When the Federal Deposit Insurance Corporation proposed new rules in early November that would hit big banks harder than small ones when assessing fees for the exhausted deposit insurance fund, community bankers–who had aggressively lobbied first Congress and then in recent months the independent agency–declared victory.
"The FDIC today took an important step in leveling the playing field for the nation's community banks," said Jim McPhee, chairman of the Independent Community Bankers of America (ICBA) in a statement at the time. Federal Deposit Insurance Corporation (FDIC) meeting logs show that Independent Community Bankers of America representatives met four times with agency officials since August, when the agency first put meeting records on-line in a bid to increase transparency.
The revised formula for assessing bank contributions to the deposit insurance fund was already spelled out as some of the nearly 250 rules changes mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. However, confirmed an ICBA representative, the FDIC proposals clarified a break for so-called "bankers' banks" and "custodial banks," which service other banks. The law had required these institutions be treated differently, but had not spelled out exactly how. ICBA includes bankers’ banks as members.
While community banks comprise the bulk of the "problem banks"–those the FDIC believes are in danger of failing–they have long argued that they did not engage in the risky behavior that led to the financial crisis and that larger banks should share a larger share of the burden for bailouts. In July, when Congress passed the financial regulatory reform bill, the ICBA counted the section on the deposit insurance fund assessments, which requires the agency to take into account all assets for a bank rather than just domestic deposits, as a win. ICBA has reported spending $3.6 million on lobbying in 2010, according to the Center for Responsive Politics, and the group's PAC has contributed $1.3 million to federal candidates this election cycle.
Over all, 14 of the 39 meetings with private sector interests posted by the FDIC involved discussion of the "assessment base" issues, or the deposit insurance fund (See spreadsheets below). These included a meeting on September 15 with members of the Financial Services Forum, which represents some of the larger banks expected to be hit harder by new assessment formulas. Other firms that weighed in included the American Bankers Association, the European bank Credit Agricole and various state chapters of banking associations.
Erica Hurt, a spokesperson for the Financial Services Forum who attended the September meeting says that the deposit insurance issue was "not one of our top tier issues," and that at the meeting the group was concerned about discussing the time table for the new rules and other issues related to the implementation.
The American Bankers Association (ABA), which represents both large and small banks, remained neutral on the deposit insurance fund changes during the legislative debate, said Rob Strand, an economist with the group. "Some of our members felt one way, some felt another way." Strand said the ABA had "fine tuning" suggestions and would make its views known in formal comments on the proposed regulations.
As helpful as the FDIC’s meeting logs, which it updates bi-weekly, are in revealing to the public how the feds are conducting their regulatory sausage making, they also contain shortcomings. Visitors are not always listed with their exact affiliations, making it hard to connect names to employers. When affiliations are listed, it’s often by acronym rather than a full name. And FDIC staff are not identified by their titles.
For example, on October 27, a group of 13 people reportedly met with agency staff to discuss assessment issues. These people are identified as representing Northern Trust, State Street, and Bank of New York/Mellon. But the individuals are not linked to their employers. Custodial banks such as these, which hold investments for other firms or individuals, got a break in the new rules.
In other cases, the FDIC meeting records lump together large groups of people under vague identifications. For example, on October 26, 16 people identified as working for “law firms” reportedly met with FDIC staff to discuss the issue of “living wills”—the plans mandated under the law that large financial institutions much have in place that would make their liquidation simpler in the event of financial catastrophe.
Some of these visitors are relatively easy to fingerprint, thanks to their unusual names—i.e. Knox McIlwain appears to be an associate with Cleary Gottlieb, specializing in derivatives and finance. But when you have an attorney named John Douglas or Jack Murphy, it is a lot more difficult to figure out where they work.
For some events, the FDIC simply lists “Visitors, multiple” as attendees at meetings to discuss such vaguely described issues as “what are near/mid/long term issues FDIC will work on in reaction to legislation.”
In addition to the meeting logs, the agency also posts information about round table discussions sponsored by the agency dealing with aspects of implementing the new law, including this one on September 24 on the deposit insurance reform issue, where attendees are identified by firm and agency officials by title. The agency also makes public comments received from the general public.
In the end, the ICBA didn’t get everything it wanted in the proposed deposit insurance rules. The group would have liked to see the new assessments applied retroactively as spelled out in this letter to the agency, however, asserted that changes would need to be made in how banks report their assets before it could implement new formulas.
“We accepted the fact that [the new assessment formulas] do require some operational changes,” said Chris Cole, senior regulatory counsel and senior vice president for the ICBA, who attended the meetings with the FDIC.
Scroll down to see spreadsheets of FDIC visitors and FDIC officials hosting meetings. The FDIC updates these lists biweekly, with the next installment expected on Friday, December 3.
Aaron Bycoffe contributed to this report.
Federal Deposit Insurance Corporation Meeting Logs: Visitors. Includes names and affiliations of visitors to the FDIC as posted by the agency on-line here. Data updated through November 12. Can be linked to table below via "meeting code."