OCC Issues New Exam Guidance on Retail Lending
The OCC yesterday issued a new booklet on retail lending as part of its Comptroller’s Handbook. The new booklet discusses risks associated with retail lending and provides a framework for examiners to evaluate retail credit risk management activities. It supplements the core assessment sections of the Comptroller's Handbook booklets on large bank supervision, community bank supervision and federal branch and agency supervision. Download the booklet.
GSB Bank Technology Security School Set for Oct. 15-20
The Graduate School of Banking at the University of Wisconsin-Madison will hold its Bank Technology Security School Oct. 15-20 at Dex Media Center in Dallas, Texas.
This innovative one-week school is designed by, and especially for, information security officers in the financial industry. It features in-depth labs that allow attendees to work with learned concepts to gain skills and tools they can put to use immediately at the bank.
The school will give both veteran information security officers and those new to the field the skills and knowledge to effectively secure their banks and their customers' most secure information. Learn more and apply.
Question of the Week
In regards to Regulation E and unauthorized disputes, can the bank have a policy to require police reports as part of their unauthorized resolution procedures?
Answer: The bank must always start an investigation once a complaint has been received (written or oral) from the customer. While a bank is allowed to require "written confirmation" of error from a consumer as part of the error resolution process within 10 business days of an oral notice, Regulation E does not permit a bank to require documentation such as notarized affidavits, statements or copies of police reports. Additionally, the bank cannot require a customer to come to the branch to notarize any statements.
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Report: Trump 'Very Close' to Fed Nominations
President Trump is “very close” to nominating a Federal Reserve vice chairman for supervision and another governor to fill a designated seat for an individual with community bank expertise, according to Treasury Secretary Steven Mnuchin, who was interviewed with Trump by the Wall Street Journal.
Trump changed course from previous statements about Fed Chairman Janet Yellen, whose term expires early next year. Trump told the Journal that she was “not toast” and added: “I like her, I respect her. It’s very early.” During the 2016 campaign, Trump had signaled that he would not reappoint Yellen over her approach to monetary policy, but in the interview, he said that he “do[es] like a low-interest rate policy, I must be honest with you.”
During the interview published yesterday, Trump also said that he would fill vacancies on the Export-Import Bank board, allowing the bank to make larger loan guarantees again--a long-standing priority for ABA and its trade finance subsidiary, BAFT. “Instinctively, you would say, ‘Isn’t that a ridiculous thing,’” Trump commented about Ex-Im. “But actually, it’s a very good thing. And it actually makes money, it could make a lot of money.”
ABA Urges Treasury, Regulators to Fix Capital Rule Problems
As part of the banking industry’s continuing response to President Trump’s executive order outlining “core principles” for financial regulation, ABA on Monday provided recommendations to the Treasury Department on areas where the bank capital framework can be improved.
Specifically, ABA recommended ending the penalty on banks for holding mortgage servicing assets, treating risk-free assets like cash and reserves at the Fed as truly risk-free, correcting the Basel capital disadvantage for Subchapter S banks, excluding unrealized gains and losses from capital calculations, following congressional intent on trust preferred securities and reducing unnecessary complexity in capital calculations.
ABA emphasized that holding adequate levels of capital is a “primordial view” of the bankers. Today, “capital regulation for U.S. banks is far more complex than need be to achieve that supervisory result,” the association added. “There is some tailoring of capital standards, but more can be done to make capital regulations better aligned with the risks presented by the variety of business models and activities of our diverse banking industry.”
As Treasury reviews the capital framework, ABA urged policymakers to focus on unique concerns related to community banks, reducing the number and complexity of calculations, recognizing the role of stress testing and incorporating appropriate risk sensitivity instead of relying solely on a leverage ratio.
The white paper is the second of several that ABA will submit to Treasury in response to the executive order. It reflects feedback and input from numerous banks participating in ABA’s capital working groups over recent years. Read the white paper. For more information, contact ABA’s Wayne Abernathy.
Financing Available for Beginning Farmers
Bond purchasers can potentially save thousands of dollars in federal taxes by investing in a beginning farmer.
Through the Beginning Farmer Bond program, the South Dakota Value Added Finance Authority (VAFA) issues tax-exempt bonds for qualifying beginning farmers to purchase agricultural land at lower interest rates. The limit on a beginning farmer bond is $524,200.
“The beginning farmer bond program has different eligibility criteria than other governmental programs, so I would encourage producers to contact us if they are purchasing agricultural real estate,” says Terri LaBrie, finance administrator for the South Dakota Department of Agriculture (SDDA). “To be eligible for the program, an applicant must be at least 18 years old, a resident of South Dakota, have a net worth under $400,000 and own less acres than 30 percent of the county median.”
Typically the Beginning Farmer Bond program works through a local lender. However, if a retiring farmer is interested in passing on his or her land to a beginner farmer, the interest from that contract sale is federally tax exempt--providing substantial savings to the seller. There are regulations prohibiting this type of transaction with closely-related parties such as parents or grandparent, so a third-party lender is required in those cases.
For information on the financial programs offered through SDDA,contact LaBrie at 605.280.4745 or [email protected]. Learn more.
FDIC's New Affordable Housing Guide Details FHLB Programs
The FDIC last week released the third installment of its guide to affordable single-family home loan programs, which collects information about programs to expand access to affordable mortgage credit, including programs targeted in rural and low- and moderate-income communities and to Native Americans and veterans. The guide is designed to help bankers compare different programs and their Community Reinvestment implications and to identify practical steps to participate.
The latest installment of the guide provides an overview of programs currently offered by Federal Home Loan Banks to support single-family home purchases, such as down payment and closing cost assistance, and alternatives for selling mortgages on the secondary market. Previous installments of the guide cover federal and GSE programs, as well as those offered by state housing agencies. Read more.
Article Spotlights 'Handcrafted' Banking Turnaround
The latest article from the ABA Banking Journal tells the story of how banker Blaine Jackson helped change the course of Charlotte, N.C.’s NewDominion Bank when the institution was in danger of failing after the financial crisis.
A de novo founded in 2005, NewDominion had aggressively pursued commercial real estate loans but was hurt badly by the deteriorating real estate market during the crisis years. When Jackson joined the bank as CFO in 2011, NewDominion’s leverage ratio was hovering just above failure.
“No miracle was great enough to save this bank without capital,” Jackson recalls. “It just wasn’t going to happen.” Together with then-CEO John Hipp, Jackson and his colleagues rolled up their sleeves and took a retail sales approach to capital raising--securing $10.5 million in equity from mostly local investors. Jackson took over as CEO in 2014, and, with the bank in a much stronger capital position, turned his focus to rebranding NewDominion around the idea of “banking handcrafted.” Read the article.
Make Plans to Attend Dakota School of Banking
Applications are being taken for the 2017 session of the Dakota School of Banking June 18-23 on the campus of University of Jamestown in Jamestown, N.,D.
The school provides a focused education of the banking industry. Students enroll for two years, attending one week each summer. The first-year session provides students with a general overview of the banking industry and banking departments. The second-year session builds on this general banking knowledge and adds a computerized bank management simulation.
Bankers at all levels benefit from the well-rounded curriculum that builds on fundamental skills and focuses on emerging trends. Learn more and register.
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