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U.S. Rep. Erik Paulsen (R-Minn), who sits on the House Banking Committee, addressed bankers gathered for the ICBM convention on August 7. His short video message addressed the Dodd-Frank Act. He said:

While most of us can agree that some amount of reform was definitely needed, I don’t think anyone in this room was comforted by the bill’s final passage or by the fact that the legislation’s primary author wasn’t even sure that his bill will be able to prevent another economic crisis. Instead, as pointed out in a sobering opinion piece in the June 29 Wall Street Journal, the Dodd-Frank Bill, with its tangle of new regulations and as-yet unwritten financial rules, seriously threaten community banking by punishing the people and institutions like you who played no role in the crisis.

What is also important about this missed opportunity is that the financial reform bill fails to address many of the issues that caused the crisis in the first place. Instead, it paints everyone with a broad brush and gives more power to the regulators who missed the early warning signs and failed to do their jobs.

It also completely ignores reforming and restructuring government sponsored enterprises Fannie Mae and Freddie Mac, which taxpayers have already spent more than $100 billion bailing out and are on the hook for billions more.

What may be most troubling for many of you is that most of you will now be affected in some way in how you run your business … small community banks are being made subject to rules set by a new credit czar and the newly created Consumer Financial Protection Bureau which will have broad authority to set sales practices, limit credit products, and mandate compensation growth. This credit czar has been given broad authority to determine whether a consumer financial product is unfair, and as the legislation is written, will have nearly complete authority to review consumer products and ration credit. In the end this will raise the cost of credit to consumers and small businesses while also imposing a hefty regulatory burden on your banks.

You know for every page of this 2,300-page bill, you will see about 10 pages of new rules and regulations. This enormous new compliance burden will expose small community banks to lengthy mandates and more burdensome regulations. In my opinion, instead of creating new bureaucracies and limiting consumer choice strangling small banks and small business with red tape, we should be focusing on safety and soundness and real solutions that will get the economy going, getting the credit markets lending again and also creating jobs.

U.S. Sen. Al Franken (D-Minn.) spoke to bankers at the annual convention of the Independent Community Bankers of Minnesota this morning through a taped message. Here is what he said:

I know people all across Minnesota are facing hard times right now due to the unregulated greed on Wall Street that led to the biggest financial collapse in a generation. The big banks and investment firms and insurance companies put profit ahead of everything else and in the end it cost the American people billions of dollars in lost retirement savings, it caused national unemployment to skyrocket to 10 percent, and forced many small businesses to close their doors.

Thankfully there are folks like you - people all over the state who run small community banks — to help ease these burdens. I know you’ve made efforts to work with your customers, often your neighbors, to strike a compromise on their mortgage payments until they can find a new job, or you’ve extend credit to a local small business that was turned down by all the big guys.

Because there are over 400 community banks in Minnesota, that means more Minnesotans have a local bank in their town, even those in rural areas.

I met with many of you in April to hear your concerns about the Wall Street reform bill. You told me about the impact of new regulations on small banks. I think the new bill passed strikes a reasonable compromise. New rules will hold the big banks accountable while minimizing the impact on small community banks which didn’t cause the financial crisis in the first place. The bill takes significant strides toward ending too big to fail. However, as the bill is implemented I want to make sure you can continue to do the work you do so well in your communities.

I hope you enjoy the rest of your conference. I look forward to working with each of you and find new ways to partner, grow our local communities and strengthen our national economy.

After this message, bankers greeted former Minnesota Governor Arnie Carlson, who talked about the need for elected officials to get beyond partisanship in order to solve real problems.

The Dodd-Frank bill will be signed into law and there is an interesting debate about whether that is a good thing or a bad thing for the industry. The point of view I pick up from people affiliated with the ABA is that it is a bad thing. The feeling is we could have done better. Sure, there was going to be legislation, that was certain. But the legislation could have been a lot better for banks.

The point of view I pick up from people affiliated with the ICBA is that it is a good thing. The feeling is this bill is as good as we could have done. There are a lot of carve-outs and exceptions for smaller banks which make the legislation palatable.

