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Is the OCC on a Path to Greater Power?

December 6, 2016

Authors

Robert Klingler

Is the OCC on a Path to Greater Power?

December 6, 2016

by: Robert Klingler

bankthinkIn a recent American Banker BankThink article, Partner Dan Wheeler explores the possibility that the OCC could rise in stature, while the other banking regulatory agencies fall out of favor.  By largely staying out of Congress’ scrutiny and taking a lead on fintech regulation, Dan argues that the OCC is well positioned to obtain greater chartering and regulatory responsibility under a Trump administration.

Some regulatory agencies, such as the Consumer Financial Protection Bureau and Federal Reserve Board, appear ripe for more congressional criticism and even curbs to their authority under the incoming Trump administration. But one may be in relatively good position to have its authority expanded: the Office of the Comptroller of the Currency.

The OCC has stayed under

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CFPB Denied

November 11, 2015

Authors

Robert Klingler

CFPB Denied

November 11, 2015

by: Robert Klingler

Invoking memories of Apple’s famed 1984 Superbowl commercial, a group called the American Action Network aired an anti-CFPB spot during last night’s Republican presidential debate. If nothing else, the spot should encourage further discussion of the role and impact of the Consumer Financial Protection Bureau.

The spot certainly portrays the CFPB in an evil light that is sure to please many in the banking industry, but its broader impact is less certain. A well-written piece by the American Banker offers several reasons why the ad could backfire, not the least of which is the hyperbolic nature of (and shortcuts taken by) the spot.

And former FDIC Chair Sheila Bair seems to agree.

@ABWashBureau Not smart. This will solidify CFPB supporters and imply GOP is anti-consumer, which it isn't.

— Sheila Bair (@SheilaBair2013) November 10, 2015

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Extending Credit to a Bank Holding Company

September 2, 2014

Authors

Jerry Blanchard

Extending Credit to a Bank Holding Company

September 2, 2014

by: Jerry Blanchard

Over the past several years reports of someone extending credit to a community bank holding company were similar to sightings of the Yeti in the Himalaya, you might hear about it but you never actually saw one. The number of bank failures and the consequent insolvency of many bank holding companies has led to a natural reluctance on the part of many lenders to provide such financing. The losses that many lenders suffered on such loans has raised some interesting questions about the loans were structured to begin with. The typical loan documentation for such a credit usually has traditionally had only a few financial covenants. The obligation to maintain well capitalized status for both the bank holding company and the subsidiary bank has been the primary focus on the assumption (not altogether incorrect) that maintaining a strong capital base cures many sins. Other covenants might address the ratio of

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Commentary: The End of Community Banking?

June 29, 2010

Authors

Walt Moeling

Commentary: The End of Community Banking?

June 29, 2010

by: Walt Moeling

On June 29, 2010, Sarah Wallace,  chair of the board of directors of First Federal Savings and Loan Association in Newark, Ohio, authored a passionate opinion piece in the Wall Street Journal titled “The End of Community Banking.”  While I agree with many of Ms. Wallace’s points, I do NOT see the end of community banking in the foreseeable future.

I do think that we are going to see tighter regulations and tighter credit than we saw in the five years before the financial meltdown – 2002 through 2007.  Those five years were the culmination of a world wide expansion of credit and leverage that began in the US around 1980, so we really had a great run.  Nonetheless, by 2002, a good number of observers would argue that credit availability was running somewhat out of control.

As Mrs. Wallace suggests, we will have tighter rules, but they will

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Boards and Strategic Planning in a Challenging Environment

September 10, 2009

Authors

Walt Moeling

Boards and Strategic Planning in a Challenging Environment

September 10, 2009

by: Walt Moeling

Short-Term Planning for Recovery and Survival

(This post was authored by Walt Moeling and Dustin Hall.  A version of this post originally appeared in the August 2009 issue of the ABA’s Community Banker magazine.)

