal government. We are in desperate need to institute more fiscally sound principles than what we have been allowing to occur for the past couple of decades.

– S. Joe DeHaven

Losing the Battle – and the War – Against Data Breaches

October 28, 2015

Recently the war between the retailers and bankers seems to be heating back up. Tension began years ago over the Durbin Amendment to the Dodd-Frank Act that forced the Federal Reserve Bank to set price rates for debit card interchange payments. When the Federal Reserve did set those rates, the retailers sued, claiming that rates were not set low enough. The Federal Reserve was successful in defending its decision. The retail industry and its biggest legislative fan, Democratic Sen. Dick Durbin of Illinois, are constantly picking at the scab over that loss.

That was followed by large data breaches at a variety of retailers over the past several years. Today the retailers are advocating for requirements that chip-embedded cards and PIN verifications be utilized for all transactions. Two concerns about this are missing from these self-serving arguments. First is that these are transaction safety guards. The huge losses that banks have primarily picked up the tab for have been data breaches into the systems of retailers, not transactions. Let’s get serious and fight the bad guys who are going after identity theft at the root of the data, not at the transaction level.

The second concern is that putting such rules in effect may preclude further research from occurring that could very well be more advanced than the chip and PIN standard. As a matter of fact, there is already much being done on other technologies that could be far more advantageous for all parties. One such advancement is tokenization, which assigns an algorithmic code to each transaction and does not store the card number at the transaction location. This seems to be a much better long-term solution.

However, the retailers are now putting on a full court press with the state attorneys general to send a joint letter to Visa and MasterCard to change their rules to require chip and PIN technology. I believe that this is tantamount to putting a Band-Aid on a six-inch knife wound. It may help a tiny bit, but it won’t close the wound. On Monday, the IBA partnered with the Indiana Credit Union League to submit a letter to Indiana Attorney General Greg Zoeller to share our views on several mischaracterizations being purported by advocates for the chip and PIN requirements.

As I have stated in the past, it is long past time that we argue about this with each other. Business, government and academia need to work together to foil the efforts of these modern-day thieves. The thieves are working full-time every day to steal information that they can sell to other bad people or to unethical governments, which use the information for ill-gotten gain. We have to face the fact that the cost of fighting this war is going to be very high for all of us. But much like the war on terrorism, we simply have to win it, whatever the cost.

In the meantime, the retailers keep picking these street fights, instead of joining with banks, government and academia to fight the war. Their distraction is preventing us from collectively finding real solutions to bring us all to victory.

– S. Joe DeHaven

Fighting the Good Fight Against Overregulation

October 21, 2015

Every 10 years the federal regulatory agencies are required by law to review regulations to determine if any are outdated, unnecessary or unduly burdensome. The law requiring this process is the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA). Ten years ago a few meetings were conducted, but nothing came from this process. This year skeptical bankers and advocates have found it difficult to muster enthusiasm for the process taking place, yet the regulators appear to be taking this process much more seriously. Several regional meetings have been occurring throughout the country, and a number of bankers have been invited to provide testimony at these outreach meetings.

On Monday one such meeting was held in Chicago. In perhaps the most positive presentation at these meetings by a regulator, Dr. Lael Brainard of the Federal Reserve Board highlighted a list of areas that the Fed believes “hold the greatest promise to reduce undue regulatory burden, especially for our community banks.” Gov. Brainard detailed opportunities in the following areas: regulatory reports; small bank holding company policy threshold; Community Reinvestment Act; Bank Secrecy Act/anti-money laundering; expediting and improving applications; appraisal thresholds; simplified capital for small institutions; stress tests for regional banks; the examination cycle; and the Volcker Rule. These are certainly important areas for consideration of regulatory relief. Included in this list are several areas in which the regulators state they have already taken some action, or are in the process of doing so.

A caveat that winds through some of these issues is that legislative action may be required. So far that has not worked very well. Getting Congress to agree on anything at this point has proven to be elusive at best and impossible at worst. We need look no further than the current conundrum regarding the bill for regulatory relief in the Senate. And even if the Senate comes to an agreement, will the House ‒ which has taken a completely different approach ‒ be willing and able to act upon the Senate version?

