Your Future. Our Focus. Iowa Banks.
Iowa Bankers Association Volume 28, Issue 21 October 23, 2009
House Financial Services Committee considers bill to create CFPA
T he Obama Administration’s proposed
Consumer Financial Protection
Agency is again the focus of debate in
placed on traditional banks that never
made a subprime loan.
Washington as the House Financial “Thanks to months of contacts by Iowa
Services Committee began considering the bankers and others, Financial Services
CFPA bill (H.R. 3126) last week. Committee leaders have improved
H.R. 3126. Yet, the bill remains
Thanks to the efforts of Iowa banks and severely flawed,” said Iowa Bankers
bankers across the country, several changes Association (IBA) President and CEO
have been made to the original proposal John Sorensen. “This all-powerful new
since it was released in June. Committee agency would disperse rules with little
Chairman Barney Frank (D-Mass.) to no regard for the financial viability
heeded industry concerns by eliminating of the institutions they oversee. Once the bill is reported out of
troublesome provisions requiring that banks offer government- committee, it will be important for Iowa bankers to communicate
designed “plain vanilla” products and that communications with their concerns to our Congressional delegation.”
consumers be “reasonable.” Other industry concerns that Frank
addressed included: Chairman Frank has indicated the CFPA legislation will be
requiring that the CFPA and safety and soundness regulators folded into the larger regulatory reform bill, which the committee
coordinate bank exams; is taking up over the next few weeks, before going to the House
providing a more explicit mandate to focus on the nonbanks floor. In the Senate, Banking Committee Chairman Christopher
that were the primary cause of the financial crisis; Dodd (D-Conn.) is supporting the full CFPA proposal from the
and providing a less burdensome CFPA funding structure. Administration, and no committee action is yet scheduled.
Examination Authority Preemption Debate Continues
Last week, the committee approved an amendment that would As of Wednesday, Oct. 21, dozens of amendments to the bill were
allow banks with $10 billion or less in assets to be examined by pending, including one by Reps. Mel Watt (D-N.C.) and Dennis
their primary regulator for compliance with CFPA rules, rather Moore (D-Kan.) that would address the preemption issue. The
than by CFPA examiners. The bank regulators also would have Watt-Moore amendment appears to be an improvement over
primary enforcement authority. However, all banks would still be the language in the original bill that would eliminate all federal
subject to rules issued by the CFPA, and the new agency would preemption in the consumer area for national banks and savings
have back-up exam authority. The banking industry has advocated associations.
that all banks’ prudential regulators should have examination
and supervision authority for both safety and soundness and The preemption issue was also the focus of a news briefing in
consumer protection. Des Moines last week featuring U.S. Secretary of Agriculture
Tom Vilsack, Iowa Attorney General Tom Miller and leaders of
The banking industry believes Chairman Frank’s draft addresses AARP who urged Congress not to strip state enforcement from
many issues, but there are serious concerns about the bill’s impact the proposed CFPA.
on preemption of state and local laws; the vast, unchecked power
of the new agency; and the regulatory burden that would be continued on page 4 — see “Regulatory Reform”
Page 3 Page 3 Page 8
Register for IBA’s Don’t miss the Employers see
2010 Mid-Winter IBA’s Legislative results using
Management Preview Meeting Iowa Bankers
Conference in your area Career Center
A unique perspective on health-care reform
By Clifford d. Gold include medical underwriting to sift out people with previous or
current medical problems, so-called “pre-existing conditions,” or
President, Cliff’s Edge Strategies LLC those who have a history of incurring large medical expenses. As
long as all insurers must accept these individuals, thus leveling the
S o much misinformation is being bandied about in the health
care and health insurance reform discussion that the public
cannot possibly sift through the rhetoric to ascertain the truth.
playing field, the insurance industry should herald and embrace
this reform. But the rest of us have to understand that bringing
these individuals into the insurance system will raise the premium
Reform is needed badly in both systems. But the issue is so critical rates for everyone else, however marginally. And to keep rates
that the public deserves the truth. from being affected to a great extent, a broad coverage mandate
is critical to ensure that the young, healthy people who opt not to
After spending 30 years in the health-insurance business and the buy insurance today are integrated into the overall system. This is
past a year-and-a-half as a management consultant, I believe I have a far preferable way for paying for the new people in the insurance
a unique perspective on the debate over reforming the health-care system than raising taxes on everyone.
This brings us to the main point of contention about health-care
So let’s look at some facts, starting with the uninsured. While the reform: the so-called “public option.” Assuming everyone who can
U.S. Census reports 45–47 million uninsured Americans, the afford coverage is required to buy it; that everyone who can’t is
facts tell an interesting story. The Census Department admits its covered by the government; and that the private sector is required
number is likely overstated because it includes about 9 million to take all eligible applicants, there is no logical reason to inject a
people —about 20 percent—who are not U.S. citizens. None of the government option into the health-insurance market. Here’s why:
reform proposals purports to cover them, which means the number First, it would make the government both regulator and competitor,
of Americans who are uninsured is no more than 38 million. an inherently unfair infiltration into a capitalistic system. The
Of these, more than one-third, about 12–16 million people, are government program would have too many built-in advantages
currently eligible for Medicaid, the State Child Health Insurance to foster fair and effective competition. The government programs
Program (S-CHIP) or other government programs, but are not wouldn’t need to build profit margins into rates and would probably
enrolled. It is a great irony that the same government many people have lower marketing expenses, such as broker commissions and
want to entrust with a greater role in health care can’t find or sign promotion costs.
