Bankers get industry, association updates at IBA meeting

Northwestern Financial Review, Mar 1, 2002 by Bengtson, Tom

Deposit insurance reform is gaining momentum and the American Bankers Association believes Congress may agree on a package of reforms by the end of the year, reported Paul Johnson, ABA's state chairman for Iowa. Johnson, president and CEO of the Iowa State Bank in Algona, gave bankers an association update at the annual meeting of the Iowa Bankers Association hosted Feb. 6 at the group's management conference in Des Moines.

Johnson reported that consensus for deposit insurance reform is building around six issues:

* Merging the Bank Insurance Fund with the Savings Association Insurance Fund;

* Establishing a mandatory premium for fast-growing banks;

* Giving FDIC staff greater flexibility to determine premium prices;

* Capping the growth of the deposit insurance fund, possibly using premium credits and rebates;

* Indexing coverage so it increases over time with inflation; and

* Establishing higher coverage limits for retirement accounts.

"Staff at the House, Senate and FDIC are working on this," Johnson said.

Johnson also told bankers the current farm legislation is set to expire on Sept. 30. "ABA expects a new farm bill to be passed this spring, or certainly by Sept. 30," he said.

Johnson said the association is less optimistic about the bankruptcy reform bill, which it supports. "We don't know if the conference committee will be able to get it to a vote," he commented about the legislation, which has been on the legislative docket for three years.

Privacy and predatory lending have emerged as major banking issues, Johnson said. The ABA is working with other industries to develop clearer disclosure language for privacy statements, he said. "The privacy issue will be with us for years to come," he said. "If you want to know what's coming on privacy, watch California. People are predicting the legislature there will pass a tough state law."

The annual meeting featured association leaders summarizing highlights from the last year. John Sorensen, president of the Iowa Banker Association, noted the association's dues receipts, at $1.735 million, are about $100,000 higher than they were 10 years earlier. Bankers, however, have seen their dues decrease over that time as the increase has come from new and associate members. Thrifts became eligible for IBA membership in 1997. Dues income represents about 10 percent of the association's total revenue.

Sorensen said the association has 410 members, 500 insurance customers in three states, 175 mortgage subsidiary customers and 75 securities subsidiary customers.

Dan Vessely, who heads the Iowa Bankers Mortgage Corp., noted the company services 11,000 loans worth about $800 million. In 2001, the company processed 5,000 loans totaling just less than $500 million. Also last year, the company processed $4.5 million in agricultural real estate loans, out of a total ag loan portfolio of $32 million.

Merritt Krause, head of Iowa Bankers Insurance and Services, noted the company commemorated its 30 anniversary, after being founded in September 1971.

By Tom Bengtson