FDIC Advisory Committee On Community Banking

In September I was appointed to the FDIC Advisory Committee on Community Banking. On October 15, I was privileged to represent the banking industry in Washington, D.C., at the FDIC headquarters as that committee held its first meeting. It was quickly apparent from the commitment of staff resources, planning, and logistics that the FDIC has taken this committee’s role seriously. The reception the evening prior to the meeting was attended by as many, if not more, upper level FDIC staff as bankers.

By law every meeting of the Committee is to be public. This meeting was held in the FDIC board room which is situated with a horseshoe table facing a gallery in which were seated a couple of dozen observers filling perhaps one third of the available seating. The horseshoe table, at which were seated committee members and a couple of senior FDIC executives including Chairman Bair (she attended nearly all of the proceedings) was fronted by a rectangular table from which various FDIC staff addressed the committee. The session was also simulcast into an overflow room across the hall. Security for the entire affair was extremely evident.

From several remarks made throughout the day the FDIC apparently was initially concerned that committee members might be reluctant to speak out in such a forum. As they readily admitted, much to their delight, their concerns were ill founded. From the very first question concerning examination issues to the very last question regarding “too big to fail,” it was evident bankers were there to say their piece.

In addition to bringing individual bank’s issues to the table, most participants also expressed views colored by their perceived representative position within the industry. At least two members had taken CPP money “for all the right reasons” and yet had been punished by the press and targeted by competitors with derogatory marketing campaigns for having done so. One participant is the Chairman of the Board of his local Federal Home Loan Bank and expressed grave concerns, supported vehemently by most committee members, over talk of a FHLB haircut in the event of a bank failure and the affect such a ruling would have on the cost of credit for users of the system. A couple of participants are from ag banks who are still performing quite well, but feel the pressure of additional regulatory scrutiny in the current environment. Others are reeling from valuation hits to capital based on OTTI determinations. The banker from Georgia, like this writer representing Michigan and the Great Lakes region, brought tales of banks struggling to survive, starved of capital because of collateral value degradation in the loan portfolio with little hope of attaining new equity infusions given a government intent on bailing out Wall Street with little appetite for buoying up Main Street.

So, specifically, what did we discuss? Here’s a non-exhaustive, non-prioritized, personally prejudiced list: loan classifications caused by depreciating collateral values even when the supporting cash flow is still strong thus causing the secondary source of repayment to be considered by examiners as the primary source of repayment while the original primary source, cash flow, is totally ignored (it was stated there will be new regulatory guidance on this matter in the near future); the need for some type of capital infusion program specifically for community banks - and not just for the ones that don’t need it; changing the FDIC premium assessment base to assets instead of deposits; the method used to auction closed bank assets and its deleterious affect on loan participations; forbearance as the new “F” word; the unavailability of open bank assistance options; given community bankers’ commitment to the success of their communities and the citizens thereof, the insulting inference that customers need to be protected from community bankers by the creation of CFPA – an agency and process that in seemingly willful ignorance of the actual culprits targets the innocent players in the industry; redefining a jumbo CD as one over the insured limit of $250,000; FHLB pre-payment penalties charged to the FDIC in a closed bank; the use of non-core deposit funding is NOT the problem, it’s what is done with those funds on the asset side that is the problem; the three year pre-paid FDIC premium proposal; fear - of a disconnect between an eventual rule maker (CFPA) and safety and soundness, of a single rule maker, of the demise of the dual banking system, of the inability to address “too big to fail” in a meaningful manner.

FDIC personnel expressed unabashed support for the dual banking system and its role in making this country strong – the best in the world in this writer’s opinion. Seemingly, copious notes were taken by the numerous FDIC staff present. Not all suggestions fell on fertile soil.

I am privileged to have a seat on this committee and applaud Chairman Bair and her staff for their obvious support. We are to meet quarterly, most likely at the FDIC headquarters in D.C. I welcome comments from bankers and other interested parties and appreciate the opportunity to carry messages to and from Washington. In this writer’s opinion the committee is not simply the voice of one crying in the wilderness, but is convened so that he who has ears, let him hear. As I mentioned, the meetings are public. Perhaps the reader can join this writer on the next foray to our nation’s capital!

New Good $ense Course Schedule

Good $ense Budget Course
Presented by:
Craig Goodlock
Chairman and Chief Executive Officer of Farmers State Bank

Six Monday evenings
Nov. 9 – Dec. 14
7:00 p.m. to 8:30 p.m.
Good Shepherd Mission
5050 E. M-36, Stockbridge, MI
Ph: 517.851.9800

Workbook fee: $10.00 per household


In the Good $ense Budget Course you’ll discover tools and develop skills to help you control your finances so your finances don’t end up controlling you. You’ll get training in biblical financial principles as well as help and guidance to:

 Prioritize financial goals
 Develop a personalized spending plan
 Identify action steps to reduce expenses
 Reduce debt, and much more!

More than just a learning experience about budgets and finances, this course also enables you to reflect on your relationship to money and how it impacts your relationship with God. No matter what your circumstances—financial crisis or abundance—Good $ense can help you!

For information call Craig at 517.596.2311 or
email cgoodlock@farmerstatebank.com
Sponsored by Good Shepherd Mission and Farmers State Bank.

Stockbridge Free Thanksgiving Dinner

Sixteen years of community support has made the Annual Free Community Thanksgiving Day Dinner an appreciated tradition for many area families. As always, our goal continues to be that anyone who needs or would enjoy a meal has a traditional dinner in a community setting or in their own home. As in the past, the success of this event depends on your support.

Your help in spreading the word is appreciated. Many volunteers and local restaurants will be preparing this homemade dinner with all of the trimmings. The meal will be served on Thanksgiving Day, November 26, 2009 from 11:30 a.m. to 2:00 p.m. at Heritage Elementary School in Stockbridge.

This year we are planning to serve over 500 meals through a variety of methods including dine-in, home delivery, and/or carry-out. We will also have free transportation for anyone who might like to join us and needs a ride. It continues to be our belief that no one should have to eat alone on Thanksgiving Day. We invite everyone to share the day with others at no charge. This longstanding tradition is made possible by tax deductible contributions from our community. If you would like to make a donation, please make the check payable to the Stockbridge Community Schools, MARKED: Thanksgiving Day Dinner Fund, and mail it to 305 W. Elizabeth Street, Stockbridge, MI 49285.

We hope you will be able to come enjoy fine food, good friends and a spirit of thanksgiving at the sixteenth annual Stockbridge free community dinner on Thanksgiving Day. For more information call 517-565-3051 or email stockbridgeturkeyday@yahoo.com.