up the people who already qualify for existing comprehensive, low- It would, however, have to build financial reserves for claims, or
cost, taxpayer-supported coverage. Thus, the true number of citizens else it would run into the same enormous problem it has today
who are either uninsured or aren’t eligible for existing government with Medicare, which has billions of dollars in unfunded liabilities.
programs is far smaller than we have been led to believe. And of Medicare may appear to be a well-run, low-cost system but, when
those who remain, close to 40 percent reside in households making the unfunded liabilities are taken into consideration, it is financially
more than $75,000 a year and, at least theoretically, have some insolvent by any regulatory standards. Plus, its rate of cost inflation
financial means to pay for at least high-deductible, catastrophic mirrors the private sector.
health insurance to protect them from debilitating health-care costs.
These are people who might be termed “uninsured by choice.” But the main reason the government-sponsored option would have
a price advantage over the private sector is because it would pay
This latter group, which also includes many young people who hospitals, physicians and other health professionals at levels at or
think themselves invulnerable from catastrophic illness, is among close to Medicare, which pays far less than it costs providers to
the targets of those who want to mandate individual coverage. provide care. And this problem is worse in Iowa than in almost any
And it makes sense. Like automobile insurance, which is required state in country.
in most states, every individual who can afford coverage could or
should have the responsibility to buy at least a basic level of health Today, that under-funding from government is shifted to the private
insurance so the rest of our citizens don’t bear an unfair burden. sector, accounting for 10 to 15 percent of all private insurance
For the 8–14 million Americans who truly can’t afford even a basic costs. The major commercial insurance companies in the state pay
level of insurance, our society may indeed be a moral obligation 140 percent or more on average than Medicare to compensate for
to provide it. These people are disenfranchised just as the elderly government under-funding. The more people who sign up for a
and poor were in the 1960s when the architects of Medicare and government “public option,” the worse the under-funding problem
Medicaid created these “social” programs as part of President becomes. And with uncompetitive premium rates, there will be a
Lyndon Johnson’s Great Society. smaller private insurance sector, thus intensifying the cost shift or
making the plight of providers even worse.
Indeed, barriers need to be knocked down that preclude those who
can afford private health insurance from getting it. Those barriers continued on page 5—see “Health-care Reform”
Register for IBA’s 2010 Mid-Winter Management Conference
R egister now for the Iowa Bankers Association’s 27th annual
Mid-Winter Management Conference. The conference will
take place Jan. 17–19, 2010, at the Sheraton Steamboat Resort 2010 Mid-Winter
in Steamboat Springs, Colo. The conference will feature industry ManageMent ConferenCe
experts, timely seminar topics and a chance to hit the slopes. With
educational sessions, meetings with your peers and the beauty of
a Colorado winter, what better way to begin a new year?
Speakers include Beau Gamble, senior shareholder of the Davis
Brown Law Firm in Des Moines, whose presentation will
focus on “Mergers & Acquisitions in a Challenging Regulatory
Hal Oswalt, president & CEO of Brintech, will present
“Expanding Opportunities in Non-Interest Income.” As 2010
begins, the banking industry continues to navigate both a class Steamboat Ski Resort as its backyard, just steps away from
challenging economy and dynamic regulatory environment. This the chairlift and the Silver Bullet Gondola. Enjoy alpine skiing,
session will focus on overcoming obstacles, maintaining current snowboarding and telemark skiing in the area’s famous champagne
levels and generating new sources of non-interest income. powder. Then enjoy a workout in the resort’s fitness center and
steam room or relax in the outdoor heated pool or one of seven
Attendees will also have the chance to meet Billy Kidd, a legend of rooftop hot tubs.
American skiing who earned a silver medal in the 1964 Olympics.
He now spends the winter as Steamboat’s Director of Skiing. More information and registration materials are included in
this week’s Exchange mailing. The registration materials are also
Guests and families are welcome to attend the conference and available on the IBA Event Calendar at www.iowabankers.com.
enjoy all that Steamboat has to offer. Nestled in the Rocky For more details, contact the IBA’s Molly Lydon at (800) 532-
Mountains, the Sheraton Steamboat Resort claims the world- 1423 or e-mail firstname.lastname@example.org.
Don’t miss the IBA Legislative Issues Preview Meeting in your area
P lan to attend your IBA Group’s annual Legislative Issues
Preview Meeting hosted by the Iowa Bankers Association in
November. The meetings will take place across the state in each
IBA Group from Nov. 9 through Nov. 23. The meetings provide
an opportunity for IBA members and their state legislators to
learn more about the Association’s legislative agenda prior to the
beginning of the legislative session.
The meetings will take place:
Monday, Nov. 9 ............. Burlington (Group 11)
Tuesday, Nov. 10 ......... Council Bluffs (Group 5)
Thursday, Nov. 12 ........ Marshalltown (Group 7)
Monday, Nov. 16 ......... Johnston (Group 6) For a detailed agenda with meeting times and locations, refer to
Tuesday, Nov. 17 ......... Cherokee (Groups 1 & 12) this week’s Extras supplement or visit the IBA website at www.
Wednesday, Nov. 18 ...... Fort Dodge (Group 2) iowabankers.com.