Cam Fine, ICBA President/CEO, spoke by telephone to bankers in Iowa on Thursday. He told them that if Congress failed to pass a bill this time around and had to take up financial reform legislation in the future, he highly doubts it would be willing to grant many of the things that make the current bill tolerable — things like the continued supervisory role of the Federal Reserve, the continued ability to count trust preferred securities as Tier 1 capital, the carve-out on CFPA exams for banks with less than $10 billion in assets, and the new asset-based formula on FDIC premiums.

As the Senate was taking its vote on Thursday morning, the ABA opposed the bill and ICBA was neutral. Jim MacPhee, ICBA chairman, explained that his organization could not support the bill because of its negative provisions, particularly its impact on interchange fees. However, the ICBA did not want to oppose the bill because it didn’t want to disregard the help it got from other interested parties that helped it achieve many of the positive provisions in the bill. “If you oppose it, you throw everyone under the bus,” MacPhee, a Michigan banker, told about 125 bankers in Okoboji.

If you read the statements both groups published on Thursday afternoon, you see they both expect a lot of work in the coming months and years in the rule-making process where much of the about-to-be-signed bill will be articulated.

Larry Winum, president of the Glenwood State Bank in Glenwood, Iowa, was honored with the Robert D. Dixon Founders Award by the Community Bankers of Iowa at the association’s annual convention, which kicked off last night in Okoboji. The award is given to a banker who has devoted his or her life and livelihood to community banking. Dixon, who passed away in November 2005, started the organization in 1971.

Winum recently completed a term as treasurer for the Independent Community Bankers of America. “I would always go to bat for everyone in this room,” he told the audience at the Arnold’s Park Pavilion as he accepted the award.

The CBI also honored Tina Smith Fritz of Bankers Trust, Des Moines, with its Up and Coming Banker of the Year award. The award is presented by the association’s Leaders of Tomorrow division. This year, Bankers Trust announced it would give $2,500 to the Leaders of Tomorrow bankers in Smith Fritz’s name. The bank said it is giving the funds to “honor your accomplishments and provide an investment in other bright and capable young people to follow in your banking footsteps.”

In addition, CBI also awarded scholarships to help two high school graduates attend college this fall. Selected to receive $500 scholarships were Madison Boswell, sponsored by Bank Iowa in Humboldt, Iowa, and Emily Pappas, sponsored by First Citizens National Bank in Mason City, Iowa.

The CBI convention, taking place at the Arrowwood Resort in Okoboji, runs through Friday.

Congratulations to Tom Welle of First National Bank of Bemidji who completed his term as chairman of the Minnesota Bankers Association at the group’s annual convention earlier this week in Duluth. Also, congratulations to Steve Moore, U.S. Bank, St. Paul, who becomes the group’s chairman for 2010-2011. I was able to joined the MBA convention after leaving Fargo where the South and North Dakota bankers associations were conducting their joint convention at the same time. Driving some 250 miles east along Highways 10 and 210, I made my way through Motly and eventually to Duluth, arriving in time for Monday’s dinner.

“I would like to invite all of us, community bankers from small banks, large banks and every bank in between, to expand on the MBA’s commitment to be the ‘Champion for Minnesota Banks’ to become ‘Champions for the Recovery.’ Being a ‘Champion for the Recovery’ implies a commitment from all of us who, as members of the MBA, are called to duty to focus in a positive manner on the task of restoring the faith and confidence within our industry, and within our communities,” Moore said in his speech to the group.

Tuesday’s general session featured a upbeat economic report from Brian Wesbury. Unlike the economist who addressed the Dakota bankers a day earlier, Wesbury said we are in a ‘V’ shaped recovery. He was very positive on the economic outlook for the country. He was followed by Jennifer Duffy of the Cook Political Report. She provided a detailed survey of the political landscape. As in most mid-term elections, she said the minority party (Republicans) will pick up many seats in the House, possibly enough to regain a majority. Republicans also will pick up seats in the Senate, but not enough to change the balance of power.

Tuesday evening, Minnesota bankers named Duluth banker Tim Meininger its ‘Bank Champion of the Year,’ it’s highest annual honor. Meininger works for Beacon Bank, which is based in Shorewood, a Minneapolis suburb. Meininger, a former MBA president, runs Beacon’s Duluth branch.