The grim economic prognoses we continue to hear about have an immediate impact in the bank board room. Boards must think about short-term planning for recovery and survival because virtually no bank is wholly immune from the current recession.  Although the problems may have started with residential real estate in the Sunbelt, they have gone much beyond that now, impacting banks throughout the country.

As a director you must plan for both long-term and short-term.  Long-term planning is tremendously important, and we hope to make it to the “long-term,” but short-term planning is critical today.

Short-term planning in this context deals with the reality of today’s marketplace.  The focus is

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Commentary: NYTimes Recognizes Community Banks

May 18, 2009

Authors

Robert Klingler

Commentary: NYTimes Recognizes Community Banks

May 18, 2009

by: Robert Klingler

The front cover of the May 17, 2009 issue of the New York Times Magazine asked “Are Small Banks the Future?”  As noted in the article, lending may have slowed at the largest banks, but at the other end of the financial system, there are 8,500 community banks, and most remain very strong.

In the midst of the worst banking crisis since the Great Depression, community banks have generally fared well. That’s because they typically shunned the lending practices that led to high default rates. They rarely participated in the securitization of loans, credit-default swaps and other overvalued financial products that put the global financial system in crisis. Instead, they stuck to the fundamentals. They considered the character and history of their borrowers. They required collateral. Without community banks, the current financial crisis would be a lot worse.

The focus of the mainstreet press, and the Treasury Department,

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Commentary: Demonstrating a Bank is Using TARP Capital to Lend

January 15, 2009

Authors

Walt Moeling

Commentary: Demonstrating a Bank is Using TARP Capital to Lend

January 15, 2009

by: Walt Moeling

One issue that seems to be gaining traction is the need for banks to show how they are using TARP Capital, with a strong preference for the banks to be using TARP Capital to make loans.  While the fungibility of bank capital makes it virtually impossible to directly tie any particular dollar of capital with any particular dollar lent, that fungibility also gives great leeway to community banks to demonstrate the lending impact of TARP Capital.  Despite the political hot potato, we expect very few, if any, community banks to be criticized for their use of TARP Capital funds.

We do not believe that TARP Capital should fundamentally change the way in which bankers run their banks.  Solely because they have TARP Capital, banks should not approve loans that they otherwise would turn down.  However, any bank with additional capital, which TARP Capital provides, is in a better position to

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Commentary: Big Picture Thoughts on Applying for TARP Capital

November 23, 2008

Authors

Walt Moeling

Commentary: Big Picture Thoughts on Applying for TARP Capital

November 23, 2008

by: Walt Moeling

Whether to apply for or accept TARP Capital is a decision that each bank needs to make individually depending on its own markets and circumstances.  However, as explained below, we believe each bank needs to prepare a realistic, worst-case scenario for the next three years.  Unless your bank’s capital will remain strong, we think you should apply for TARP Capital.

In three years, your bank will likely be in position to redeem the TARP Capital.  If that’s true, then the TARP Capital will have served as an inexpensive insurance policy that went unused, and you won’t be subject to any further government restrictions.

On the other hand, it is possible that, in three years, the financial condition of your bank makes you unable to redeem the TARP Capital.  In that event, it is very clear that you needed the TARP Capital.

With only these two scenarios, we believe almost every bank is

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Commentary: Reputation Risk from Participation

October 30, 2008

Authors

Walt Moeling

Commentary: Reputation Risk from Participation

October 30, 2008

by: Walt Moeling

The ABA has noted that some banks are concerned with the reputational risk of participating in a bail-out.   While some customers may have this concern, it does not change our belief that all eligible banks should strongly consider participating.   Having said that, we also think banks should be prepared to deal with this issue and should be proactive with their customers.   The emphasis should be on supporting the Government’s program to strengthen the entire banking system in order to enable banks to continue supporting their local community through this economic downturn.  The program is designed to earn a return for the Government (and thus the taxpayer), and is thus not a “bail-out” at all.   The program is for healthy banks, not to save problem banks.  Customers should be comforted by the facts.

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