Mason City (Group 3)
Thursday, Nov. 19 ......... Coralville (Group 8) For more information on the upcoming Legislative Issues Preview
Monday, Nov. 23 ........... Manchester (Group 4) Meetings, contact the IBA’s Senior Vice President of Government
Relations Sharon Presnall or IBA Legal Counsel Bob Hartwig at
Topics of discussion will include federal deductibility, state (800) 532-1423.
budgeting practices, property tax reform, the expansion of credit
union powers, right to work and prevailing wage, among others.
October 23, 2009 3
iBmC hosts foCus GrouP meetinG
Members of the Iowa Bankers Mortgage Corporation
(IBMC) Board of Directors met on Tuesday, Oct. 20 and
then joined mortgage officers from their institutions for a
focus group meeting to discuss the significant changes
challenging the mortgage industry. IBMC President Dan
Vessely welcomed the group and provided an industry
update. Other presentations focused on technology,
regulatory changes, compliance issues and loan servicing/
modifications. An open forum also provided a chance for
bankers to share concerns and questions with IBMC staff.
“Regulatory Reform”— continued from page 1 Sen. Dodd, prompted the ABA and Independent Community
Bankers of America (ICBA) to send a letter to the leaders of
“This is the most important consumer protection legislative issue the Senate and House banking committees expressing strong
of our day,” Attorney General Miller said. “Preserving a proper opposition to proposals to consolidate the regulatory functions
role for the states is crucial if consumers are going to be protected of the federal banking agencies into a single entity. While changes
from a repeat of the banking and mortgage abuses we’ve seen in in the regulatory system are needed, they said, a single federal
recent years.” banking regulator is not the answer.
Miller argued that states are often in a better position than “A single regulator is only good when it is right. When wrong,
the federal government to see consumer protection needs and the outcome could be catastrophic,” ABA and the ICBA said.
regulatory gaps. They emphasized that the current system of bank supervision,
while complex, provides a healthy check against any one regulator
“When we are excluded from enforcement against national neglecting its duties.
banks, we can help only citizens who happen to do business with
a state-chartered lender—even if national banks are engaging in Regulatory consolidation, on the other hand, would undermine
the exact same practice. All consumers should be treated the same the dual banking system, which has served the nation well.
regardless of how their bank is chartered,” he said. Experiences in nations such as Great Britain show that
consolidation would put state banks at a disadvantage, leading
Iowa’s banking industry sees the issue differently. In a message them to shift to a federal charter or leave the market entirely, the
to members of Iowa’s Congressional delegation last week, IBA trade groups said.
President and CEO John Sorensen reenforced the concerns of
Iowa banks with regard to the impact the CFPA could have on “Unlike any other country, we have a broad range of small, mid-
the ability of banks to continue to effectively serve Iowans. size and large banks that meet different market needs,” ABA and
the ICBA said. “We believe strongly that this diverse system would
“Almost every policymaker I talk to agrees with the premise be greatly undermined by the creation of one, large regulatory
that community financial institutions did not contribute to the agency.”
financial crisis. Yet, the move to add another layer of regulatory
burden to their already significant oversight continues. These ABA proposal would end “too big to fail”
institutions are already dealing with the double whammy of On Oct. 29, a House Financial Services Committee hearing will
economic challenges facing their loan customers and the cost to discuss proposals to resolve institutions that pose a systemic risk.
recapitalize the Deposit Insurance Fund,” Sorensen said. The Obama administration is expected to release a revised plan
on systemic risk and resolution authority that will be discussed
Sorensen added that he has recently received positive feedback at the hearing. Earlier this month, ABA submitted a systemic
from groups representing Iowa agriculture and commercial real risk proposal to policymakers that would result in a “controlled”
estate in Iowa. “In both cases, they commended Iowa banks for bankruptcy of systemically important institutions and an end
their understanding and willingness to help them through the to “too big to fail.” ABA’s plan meets five important criteria: It
economic downturn. Their only fear was that federal regulators creates a resolution regime that works in a full-scale financial
may force these banks to act differently.” crisis; protects the taxpayer; ends too big to fail; is fair to smaller
financial firms in terms of competitiveness and costs; and does
Trade groups oppose creation of a single regulator
not impede financial markets.
Meanwhile, proponents to create a single bank regulator, including
IBA leaders support steps to improve Iowa’s budgeting practices
T he same day Iowa Bankers Association’s Legislative Committee
and Board were meeting to recommend changes to Iowa’s
budgeting process, the state Revenue Estimating Conference
to a seven year moving average that includes a five year look
back of actual revenue plus the REC’s December estimate for
the current and upcoming fiscal year, and
(REC) was meeting to downgrade Iowa’s available revenue for the 2. Statutory requirement that the use of one-time revenue
current fiscal year by $415 million dollars. cannot be used for ongoing expenses. State Auditor Vaudt
has been very critical of this practice by the Legislature and
As a result of the new revenue estimate by the REC, Iowa Gov. Governor over the past several years.
