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Thirty to 50 protesters interrupted a meeting of 200 bankers this morning at the Hilton Garden Inn in St. Paul. The Minnesota Bankers Association was hosting its annual legislative conference when at about 10:15 a.m. the meeting was interrupted by a group of people chanting anti-bank slogans and waving signs.

MBA personnel closed the doors to the ballroom where the meeting was taking place, keeping most of the protesters in the lobby. A few protesters got inside the meeting room, however, and disrupted the meeting for about 7 minutes. MBA President/CEO Joe Witt was speaking when the meeting was interrupted. Witt escorted one of the protesters out of the room. The protesters dissipated soon after.

It is believed the protesters represented a group of custodial workers, who staged a protest in the Minneapolis skyway system yesterday.

On Feb. 4, the same group of people attempted to interrupt a meeting of the MBA’s Government Relations Council, but the group mistakenly barged into a meeting of the Minnesota Chamber of Commerce, which was taking place in a room next door at the Minnesota River Center.

Eleven community bankers and one credit union official met with President Obama at the White House today. The delegation included four Midwestern bank leaders and one CEO with strong ties to Minnesota:

• James McPhee, chairman-elect of ICBA and CEO of Kalamazoo County State Bank in Schoolcraft, Mich.
• Mark Schroeder, President, German American Bancorp, Jasper, Ind.
• Deloris Sims, chairman and CEO, Legacy Bank, Milwaukee
• Matthew Gambs, CEO, Diamond Bancorp, Schaumburg, Ill.
• Dorothy Bridges, who left Minneapolis last year to become president and CEO of City First Bank, Washington, D.C.

In a release describing the meeting, ICBA gave some perspective on community banking’s role in a key White House priority: expanded lending to small business:

“while community banks with $1 billion in assets or less represent about 12 percent of all bank assets, they support 31 percent of all small business loans that are less than $1 million. “

ABA CEO Ed Yingling commended the meeting but commented on loan demand, an important variable in this discussion:

“As is typical during a recession, consumers and small businesses tend to save more and spend less.  In some regions of the country, loan demand is down considerably. However, lending is our business – it is what banks do, and we stand ready to make credit available to worthy borrowers.”

Beside the Midwestern bankers mentioned above, community bankers from New York, New Mexico, Arkansas, Connecticut and New Hampshire attended the meeting, as did an official from a credit union in Mississippi.

The House Financial Services Committee voted along party lines to pass regulatory reform legislation for the banking industry. Here’s how the Los Angeles Times covers the story. The bill, called the Financial Stability Improvement Act of 2009, gives federal regulators the ability to prevent firms from growing so large they become systemically risky, and its spells out steps for dismantling systemically important financial institutions on the verge of collapse. Among other things, is also creates a consumer financial protection agency.

Here is how ABA responded:

The American Bankers Association has long supported the formation of a council charged with overseeing systemic risk and the creation of a mechanism for the orderly resolution of systemically important non-banks.  We also strongly support legislation that would instruct the council to monitor and comment on accounting principles, standards and procedures. 

The legislation approved by the House Financial Services Committee today contains some of these key elements, but must be viewed in light of our opposition to pre-funding of the resolution authority and other concerns.

ICBA seems more enthusiastic about the legislation. Here’s what they say:

 ICBA has been a leading advocate for creating parity between large and small banks and applauds the committee for including the Gutierrez-Manzullo amendment in the bill, which includes an ICBA proposal to broaden the FDIC assessment base by allowing the FDIC to determine bank premium assessments using total assets (minus tangible equity), not just domestic deposits. In addition, ICBA fully backed Rep. Gutierrez’s separate amendment that creates a pre-funded systemic resolution fund for the orderly unwinding of a failed large financial company that threatens not only the stability of the financial sector, but the national economy. Furthermore, ICBA appreciates the committee’s commitment to putting a hard stop on too-big-to-fail by including the Kanjorski amendment in the bill. The amendment provides the Financial Services Oversight Council with authority to take responsible preventive actions to protect the financial system when financial companies are found to be systemically dangerous. ICBA thanks Reps. Luis Gutierrez (D-Ill.), Donald Manzullo (R-Ill.) and Paul Kanjorski (D-Pa.) for proposing these vital amendments. 

ICBA is pleased that the bill would close the ILC loophole by prohibiting new ILC charters and would maintain the thrift charter, but the association is disappointed that it would abolish the Office of Thrift Supervision (OTS). However, ICBA is pleased that the bill would establish a separate office dedicated to thrift supervision under the proposed Office of the Comptroller of the Currency’s (OCC) Division of Thrift Supervision.

CSBS believes it vital that financial regulatory reform promote a diverse banking industry capable of meeting the credit needs of the smallest to the largest borrowers, while enhancing regulatory checks and balances, strengthening market discipline, providing robust consumer protection, and ending – once and for all – too big to fail.  The legislation approved today by the House Financial Services Committee is an important step in the right direction.

The industry earned $2.8 billion in the third quarter, up from a $4.3 billion loss in the second quarter and earnings of $879,000 in the third quarter of 2008. Loan loss reserves rose to $62.5 billion, with two out of three banks raising their loss reserves in the third quarter. However, loss reserves rose at a slower rate than in the second quarter. Charge offs and non-current loans are also rising at a slower rate, though both hit 26-year highs. Fifty banks were closed in the third quarter, and there are now 552 banks on the problem bank list, compared with 416 at the end of second quarter.

