SDBA eNews: February 16, 2017

In This Issue

GSBC Future Leaders Scholarship Deadline Nearing


The Graduate School of Banking at Colorado (GSBC) partners with the SDBA each year to offer the GSBC Future Leaders Scholarship. Awarded to one banker per state per year, recipients receive $1,360 per year for three years to attend GSBC's Annual School Session. Scholarship recipients must be first year students.

GSBC's Annual School Session is a 25-month, graduate school of banking that is hosted each July on the campus of the University of Colorado at Boulder. This year's school will be held July 16-28, 2017.

The deadline to apply for the scholarship is March 1. Candidates will be notified by March 31 of selection decisions. Learn more about the school and apply. Apply for the scholarship.


Enrollment Deadlines Nearing for GSB Bank Technology, HR Management Schools


Deadlines are nearing for two Graduate School of Banking (GSB) at the University of Wisconsin-Madison schools.

The deadline to apply for GSB's Bank Technology Management School is Friday, Feb. 17. This innovative one-week school is designed by, and especially for, IT professionals and information security officers in the financial industry. The school will be held March 19-24. Learn more and apply.

The deadline to apply for GSB's Human Resource Management School is Feb. 26. This one-week school provides the foundation for new or veteran human resource professionals to tie together important issues in human resource management with an understanding of the business of banking. The school will be held March 26-31. Learn more and apply.


 Question of the Week

We have a loan that we are restructuring due to a workout/loss mitigation situation, but as part of the terms of the restructure, new money is being added. Would this be a refinancing requiring new TRID disclosures?

Answer: Most likely, yes. The addition of new money takes the loan out of the refinancing exception in Regulation Z for ‘workout’ loans. See Comment 20 (a)(4)-1 ("A workout agreement is not a refinancing unless the annual percentage rate is increased, and is also not a refinancing if additional credit is advanced beyond amounts already accrued plus insurance premiums.")

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Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call 888.353.3933 or email.


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Questions/Comments

Contact Alisa DeMers, SDBA, at 800. 726.7322 or via email.

Rounds Reintroduces ABA, Allliance-Backed Tailored Reg Bill

 
Sen. Mike Rounds (R-S.D.) on Tuesday reintroduced the Senate version of the TAILOR Act (S. 366), which would require financial regulators to consider bank risk profiles and business models when taking regulatory actions. The bill--a signature part of ABA’s Blueprint for Growth--has been strongly advocated by ABA and the alliance of state bankers associations, including the SDBA.

In addition to requiring a tailored approach for future rulemakings, Rounds’ bill would require a review of regulations issued in the past seven years and a report on how they might be better tailored. Regulators would be required to state in notices of proposed rulemaking how they applied the TAILOR Act.

Championed by Rounds and Rep. Scott Tipton (R-Colo.) in the 114th Congress, the bipartisan TAILOR Act cleared the House Financial Services Committee earlier this year. A new House version of the bill is expected to be introduced soon.

“South Dakota is home to some of the smallest and the largest banks in the world, with wide variations in their business models,” said SDBA President Curt Everson. “Bankers from those institutions agree that today’s one-size-fits-all regulatory scheme doesn’t make sense. We applaud Sen. Rounds for introducing the TAILOR Act to start the conversation about matching bank regulation to risk.” Read more.


Dallas Fed's Kaplan Suggests Faster Pace for Rate Hikes

 
Federal Reserve Bank of Dallas President and CEO Robert Kaplan yesterday said that economic conditions and downside risks from accommodative monetary policy warrant a faster pace of interest rate increases.

“[A]s we continue to make progress in achieving our dual-mandate objectives, I believe that we should be taking steps to remove additional amounts of monetary accommodation,” he wrote in an essay posted on the Dallas Fed’s website. “ [M]oving sooner rather than later will make it more likely that future removals of accommodation can be done gradually—that is, reduce the likelihood that the Fed will get ‘behind the curve’ and feel the need to remove accommodation more rapidly.”

Reviewing available data, he concluded that the economy is moving closer to full employment and that headline inflation would return to the 2 percent mark over the “medium term.” As a result, he said policymakers need to consider risks of a persistently low-rate environment. “I also believe there is a cost to excessive accommodation in terms of penalizing savers, as well as creating distortions and imbalances in investing, hiring and other business decisions,” he wrote. “These imbalances are often easier to recognize in hindsight and can be very painful to address.”