Chet Culver announced a 10 percent across-the-board budget
cut. The bulk of the state’s budget goes to fund the school aid The IBA Legislative Committee and Board took positions on a
formula, so roughly $280 million of the cut will get shifted back number of other issues which will be discussed at the IBA Fall
to local school districts and or property tax payers. Legislative Issues Preview Meetings taking place across the state
Culver indicated he would not raise taxes on Iowans, but because Monday, Nov. 9 ............. Burlington (Group 11)
schools districts have property tax levy authority he also called on Tuesday, Nov. 10 ......... Council Bluffs (Group 5)
Iowa’s 360 school districts to make budget cuts and use existing Thursday, Nov. 12 ........ Marshalltown (Group 7)
cash reserves rather than raise property taxes. According to Culver, Monday, Nov. 16 ......... Johnston (Group 6)
local school districts have close to $400 million in cash reserves in Tuesday, Nov. 17 ......... Cherokee (Groups 1 & 12)
aggregate although the amount varies significantly from district Wednesday, Nov. 18 ...... Fort Dodge (Group 2)
to district. Mason City (Group 3)
Thursday, Nov. 19 ......... Coralville (Group 8)
At its meeting on Oct. 7, the IBA Board and Legislative Monday, Nov. 23 ........... Manchester (Group 4)
Committee voted to support legislation that would help create
incremental solutions to improve Iowa’s budgeting practices. The A complete schedule is also available in this week’s edition of
recommendations include: Extras and on the IBA website at www.iowabankers.com.
1. Change how the REC number is set from a future guesstimate
“Health-care Reform”—continued from page 2 proposed legislation. Medicare benefits will not be reduced under
The financial viability of hospitals, clinics and the rest of the health- any proposals. And no one can guarantee that people will be able to
care system would become tenuous at best. keep their current insurance if there is a government option because
employers, the main source of health care to workers, always have
The fear that a government option will ultimately lead to a system the right to opt out of providing insurance, changing carriers or
where virtually everyone will be covered by the government is real; (potentially) to convert to the public option.
it may be inevitable. The private insurance sector that does remain
will likely only sell supplemental insurance policies similar to those It may indeed be time to reform health care, but it must be done
under Medicare. Under the new public health insurance system, responsibly. Everyone should have a basic level of coverage and
supplements would most likely be developed to cover deductibles, protection from the potentially catastrophic costs of care. We
co-insurance and/or additional benefits not covered under the need reform that maintains the balance between government and
“public option.” privately-funded health care that has delivered a highly-accessible,
technologically-advanced system to almost all Americans. Everyone
The “new health care” will most likely be comprised almost agrees that care needs to be less variable. It surely has to be of higher
exclusively of government-defined programs: Medicare for the quality. And it must be far more cost-effective and efficient than it
elderly; Medicaid for the poor; S-CHIP for uninsured children; is now. But it also must maintain an appropriate balance of public
and the public option for almost everyone else. Medicare, Medicaid and private health insurance.
and S-CHIP will continue to be funded almost exclusively through
taxes on all of us, while private premiums and new taxes will fund
About the author
the public option at a cost of $1 trillion or, almost certainly, more.
Cliff Gold spent 30 years as a senior executive at Wellmark, having
Employers will either opt out of the system or, in order to attract
served before his retirement in May 2008 as Group Vice President
and keep employees, subsidize some of their employees’ premium
of Marketing and Business Strategy, CEO of the Wellmark Health
cost and/ or offer to contribute toward supplemental insurance in
Plan of Iowa, Chairman and CEO of First Administrators, Inc.,
order to remain attractive to workers.
and Executive Director of The Wellmark Foundation. He is now
The intense rhetoric of the current health-care debate has led to President and CEO of Cliff’s Edge Strategies, Inc., a management
misinformation on both sides. There are no “death panels” in the consulting firm.
October 23, 2009 5
iBis hosts meetinG with university
of iowa risk manaGement students
On Friday, Oct. 2nd, Iowa Bankers Insurance & Services,
Inc. (IBIS) hosted a group of students from the University
of Iowa’s Vaughan Institute of Risk Management and
Insurance. The students participated in a meeting with IBIS
staff members to learn more about the relationship between
banking, risk management and insurance and about the
services of the Iowa Bankers Association and its insurance
operations. IBIS President Merritt Krause said IBIS was
pleased to partner with the University of Iowa to provide
the opportunity to future business leaders.
FDIC hosts first meeting of Community Banking Advisory Committee
A t the first meeting of the FDIC’s new Advisory Committee
on Community Banking, discussion focused on the impact
of the financial crisis on community banks. The first meeting of
The Advisory Committee was formed to provide the FDIC with
advice and recommendations on a broad range of policy issues
with particular impact on small community banks throughout
the new committee—which was established by the FDIC Board the nation, and the local communities they serve.
in May—took place on Oct. 15.
The committee is comprised of 14 community bankers from
Other issues addressed included regulatory reform proposals across the country along with Dr. Timothy Koch, president of the
under consideration by Congress and their effect on community Graduate School of Banking at Colorado, who is the committee’s
banks, the impact of FDIC supervisory proposals on these banks, only member from academia. Dr. Koch is professor of finance at
and community banks’ perspectives on funding the FDIC’s the University of South Carolina’s Moore School of Business and
Deposit Insurance Fund. has served as President of GSBC since 2001 where he also teaches
the advanced-level Asset-Liability Management class.
“I was extremely pleased with the robust discussion among our
committee members on issues that are so critical to both the The committee will meet at least two times a year with Members
FDIC and our nation’s community banks,” said FDIC Chairman serving a two-year term. More information on the Advisory
Sheila C. Bair. “The committee members voiced a number of Committee on Community Banking is available online at http://
interesting ideas that they will pursue.” www.fdic.gov/communitybanking/index.html.