Look for coverage of the MBA convention in the July 15 edition of NorthWestern Financial Review magazine.

The economy is going through a period of slow recovery, explained Sean Snaith, an economist who addressed bankers during the opening general session of the NDBA/SDBA convention this morning in Fargo. He said the recovery is leaving an “ugly scar,” that is, the job market, where unemployment is high and under-employment is problematic.

Snaith, a former professor at the University of North Dakota who now teaches at the University of Florida, said the decline in housing prices and the drop in value of most stocks has substantially diminished the wealth of many Americans. This will prevent the recovery from occurring at the rate that the economy fell into recession. “While some talk about a V-shaped recovery, I just don’t see how we come out of this as quickly as we fell into it,” Snaith said. “I see this more as a ‘gravy boat’ recession and recovery,” he said, suggesting the recovery will be slow and gradual.

He said that the government policy response to the recession has been largely ineffective, likening it to the gadgets available to travelers in the “Sky Mall catalogue.” The four main components of the government response have been interest rate cuts, the first stimulus package, TARP and the second stimulus package. He said these were expensive ideas that really haven’t worked.

Growing U.S. debt is a serious problem, he said, although the effects of the debt have been masked by an inflow of investment capital into U.S. government bonds. Of concern, however, is the high percentage of investment coming from other countries. More than 60 percent of U.S. debt is held by foreigners, compared to just 19.4 percent in 1989, Snaith noted.

“The inevitable result is higher taxes,” he said. “I just don’t see how you go on with our policies without raising taxes.”

The annual combined convention for the North Dakota and South Dakota bankers association opened this evening with a ’50s theme party at the Ramada Plaza and Suites in Fargo N.D. NDBA officials report record attendance at the 2010 meeting.

In an unusual scheduling development, the NDBA/SDBA meeting is taking place the exact same dates as the annual Minnesota Bankers Association convention, which opened this evening in Duluth. This editor drove to Fargo from Minneapolis this afternoon for the opening party and for tomorrow morning’s general session. While the bankers golf tomorrow afternoon, I will travel to Duluth to join the MBA meeting in the evening and for Tuesday’s events.

Rick Clayburgh, NDBA president/CEO, said the convention planners were aware of the scheduling conflict and accommodated vendors by scheduling the exhibit hall event for Sunday night, so those who want to hit both conventions can travel to Duluth tomorrow for MBA’s vendor event Monday evening.

On Tuesday, NDBA Chairman Tim Hennessy, U.S. Bank, Bismarck, will hand the association leadership over to Brent Zavalney, Choice Financial Group, Langdon, N.D. Also, SDBA Chairman Robert Rutten, Citizens State Bank, Arlington, S.D., will hand the association gavel over to Bruce Byrum, First Interstate Bank, Spearfish, S.D.

Mike Jacobson, NebraskaLand National Bank, North Platte, concluded his chairmanship of the Nebraska Bankers Association last Friday at the association’s convention outside of Omaha.

“Together, we have told the story of traditional banking,” Jacobson said as he recounted the past year. ” We have told Washington that we are the leaders and the lenders in communities across America.  We are the one financial entity that is still standing and still lending –- and we need the freedom to continue to do what is right for our country.

“We made it clear to everyone that we did not write the bad mortgages.  We did not cause the financial crisis.  And we told them that traditional banking is the solution to get us on the right path to economic growth and prosperity.

“We, too, believe that consumers should have the right to products and services from regulated and insured depository institutions.  And that the government’s focus should be on those who caused the problem — not on the traditional banks who are solving the problem.”

Jacobson noted that the economy is beginning to turn around, but noted that there remains much work to be done. He concluded by acknowledging an association milestone: its 120th anniversary.

“This year we celebrate 120 years as an association!” Jacobson said. “In September 1889, a group of 47 Nebraska bankers traveled to Kansas City to attend a convention of the American Bankers Association.  While there, these individuals decided to form a state association to represent Nebraska’s fledgling banking industry.  Four months later, the Nebraska Bankers Association became a reality with the organization’s first convention held on Jan. 22, 1890.  A total of 232 banks were represented at this organizing convention, and the Nebraska Bankers Association came into being.