Federal Reserve Bank of Boston President and CEO Eric Rosengren made similar comments yesterday about accelerating the pace of rate hikes. In a New York speech, he said “that it will likely be appropriate to raise short-term interest rates at least as quickly as suggested by the Fed’s current [Summary of Economic Projections] median forecast, and possibly even a bit more rapidly than that forecast. Rosengren--who, unlike Kaplan, is not currently a member of the rate-setting Federal Open Market Committee--added that otherwise the Fed would “risk ‘overshooting,’ potentially jeopardizing the very significant progress of the U.S. economy since the financial crisis.” Read Kaplan’s article. Read Rosengren’s speech.


Senate Confirms Mnuchin as Treasury Secretary

 
The Senate Monday night voted 53-47 to confirm Steven Mnuchin as secretary of the treasury. ABA’s Rob Nichols applauded the confirmation of the former regional bank CEO, adding that ABA is eager to work with Mnuchin to “strengthen financial recovery and economic progress.”

Nichols emphasized that as treasury secretary, Mnuchin “has a critical role in promoting economic growth and encouraging financial regulators to coordinate their work to ensure strong, prudential development of the economy. [He] has outlined an agenda to address regulatory issues so banks can better serve their customers, and we look forward to working with the Treasury under his new direction.”


ABA, Washington Federal Sue Over Federal Reserve Dividend Cut

 
ABA and Seattle-based Washington Federal last week filed suit in the Court of Federal Claims seeking relief for government actions that violate contracts with Federal Reserve member banks by reducing dividends paid to those institutions. The cut to the long-established dividend contract was part of the 2015 highway spending bill, which reduced the annual dividend for Fed member banks with more than $10 billion in assets from 6 percent to approximately 2 percent.

ABA President and CEO Rob Nichols in a press release announcing the lawsuit emphasized the effect of the policy, which as originally proposed would have applied to Fed member banks with more than $1 billion in assets. “The change to the statutory dividend rate upended Federal Reserve System policy that has been in place for more than 100 years,” said Nichols, adding that the highway bill “set a troubling precedent to target specific segments of the business community to meet broad public obligations like highway infrastructure. Every industry in this country is vulnerable if this is allowed to stand.”

The litigation seeks to reimburse banks for these improper reductions of the dividend payment. The complaint asserts breach of contract and taking of private property without just compensation in violation of the Fifth Amendment to the Constitution. In 2016, banks lost $1.1 billion to this taking, an amount estimated to balloon to $17 billion over 10 years.

In a Wall Street Journal op-ed announcing the lawsuit, Nichols and Washington Federal Chairman and CEO Roy Whitehead explained their reasoning, defending the 6 percent dividend as a key factor in the nation’s financial stability. “The monetary loss is certainly significant for the industry, especially for smaller banks that will have greater difficulty replacing the lost income,” they wrote. “But the bigger concern is the stability of the banking industry’s regulatory architecture and the principle of an honest contract.”

Read the op-ed.
Read the lawsuit.
Read FAQs on the litigation.
For more information, contact ABA’s Thomas Pinder.


SDBA to Hold IRA Update Next Week in Sioux Falls

 
The IRA Update Seminar builds on attendees’ knowledge of IRA basics to address some of the more complex IRA issues their financial organizations may handle. The SDBA will hold the IRA Update Seminar on Friday, Feb. 24, at the Ramkota Inn in Sioux Falls.

This course will also include all changes that have occurred and discuss any pending legislation. This is a specialty session; previous IRA knowledge is assumed. The instructor, Mike Nelson with JM Consultants, uses real-world exercises to help participants apply information to job-related situations.

More information and register.


SD Emergency Management Seeks Bankers Interest in Cybersecurity Tabletop Exercise

 
The South Dakota Department of Emergency Management is seeking banks interest in participating in a FEMA Tabletop Cybersecurity Exercise in Pierre in April.

FEMA Emergency Management Institute conducts a monthly series of virtual tabletop exercises using a teleconference platform to reach community-based training audiences around the country providing a virtual forum for disaster training. The goals of the exercises are to test participants' knowledge, skills and abilities to conduct all-hazards emergency response and recover effectively.

April's scenario is cybersecurity, and potential dates for a tabletop exercise in Pierre are April 25, 26 or 27 at 11 a.m. to 3 p.m. CST. If you are interested in participating, contact Patti Broer, BankWest, Pierre, at 605-399-4242 or via email by March 1. Also, please indicate which date you prefer. There will be no cost to participate.