FDIC offers deposit insurance coverage seminars via teleconference
T he Federal Deposit Insurance Corp. (FDIC)
is offering free seminars on deposit insurance
coverage. The seminar provides a comprehensive
Each seminar will begin with a 100-minute audio
presentation linked to a PowerPoint presentation
that can be downloaded from the FDIC’s web
overview of the FDIC’s deposit insurance rules, site at www.fdic.gov. A question-and-answer
including important changes enacted in 2008 period with FDIC deposit insurance coverage
and in 2009. subject matter experts will follow.
The seminars will be offered Wednesday, Nov. 18 Persons wanting to participate in the seminars
and Wednesday, Dec. 9. The seminars are open must register at least two business days before
to employees and officers of all FDIC-insured the event. At the conclusion of this process, the
banks and savings associations and are ideal participant should receive an RSVP e-mail
for bank employees who open deposit account confirmation, along with the PIN required to
products for their customers as well as employees join the teleconference. For complete registration
who discuss deposit insurance coverage with details go to: http://www.fdic.gov/news/news/
their customers. financial/2009/fil09046.html#body.
Credit unions’ $2 billion tax subsidy often benefits the affluent
New study is the first to connect customer income and relative value of rates CUs offer
T he nation’s credit unions receive a federal income tax
exemption amounting to approximately $2.0 billion a year,
a subsidy that benefits affluent customers more often than those
Credit unions’ service to modest-income households varies greatly
among individual credit unions, Kelly said. The study examined
the nation’s nearly 8,000 federally insured credit unions ranging
with average incomes, according to a new study released Oct. 20th in asset size from less than $1 million to $40 billion from all
by the Prochnow Educational Foundation, the research arm of geographic locations.
the Graduate School of Banking at the University of Wisconsin-
Madison. Past studies, including research by the U.S. Government
Accountability Office (GAO) in 2006, have also found that credit
Credit unions are non-profit, income tax-exempt cooperatives. unions lag in serving people of modest means.
Evaluation of the law shows that the sole purpose for the exemption
is a legislatively defined social mission: “to serve people of modest The Prochnow Educational Foundation research differs in the
means.” scope of the project and the information studied. Over two years,
Kelly and his researchers examined 2007 data for six categories of
“Credit union leaders often point out that an important benefit loans and five types of savings accounts, as well as data from the
to members are lower rates on loans and higher rates on savings,” Federal Reserve’s 2007 Survey of Consumer Finances.
said lead researcher William A. Kelly, Jr. “However, the results
show that any benefits offered do not go to especially modest- “While there have been numerous political studies on the role and
income households.” scope of credit unions, the PEF Board discovered that there had
not been an academically based research project on how credit
The study segments credit union members into five income unions have actually used their tax subsidy to serve the needs of
groups and measures the relative dollar value of benefits to those those individuals with modest means,” said Harry J. Argue, the
members. According to the study: former president and CEO of the Graduate School of Banking
61 percent of credit union benefits go to households with and the Foundation who initiated the research.
incomes over $95,000;
29 percent go to households with incomes of $35,000 to Iowa Bankers Association President and CEO John Sorensen
$95,000; and commented on the significance of the new research.
10 percent go to households making less than $35,000.
“The Prochnow study adds to the volume of research exposing
“Because taxpayers are subsidizing credit unions, the issue is, are the credit union industry’s complete disregard for their tax-
credit unions serving modest-income people?” Kelly said. “We exempt purpose. We’ll continue to urge lawmakers to hold them
found that credit unions as a group benefit the upper end of the accountable by reducing the tax and regulatory benefits for those
middle-income spectrum much more than the lower end, and that who stray from their public mission,” said Sorensen, who also
individual institutions vary a great deal among themselves, with serves as a Trustee of the Graduate School of Banking at the
exemplary to lackluster service to those with modest incomes.” University of Wisconsin-Madison.
In his policy analysis, Kelly concludes, “Taxpayers would benefit The complete study is available online at www.gsb.org/research.
from a policy that required credit unions to pay income taxes
as do other businesses, including cooperatives. However, the tax
should include tax credits that could offset the tax and leave the
The complete study (“An Economic Policy
full subsidy, depending on how well a credit union carries out its
mission.” Analysis of the Tax Subsidy for Credit Unions “
Kelly points out that there is no general tax exemption for by William A. Kelly, Jr.) is available online at:
cooperatives in the United States. In fact, credit unions and other
financial cooperatives in other countries pay income taxes. www.gsb.org/research
Kelly, now a professor of economics and finance at Grinnell
College in Iowa, is a former senior economist for the Credit
Union National Association (CUNA) and the previous director of
Center for Credit Union Research at the University of Wisconsin-
October 23, 2009 7
IBA to make new Employment Application available in November
T he Iowa Bankers Association (IBA)
will soon offer a newly-redesigned
employment application available for
and in an electronic file format (fillable
PDF form). The Applicant Tracking
form has also been revised and will now
The IBA’s Winnie Petersen will be
handling all order requests for the new
employment application. To order, please
human resources or hiring personnel at be sold together with the Employment e-mail email@example.com or
Iowa banks. The new form—which will be Application. call (800) 532-1423, ext. 4310 and follow
available by Nov. 2nd—has been updated the instructions below:
to accommodate current employment law Pricing of the new Employment If ordering paper forms, please
and has been approved by our employment Application (including Applicant Tracking include the number of packs of
attorney. form) is as follows: forms you wish to order (1 pack =
50 Employment Applications + 50
Some of the main changes to the form Paper Forms (packs of 50) Applicant Tracking forms)
include: If ordering the electronic file, please
1 - 4 packs $39.00/pack
Addition of e-mail address in the include your e-mail address and
“Personal Data” section 5 - 9 packs $35.00/pack number of employees at your bank.