While I appreciate Brainard’s recent remarks, and I do believe that the regulators are making a much better effort to comply with both the letter and spirit of the EGRPRA process, I fear that little will result that will have a meaningful impact on banks. Even as these efforts are taking place to delve into the undue burden cast upon the banking industry, the Consumer Financial Protection Bureau (CFPB) has released its proposed increased data collection of Home Mortgage Disclosure Act information, which goes well beyond what was mandated by Congress. The CFPB apparently did not get the memo regarding the already existing regulatory burden that government has lavished upon the banking system, which is the very reason that the EGRPRA process was enacted.

The bottom line is that bankers will have to continue to demand relief from the current overregulation of the banking business and fight to keep Congress from enacting any new laws that add to that burden. Despite the EGRPRA process, bankers will also need to be on guard to keep the regulators from continually adding to the burden. Success, to a large degree, is in our hands. This week two bankers from Indiana testified at the Chicago outreach meeting: E.G. McLaughlin, president and CEO of United Community Bank in Lawrenceburg; and David Findlay, president and CEO of Lake City Bank in Warsaw. We thank them for investing the time and effort to speak up on behalf of banking at this important meeting.

– S. Joe DeHaven

Same Old ‘Same Old’ in Washington, DC

October 14, 2015

“The more things change, the more they stay the same.” This seemingly self-contradictory observation by French critic Alphonse Karr has been quoted to the point of cliché, as its meaning has been debated for the past 150+ years. It alludes to how our innate human instincts do not really change over time. Certainly, though, our means of addressing our instinctual needs have changed, as technological advances give us options never before imagined. For example the basic job of farming ‒ i.e. the business of growing crops or raising animals ‒ remains the same, but how farmers accomplish their job bears little resemblance to the past. When I was young, my grandfather still farmed with a team of horses!

Institutions have some of these same characteristics. Leadership has some of these same characteristics. Both endeavor to accomplish the same tasks or goals, but through constantly changing means. While some kinds of changes initially seem revolutionary, over time we adapt, and the change no longer seems like a big deal.

We are now seeing this phenomenon unfold before our eyes, as the U.S. House of Representatives is undergoing seemingly shocking change. Speaker of the House John Boehner unexpectedly announced his resignation a few weeks ago, setting off a guessing game as to who his replacement would be, and how that successor would affect the chain of leadership. Soon after, Kevin McCarthy, who as House majority leader holds the No. 2 position in the House leadership structure, announced he would seek the speakership. His announcement prompted most others to back away from seeking this coveted post.

Then an even stronger aftershock hit last week. Minutes before the Republican caucus was to determine who the new candidate would be ‒ McCarthy, presumably ‒ McCarthy himself halted the proceedings by declaring that he was withdrawing his name from consideration. His rationale was that he was not the right person for the job of pulling this fractious caucus together … though tongues have since been wagging about the “real” reasons.

Meantime Boehner has indicated that the vote for his replacement would be postponed to an undetermined date. He also has pledged to remain speaker until a replacement is selected. Thus the structure will remain in place until an orderly transition can occur. During the recent IBA Annual Washington Trip, when 35 Indiana bankers visited Mr. Boehner’s office, he provided us with a little history lesson. To the surprise of many, including myself, the role of speaker of the House does not have to go to a member of the House. The speaker can be anyone that the House members elect. Could this be that moment in history when a non-House member is elected? I doubt that will happen, but we may be closer than we have ever been to that occurring. Since being educated by Mr. Boehner, I have been noticing that some of the names being put forward as contenders are not current House members.

The more things change, the more they stay the same. Yes, the House is in for a significant change regarding whoever ends up being speaker. But after a few weeks, we will be back to wondering if Congress is going to do its work, or if the government will be shut down, or how the next crisis will be handled. Even at the highest levels of our government, the more things change, the more they stay the same ‒ but it will be interesting in the interim!

– S. Joe DeHaven


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