“Now, 120 years later, Nebraska’s banking industry continues to be united under the banner of the statewide trade association that was formed on that winter day by those forward-looking pioneer bankers.

“Those founding bankers knew that history is not a matter of chance, but a matter of choice.  They understood that history is made by people who choose to make a difference.  And so it is today.”

Federal Reserve Bank of Kansas City President Tom Hoenig was sitting in a television studio on Thursday afternoon when the stock market plunged 1,000 pointsin a matter of minutes. The Bloomberg television interviewer was keeping Hoenig apprised: “Down 100 points, now another 100 points, now another hundred points.” The interviewer paused and asked Hoenig “Do you have any comment?” Lacking any additional information, Hoenig declined.

Hoenig shared this story when he spoke to bankers the next day at the Nebraska Bankers Association convention near Omaha. He said we are in a tense environment, ripe for this kind of unpredictable market activity.

The Federal Open Markets Committee has been voting to keep interest rates low, and Hoenig has not been voting with the majority. He explained to the Nebraska bankers that he does not like providing assurances that the Fed will keep rates low. He said it would be better for the Fed not to telegraph its intensions. “At least take away that language so the market has to think about it,” he said.

He said there are three things we must get out of financial industry reform legislation:

1. We have to make sure we end too big to fail. He called the language in the Senate bill a good start, but said the law needs to state clearly when financial institutions will be closed. He did not express confidence in a system that relies on the Treasury Secretary and other officials to make difficult decisions about closing institutions.
2. We need to address the derivatives market. He said that combining the activities of investment banks with traditional banks has increased the risk profile of the banking industry, and steps need to be taken to reduce the risk.
3. And third, the role of the Federal Reserve needs to be preserved with respect to supervision of bank holding companies. He said eliminating the Fed’s role in the supervision of smaller holding companies will turn the Central Bank of the United States into the Central Bank of Wall Street. “I worry about the next crisis. What will it be like to have a central bank with no eyes on the middle part of the country?” he asked.

Hoenig further expressed concern about the country’s growing debt, saying tax increases alone will not solve the problem. Spending cuts are essential, he said.

The Nebraska Bankers Association kicked off its 2010 annual convention yesterday afternoon at the new conference center in LaVista, just outside Omaha. Chester Elton, who wrote a top-selling business book called The Carrot Principle, open the meeting with a lively presentation.

He encouraged bankers to engage their employees by properly recognizing them for their work. He said: “You don’t simply want satisfied employees, you want engaged employees.” Goal setting, communication, trust, and accountability are the four keys, he said, to attracting engaged employees.

He cited a survey that said at any given moment, 65 percent of the workforce is actively looking for another job even while they work their current job.

The best companies, Elton said, provide recognition, celebrate successes, position their work as a noble cause, and demonstrate the personal impact each employee will have toward that cause.

Companies should work to become an “employer of choice,” he said, because they receive five times as many applications from prospective employees as typical companies. He said companies that become known as employers of choice retain their employees longer and they ultimately earn more money.

Citing another survey, Elton said 25 percent of employees say they are driven to tears with stress at their job, 50 percent said their work is a place of verbal abuse and yelling; only 45 percent said they were satisfied with their job.

Elton noted that a single person can make a big difference at a company. “People join organizations but they leave people,” he said, sharing a story about one of his early jobs where his boss was so frieghtening that people rarely held their jobs for very long.

Elton said 88 percent of people who leave their job say that lack of appreciation was a factor. Many people will say they are leaving over money when they are really leaving for other reasons. The average increase that people get when they leave one company for another, he said, is only 3 percent.

One company surveyed managers and employees separately. When asked why peope leave their company, managers rated “lack of appreciation,” as No. 8 in a list of reasons. In the employees survey, that response was ranked No. 1.

Elton encouraged managers to recognize their employees frequently, specifically, and in a timely manner. Recognition makes people feel good; Elton noted that people will forget what you did and what you said, but they rarely forget how you make them feel.

The NBA convention continues today, with speeches scheduled from ABA Vice Chairman Kell Kelly and Kansas City Fed Bank President Tom Hoenig.