“Dates attended” has been removed in 10+ packs $30.00/pack (If you have multiple bank locations,
the “Education” section please include the TOTAL number
Redesigned “Work History” section Electronic File (one-time charge based of employees at all locations). If you
Addition of foreign language and on number of employees bank has at submit your order prior to Nov. 2nd,
updated computer software programs the time of ordering) the electronic file will be sent to you
in the “Skills” section Less than 100 employees $50.00 on or before Nov. 2nd.
100 – 249 employees $80.00
The Employment Application will be Direct questions to the IBA’s Winnie
available in two formats: a printed form 250 – 399 employees $120.00 Petersen at (800) 532-1423, ext. 4310.
(available for purchase in packs of 50) 400 or more employees $150.00
Employers see results using Iowa Bankers Career Center
S ince being launched in February of 2009, the Iowa Bankers
Career Center has produced results for employers and job
seekers in the banking industry. The new online service provided
by the Iowa Bankers Association (IBA) is designed to help Iowa Apply Button Clicks 8.44 44 709
banks streamline their hiring process. Applications 3.12 18 262
Sent in a Job Agent 9.82 22 825
Job activity statistics show that Career Center users are seeing Sent by E-mail to a Friend 1.51 6 127
results. Since February, 71 registered employers in Iowa have posted
a total of 84 jobs on the Career Center. Each job listing features
Both members and non-members can use the Career Center
a job description along with employer information, requirements
to reach qualified candidates, though IBA members receive
and a map showing the location of the job opportunity.
discounted pricing on job posting packages. Employers can
submit job listings online, search for qualified candidates based
Since February, each job posting received an average of 323.18
on specific criteria and create an online resume agent to e-mail
views by job-seekers. The highest number of views for a single
qualified candidates daily.
job posting was 864. Each job posting also received an average of
3.12 applications. The highest number of applications for a single
For job seekers, the Career Center provides a free service to
job posting was 18.
qualified candidates wishing to learn more about employers and
jobs in the banking industry in Iowa and beyond. Job seekers can
Since February, employers have posted 84 jobs on the Career
view available jobs online and even create a search agent to provide
Center and 262 applications have been made to those job
e-mail notifications when job postings match their criteria.
listings. Currently, 153 resumes have been posted by individuals
potentially seeking positions. Career Center users are also using
The Iowa Bankers Career Center is available online at http://
the system to send job postings to friends via e-mail with the click
careercenter.iowabankers.com or visit www.iowabankers.com
of a button.
and click on “Career Center” in the Quicklinks menu.
Reg. GG — Are you ready for this?
By dodie Bauman, CrCm
Compliance Manager, Iowa Bankers Association
W e believe the mandatory compliance date for the Unlawful
Internet Gambling Enforcement Act will soon be here—
Dec. 1, 2009. However, Congress continues to petition the
merchant card services, ACH or wire
services. The following sample notice
is merely a suggestion to satisfy the notice requirement, since no
Treasury and the Federal Reserve Board (FRB) to delay for one model notice is provided in the regulation.
year the scheduled Dec. 1 implementation of the regulation.
House Financial Services Committee Chair Barney Frank sent Effective Dec. 1, 2009, [Insert Bank Name] is obligated to
yet another letter on Oct. 1st to the Treasury and FRB expressing comply with the Unlawful Internet Gambling Enforcement Act
concerns that enforcing the “flawed” rules in two months would of 2006, which prohibits proceeds of illegal Internet gambling
put “an unreasonable burden on regulators and the financial from being processed through commercial deposit accounts, or
industry at a time of economic crisis.” via wire transfer, ACH or other funds transmission.
You agree that such transactions will not be conducted through
However, until we hear otherwise, we must approach December your account, and that you will notify the Bank should your
1st under the presumption that compliance with Reg. GG is account be used for Internet gambling of any kind. Please be
mandatory as of that date. The final rule is much improved advised that should the Bank discover your account is being used
from the proposal, but still requires depository institutions, for such restricted transactions, we may terminate your access to
participants in the ACH and wire networks, and institutions that certain payment systems and/or close your account.
offer merchant charge and credit card programs to implement
policies and procedures to prevent unlawful Internet gambling To assist members in their efforts to comply with UIGEA, the IBA
transactions from being processed through commercial customers’ compliance department has drafted and posted to the Compliance
accounts. page of the IBA website a sample “Unlawful Internet Gambling”
policy, found under “Bankers Compliance Resources” at: http://
Fortunately, Reg. GG covers only commercial customers and www.iowabankers.com/aspx/iba/publications.aspx?snid=125.
transactions in commercial accounts. In addition, the final rule
applies only to “restricted transactions” – those that represent In addition, the sample “Customer Due Diligence – Risk
betting or wagering conducted via unlawful Internet gambling. Rating Form,” also available on the IBA website under “Bankers
Compliance Resources” as a Bank Secrecy Act document, has
Unlawful Internet gambling is defined, broadly, as placing, been updated to include several new due diligence questions when
receiving, or otherwise KNOWINGLY transmitting a bet or opening commercial accounts: a description of business activities,
wager by any means which involves the Internet – and where the state in which the business is established, types of financial
such bet or wager is unlawful under federal, state or tribal law. services expected to be used and whether the business engages
In Iowa, that includes nearly every bet or wager that is placed, in online gambling transactions. (http://www.iowabankers.com/
received or transmitted via the Internet. UserDocs/Customer_Due_Diligence_-_Risk_Rating_Form.doc)
Types of transactions covered by the final rule include: Feel free to use these tools and edit them as needed to fit the bank’s
ACH credits and debits; products and procedures. As always, before implementing any of
Incoming wire transfers; these samples, consult your bank’s legal counsel for additional
Receipts in merchant card programs; guidance.
