Illinois bankers ready to tell their story to legislators

Northwestern Financial Review, Jul 1-Jul 14, 2005 by Hilgert, Jackie

Illinois is a hostile environment for business and bankers need to work on changing that. "We're only as strong as the state we're doing business in," said Bruce Taylor, chairman, president and CEO of Cole Taylor Bank, Rosemont. Taylor delivered his message to peers as he became 2005-2006 chairman of the Illinois Bankers Association at its annual convention held in June 8-10 in Indianapolis.

Citing a Forbes survey that ranked Illinois 46 among 50 states in terms of supporting free enterprise by creating an environment conducive to starting and growing a business, Taylor unveiled a four-point approach which he said will focus association resources toward increasing legislative awareness of the role banks play in economic development. "Our representatives must understand the consequences of the legislation they propose," Taylor continued. "It's in our best interests to be involved in the legislative process, programs and plans that promote economic development."

Legislators, he said, must understand that when they enact legislation that increases a bank's cost of doing business, reduces its revenue opportunities, or allows competitors an unfair advantage, that legislation ultimately impacts everybody in the state. "Every elected official must hear the message that when they weaken our ability to do business, they weaken the engine that makes Illinois business work," Taylor preached.

That approach may not fall on open ears in Springfield; the industry already is at odds with its legislative body over fund sweeps that have siphoned dedicated funds from the Bank and Trust Company Fund into the state's general revenue fund. "Even though there was a preliminary injunction set up to stop the sweeps, the legislature voted to proceed with them," said Linda Koch, IBA's president and CEO. Koch said there are several theories floating about as to whether these sweeps are legal.

Hunt Bonan, 2004-2005 IBA chairman, called the fund sweeps a "robbing of state chartered banks." Bonan is chairman of the Peoples National Bank of McLeansboro, Ill.

It's not clear whether the fight over dedicated fund sweeps and other tax proposals aimed at the industry will hinder the association as it pushes again for a bank parity bill. This legislation, which would give state chartered banks and national banks headquartered in Illinois the same opportunities afforded national banks headquartered outside the state that do business in Illinois.

Koch said the bill, which includes exceptions that should please real estate brokers and consumer groups concerned about banks skirting current predatory lending laws, hasn't been voted on. "It is controversial," Koch admitted, adding IBA will keep pushing legislators.

A development for Illinois bankers this year has been the unveiling of IBA's compliance division. The new service features an online bulletin board for compliance officers to post queries; it also features a telephone hotline, 1-800-Go-To-IBA, which is answered by staff from the association's legal department. Koch said IBA attorneys field about three dozen compliance calls per week.

With an update from Washington, American Bankers Association Vice Chairman Earl McVicker told bankers that even the nation's top regulators recognize the burden compliance is placing on banks.

On June 9, Acting Comptroller of the Currency Julie Williams testifying before a House Financial Services Subcommittee, called on legislators to make a distinction between banks based on the size, complexity and scope of their operations in framing the regulatory approach. "Anytime your chief regulators are talking about the burdensome effect of regulation," McVicker said, "you know we're starting to get listened to in Washington."

By Jackie Hilgert