Other tidbits: Loan/lease balances declined by $210 billion in the quarter, led by an $89 billion dip in C&I loans. Chairman Bair noted that most of the decline was in banks over $100 billion. It was the largest decline since quarterly reporting began in 1984.

UPDATE: Now here’s the official release.

The House Financial Services Committee voted today to create the Consumer Financial Protection Agency. On a 39 to 29 vote the committee passed a CFPA that was altered considerably during the bill’s markup period.

As CNN Money notes:

“The biggest change was to allow 98% of the banking industry — some 8,000 community banks and credit unions — to keep their current regulators when it comes to enforcing new consumer rules.”

ABA said it still has “major concerns with some principal areas, including restrictions on preemption standards for national banks…and the very broad, ill-defined authority” granted to the CFPA.

ICBA said it still has “several serious concerns” but allows that the bill is better than it was when it was introduced.

The Federal Reserve Bank of Minneapolis has named Dr. Narayana Kocherlakota as its new president, replacing Gary Stern who retired earlier this year. Following is the press release:

Dr. Narayana Kocherlakota will become president and chief executive officer of the Federal Reserve Bank of Minneapolis effective Oct. 8, 2009. The announcement was made by Jim Hynes, chairman of the Board of Directors of the Federal Reserve Bank of Minneapolis.

Dr. Kocherlakota is currently a professor of economics at the University of Minnesota, where he previously chaired the economics department, and a consultant to the Federal Reserve Bank of Minneapolis.

“We are very pleased that Narayana Kocherlakota will be leading the Federal Reserve Bank of Minneapolis,” said Hynes, who is also executive administrator of the Twin City Pipe Trades Service Association, St. Paul, Minn. “This Bank has a strong history of leadership in economic research, and Dr. Kocherlakota will certainly continue that tradition. He is one of the most respected macroeconomists in the field today, and not just because of his intellectual contributions but also because of his professional standing and reputation for collaborating with others. Dr. Kocherlakota is a relentless optimist who works hard to find pragmatic solutions. All of us on the Board of Directors and at the Bank look forward to working with him.”

Prior to his recent tenure at the University of Minnesota, Dr. Kocherlakota has been a professor of economics at Stanford University, an associate professor at the University of Iowa and an assistant professor at Northwestern University. Dr. Kocherlakota entered Princeton at age 15 and graduated four years later (1983) with an A.B. in mathematics. He received his Ph.D. in economics from the University of Chicago in 1987 on the topic of pricing financial assets, incorporating new kinds of consumer preferences and analyzing how risky payoffs influence attitudes. Dr. Kocherlakota has published more than 30 articles in academic journals. 

“For an economist who has spent his career working on issues related to macroeconomics, monetary policy and finance, there can hardly be a better job than president of a Federal Reserve Bank,” Dr. Kocherlakota said. “That is especially true of the Federal Reserve Bank of Minneapolis, which has made so many important contributions to economic thinking, beginning in the 1970s and continuing under Gary Stern’s outstanding leadership. I look forward to continuing that tradition and also to working with my new colleagues on the Federal Open Market Committee. As I learned during my tenure as a consultant and Research staff member, this Reserve Bank and the entire Federal Reserve System are staffed by dedicated public servants, and it is an incredible honor to lead the employees of the Federal Reserve Bank of Minneapolis.”  

Dr. Kocherlakota is married to Barbara McCutcheon, who holds a Ph.D. in economics from the University of Chicago.

The FDIC is asking banks to prepay their estimated quarterly risk-based assessments for the fourth quarter of this year and all of 2010, 2011 and 2012, for a total infusion of $45 billion.  FDIC said the banking industry is awash in liquidity and this proposal:

“will put the industry’s liquid balances to good use in conserving capital and helping to maintain the capacity of banks to lend while they rebuild the DIF.”

ICBA praised FDIC for not levying another special assessment, but expressed concern about the length of the prepayment period. It said it would lobby for flexible payment options.

ABA emphasized the importance of industry support for FDIC in its statement on the announcement.

Our friend, Mark Olson, the former Federal Reserve Board governor from Fergus Falls, Minn., has a new job. He has joined Corporate Risk Advisors, LLC., as co-chairman. Here is his comment from an email he circulated among associates:

“As I have discussed with many of you, upon leaving the PCAOB it was my goal to continue involvement in the financial services world in areas such as corporate governance, public policy, and strategic and regulatory advice, and to balance those efforts with participation in improving financial literacy. Linking with Corporate Risk Advisors is a natural step in that direction.  CorpRA has a talented core group of professionals and is actively building additional staff capability. With the unprecedented changes we are experiencing in our industry, I look forward to working with this team in providing industry businesses with the sound representation and advice they need.”

After three years as chairman of the Public Company Accounting Oversight Board, Olson resigned effective July 31.

“There is no more respected player in the financial services business than Mark Olson,” said Jeremiah Buckley, president of Corporate Risk Advisors, a Washington, D.C.-based consulting, compliance and strategic advisory firm specializing in financial services. “Mark can provide best-in-class guidance to companies as they navigate the changing regulatory and business environment in which financial services firms must operate today.”

Olson was a Fed governor for five years. Prior to that, he worked for Ernst & Young. In addition to other roles, he was the youngest president ever of the American Bankers Association in 1986-87 at the age of 43 when he was president of Security State Bank of Fergus Falls.