Deposits to accounts made by check; and
For OPERATORS of money transmission services, both The final rule can be found at:
incoming and outgoing transmissions. http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=1b6
A notice to existing commercial customers must be delivered prior node=12:22.214.171.124.14&idno=12
to the effective date of Dec. 1, 2009. In addition, the notice must
be provided to new customers establishing commercial banking
relationships, via deposit agreements and other contracts for
October 23, 2009 9
Join your Iowa peers at the annual Iowa Ag Breakfast
in conjunction with the ABA National Agricultural Bankers Conference
J oin your fellow Iowa bankers at the 2009 ABA National
Agricultural Bankers Conference Nov. 15-18 in San Antonio,
Texas. Following tradition, the Iowa Bankers Association will
evolution, new river extension, special events, economic impact
and fun facts about the River Walk project.
The breakfast is $35 per person and will take place at the Grand
again host the annual Iowa Ag Breakfast in conjunction with Hyatt San Antonio.
the conference. Join your peers on Monday, Nov. 16 from 6:30
to 8:00 a.m. for a hearty breakfast and featured speaker Nancy For more information or to register online, visit the IBA Event
Hunt, executive director of the Paseo Del Rio Association. Calendar at www.iowabankers.com. Contact the IBA’s Ann
Winkel at (800) 532-1423 with questions.
The Paseo Del Rio Association oversees the promotion and
support of the San Antonio River Walk, which is the No. 1 Go to www.aba.com for more information about the ABA
entertainment destination in Texas. Nancy will share the history, National Ag Bankers Conference.
Upcoming IBA seminar to focus on BSA/AML compliance
B SA/AML compliance is its own growth industry. Every new
year brings changes in legal requirements and regulatory
philosophies. This year ushered in with a major revision of the
laundering programs (AMLs); customer identification programs
(CIPs); due diligence and enhanced due diligence; currency
transaction reporting; and more.
process for recognizing “exempt persons” who are not subject to
currency transaction reporting. It eliminates the need for filing a The program is designed for personnel who have responsibility
Designation of Exempt Person form in some circumstances and for maintaining or auditing BSA compliance efforts. The seminar
the filing of biennial renewals as well. will be offered on the following dates:
Tuesday, Nov. 3 — Storm Lake
BSA is one of the few regulations where compliance is so critical Wednesday, Nov. 4 — West Des Moines
it is classified as a “safety and soundness” issue. The Iowa Bankers Thursday, Nov. 5 — Coralville
Association’s Bank Secrecy Act seminar will help banks meet
the requirements of BSA training. seminar will help banks For more information or to register online, visit the IBA Event
meet the requirements of BSA training. The presentation will Calendar at www.iowabankers.com. Contact the IBA’s Ann
discuss reviewing and updating your risk assessment; anti-money Winkel at (800) 532-1423 with questions.
CheCk out the iBa event Calendar
The IBA offers a variety of options for training all bank employees. IBA
offers live seminars, schools and conferences, online and telephone
seminars, as well as e-learning and online AIB courses. To see a complete
listing of available training, check out the IBA Event Calendar online
at www.iowabankers.com. Click on “Event Calendar” in the Quicklinks
section on the right-hand side of the website. Search for an event or
training opportunity by area of interest, event type or keyword. Or you
can scroll through a complete list of events arranged by date. Sign up to
receive the monthly Education Bulletin e-newsletter by contacting the IBA’s
Darcy Burnett at (800) 532-1423 or firstname.lastname@example.org.
FDIC examiners to present IT Exam & Current Issues Seminar
T he Iowa Bankers Association’s 2009 IT Exam & Current
Issues Seminar will inform attendees on how to design
and implement an effective and comprehensive Information
Security Program. The seminar will provide tools to improve the
management of your IT operation and consequently prepare for
an IT examination. The seminar will also provide insight on new
regulatory requirements and recent IT-related risks and threats.
The FDIC will be providing the training during this seminar,
however the topics discussed are applicable to all banks, regardless
of your primary regulator.
The seminar is intended for bank management—including
security, compliance and operations personnel. The program will
be offered Wednesday, November 4 in Johnston and Thursday,
November 5 in Coralville. Considerations for deployment of remote/merchant item
Topics of discussion include: Requirements and best practices for an identity theft
How to improve and maintain a risk assessment. prevention program (red flags rule).
Continuing administration requirements of the Gramm- Benefits and risks of virtualization/cloud computing.
Leach-Bliley Act and challenges banks have had implementing Recent trends in IT-related fraud, including recent cases of
an Information Security Program. ACH Fraud and “war dialing”.
Business continuity planning, including updated regulatory
guidance and information on pandemic planning. For more information or to register online, visit the IBA Event
Audit and independent reviews. Calendar at www.iowabankers.com. Contact the IBA’s Ann
Proper security and controls for EFT operations. Winkel at (800) 532-1423 with questions.
don’t forGet in the future
Nov. 3, Nov. 4, Nov. 5 2010 IBA Leadership Institute
Storm Lake, West Des Moines, Coralville February–June 2010
online fraud & identity theft webinar Preparing for your next regulatory exam webinar
october 29 – 1:30 – 3:30 p.m. november 4 – 1:30 – 3:30 p.m.
