Portions of "NewsWatch" are reprinted with permission from "NewsWatch Today", a publication of the Independent Community Bankers of America, and brought to you as a part of your bank's relationship with the Arkansas Community Bankers Association. We're pleased to provide information about current issues affecting community banks. If you prefer not to receive these updates please reply to this email and enter "unsubscribe" in the Subject line.

In This Issue

Treasury Extends Money Market Guarantee

ICBA Asks Regulators for More Reasonable Examination Policy

ICBA-Backed SBA Reforms in Stimulus Plan

Paulson: No TARP Funds for FDIC Mortgage Plan

Treasury Extends Money Market Guarantee

The Treasury Department announced an extension of its Temporary Guarantee Program for money market mutual funds until April 30, 2009. Participating funds that meet the extension requirements are eligible to continue to participate. Funds that are not participating may not enter the program. The program will continue covering shareholder amounts held in participating funds as of the close of business on Sept. 19. Funds must make a program extension payment and submit the extension notice by Dec. 5.

FDIC Releases TLGP Final Rule

In its Temporary Liquidity Guarantee Program final rule, the FDIC adopted several ICBA recommendations benefiting community banks, though some possible improvements to the program were left out. The most significant changes the FDIC made are to exclude short term debt of 30 days or less from the unsecured debt guarantee, and to include NOW accounts that pay interest of 50 basis points or less in the unlimited transaction account guarantee.

The TLGP Debt Guarantee Program also will:

include an alternative cap on the amount of unsecured debt that is guaranteed equal to 2 percent of total liabilities for program participants with little or no senior unsecured debt as of Sept. 30, 2008,
require specific disclosure language noting the debt is guaranteed by the full faith of the U.S. government,
implement a tiered pricing structure of 50, 75 or 100 basis points, depending on the term of the debt,
require holding companies to pay an additional 10-basis point fee, and
exclude federal funds and other short-term debt.

An FDIC staff memorandum on the rule was released, and other TLGP resources are available on ICBA Economic Recovery Central. Read ICBA Summary.

ICBA Asks Regulators for More Reasonable Examination Policy

ICBA commended the banking regulators for their Nov. 12 statement urging financial institutions to meet the needs of creditworthy borrowers, but requested they consider a more reasonable and flexible examination policy, particularly with respect to real estate lending.

In a letter to the FDIC, Federal Reserve, Office of the Comptroller of the Currency and Office of Thrift Supervision, ICBA President and CEO Cam Fine said community banks continue to report overzealous examiners, those examiners sometimes second-guess bankers and appraisers and demand aggressive write-downs and reclassifications of viable commercial real estate loans and other assets. "Such an environment can lead to a contraction in credit as community bankers avoid making good loans for fear of examiner criticism, write-downs, and the resulting loss of income and capital," Fine said.

ICBA-Backed SBA Reforms in Stimulus Plan

ICBA-proposed measures to increase Small Business Administration lending are included in Senate Majority Leader Harry Reid's (D-Nev.) economic stimulus plan in motion during the lame-duck Congress. Part of a larger package (S. 3688) that includes provisions to help the auto industry and spur employment, the measure includes $615 million in measures to encourage lenders to make SBA 7(a) loans, which have dropped dramatically over the past year.

Passage of any stimulus plan during the lame duck session appears difficult; however, early passage is expected in the next Congress. ICBA Chairman Cynthia Blankenship outlined ICBA SBA lending recommendations in testimony before the Senate Small Business Committee in April.

Paulson: No TARP Funds for FDIC Mortgage Plan

In testimony at a House Financial Services Committee hearing, Treasury Secretary Henry Paulson said funds authorized by the Emergency Economic Stabilization Act will not be used for the FDIC's newly proposed foreclosure-mitigation plan, despite entreaties from agency FDIC Chairman Sheila Bair to do so.

Paulson said the FDIC's conservatorship of IndyMac Federal Bank and existing foreclosure-prevention programs under the Office of Housing and Urban Development, the Hope Now Alliance, Fannie Mae and Freddie Mac have made "substantial progress." Paulson said Treasury would not pursue "other approaches" for using Troubled Asset Relief Program funds, including purchasing troubled mortgage-related assets from financial institutions.

The FDIC previously released a plan to modify an estimated 2.2 million foreclosures by using $24.4 billion in EESA funds to split default losses with lenders that agree to refinance certain home loans. House Financial Services Committee Chairman Barney Frank (D-Mass.) expressed support for Bair's plan.