This presentation explores recent frauds and provides guidance This timely webinar breaks down the risk assessment process
into what your institution should be doing to thwart them. We and helps you prepare for and manage your next exam. In
will also review the June 11, 2009, Red Flag FAQ issued by the today’s environment, examiners are looking for more than the
agencies and other programs banks have (or should have) that request items to be waiting for them when they show up for the
work in conjunction with the Red Flags Program. The FAQ was on-site fieldwork. They want to find evidence that their banks
issued to help financial institutions and others comply with the have implemented risk management programs that stratify bank
federal regulation on identity theft and discrepancies in changes operations, identify issues and provide for timely reporting
of address. The rules require financial institutions and creditors and remediation mechanisms. If not, you may be subject to
to develop and implement written Identity Theft Prevention the examiners’ version of a risk management program. This
Programs and require issuers of credit and debit cards to assess presentation will discuss strategies to aid in preparing for and
the validity of notifications of changes of address. managing your next exam.
It is important to be aware of new threats and risks and adjust Highlights include: breaking down the risk assessment process;
your red flags to ensure adequate controls including prevention, control risk; liquidity risk; concentration risk; trend analysis;
detection, monitoring, and training. trends in audit cycle frequency; documenting and monitoring
remediation plans and more.
For more details or to register online, visit the IBA’s “Event Calendar” at www.iowabankers.com.
October 23, 2009 11
iBa news notesASSOCIATION exChanGe
still time to reGister your Bank’s Published by the Iowa Bankers Association
Get smart aBout Credit day PartiCiPation
INSURANCE AND SERVICES, INC. 8800 NW 62nd Avenue
Banks have until Nov. 6 to register their participation in the PO Box 6200
seventh annual Get Smart About Credit Day. Banks that make
MORTGAGE CORPORATION Johnston, Iowa
presentations in their communities and schools any time during 50131-6200
(800) 532-1423 FAX (515) 280-4140
October are eligible to receive credit for participating. Register your
bank’s participation at www.abaef.com. Banks who register their
participation will be recognized in the Iowa Bankers Association’s President & CEO: John K. Sorensen
Exchange newsletter and online at www.iowabankers.com. Editor: Allison Lycke
Iowa banks are also welcome to share their efforts with the Iowa Send comments to email@example.com
Bankers Association by sending photos and success stories to
firstname.lastname@example.org. The annual financial education event
is sponsored by the American Bankers Association Education
Foundation in partnership with the IBA.
2009 Build Contributions
Build ContriButions aPProaCh $150,000 (as of Oct.15) -$125,000
Bankers across the state continue to contribute to BUILD, the
industry political action committee (PAC). Since the Feb. 1 kick-off -$105,000
of the 2009 BUILD Campaign, Iowa banks have made an effort to -$85,000
educate their employees and directors on the importance of raising -$65,000
money for the industry PAC. As of Oct. 15th, BUILD contributions -$45,000
totaled $148,323. There is still time for IBA members to help
BUILD reach its $170,000 goal in 2009. Learn more about
BUILD on the IBA website at www.iowabankers.com under the -$5,000
“Government Relations” tab.
Refreshing, isn’t it?
Now that Check 21 is behind us, it’s time
Document to manage the rest of your document sets!
Imagetek has the simple, cost-effective
management and efficient solutions you need.
made simple. n
SAS 70 Certifiied
n Hosted or In-house Systems
n Low Cost of Entry
n Electronic Submission of Documents
n External Auditing
AssociAte member spotlight
A Tradition of Firsts Stands Tall
First correspondent that never competes with the customer. First bank owned by community bankers. First for Your Success.
That’s United Bankers’ Bank… the nation’s first!
United Bankers’ Bank | 2832 104th Street | Suite 107 | Urbandale, IA 50322 | Teresa Brown (515) 229-6512
www.ubb.com | Member FDIC
AssociAte member spotlight
Give us a minute.
If you’re looking for a financial partner with teams of experts not constrained by
process…with the size and independence to make things happen… with the capacity
and caring to help you work out the kinks… give us a minute.
BankersTrust.com Tony Fahrenkrog • VP Financial Institutions • 515.245.2922 • email@example.com
John Ruan IV • Asst. VP Financial Institutions • 515.245.2444 • firstname.lastname@example.org
AssociAte member spotlight
Into Repeat Customers!
Just because he doesn’t qualify for an account with your bank,
doesn’t mean he can’t be a customer.
The Convenient World Visa® Prepaid Card
is a personalized, prepaid debit card usable for all online billpay, purchase and
ATM transactions where Visa debit cards are accepted.
Amenities include: direct deposit, cash management linked through your bank’s
website, and unlimited reloads that generate fee income for your institution.
Establish a relationship and help ensure he’ll be back with his future banking needs.
Let Bankers’ Bank assist you in serving this untapped market.
Card issued by MetaBank pursuant to license from Visa U.S.A. Inc.
Kim Foell — Storm Lake Jeanne Speas — Waterloo
1-800-666-5595 ext.5763 1-800-666-5595 ext.5745
w w w. b a n ke r s b a n k u s a . c o m
AssociAte member spotlight