In This Issue

• Registration Open for SDBA 2017 IRA School
• White House Releases Principles for Tax Reform
• House Committee Holds Hearing on Choice Act
• ABA Calls on Lawmakers to Repeal Durbin Ahead of Choice Act Hearing
• Rep. Luetkemeyer Introduces CLEARR Act

• Regulators Preview Forthcoming Third-Party Guidance

Registration Open for SDBA 2017 IRA School

IRAs continue to be an essential part of a person’s retirement planning. IRA rules are always changing, and more changes are expected in the near future. It is important to be informed and prepared.

The SDBA is offering its 2017 IRA School Sept. 6-8 at the Clubhouse Hotel & Suites in Sioux Falls. This is the most comprehensive IRA course offered. Learn new rule changes and reinforce existing rules; learn what it means to be in or out of compliance; explore all topics in-depth; and ask questions, share with peers and hear real case problems.

Instructor Mike Nelson taught marketing for 13 years at Central Lakes Community College in Brainerd, Minn., before starting JM Consultants. He conducted insurance, real estate and securities training seminars and developed financial training services for financial institutions. JM Consultants offers all IRA products and services.

See the complete agenda and register.

White House Releases Principles for Tax Reform

The Trump administration yesterday released its long-awaited principles for tax reform. The proposal, which focuses on creating economic growth and simplifying personal taxes, was touted by Treasury Secretary Steven Mnuchin as “the biggest tax cut and the largest tax reform in the history of our country.”

“The president and I and others in the administration fundamentally think we can get to 3 percent sustained economic growth,” Mnuchin said at an ABA-sponsored event in Washington, D.C., yesterday. “That’s very achievable. Tax reform is critical to it, regulatory reform is critical to it.” He added that gains from economic growth would bring in revenue to support the administration’s plan.

Key provisions in the proposal include a 15 percent tax rate for business income (including C corporations and pass through entities), a territorial system, a one-time tax on un-repatriated foreign earnings and the elimination of tax breaks for special interests. For individuals, the plan calls for three rate tiers of 10, 15 and 35 percent. It would also double the standard deduction, provide additional tax relief for family and dependent care expenses and repeal the alternative minimum tax and the death tax. The plan would maintain the deductions for charitable contributions and mortgage interest.

Absent from the proposal were mentions of a border adjusted tax or change in the deductibility of net interest income, both of which were provisions supported by the House “Better Way” blueprint for tax reform. Mnuchin added that the administration’s plan is intended to be used in discussions with House and Senate policymakers as a bill is drafted and debated. While he did not identify a concrete deadline for passing tax reform legislation, he said that “we want to move this as fast as we can.“

ABA President and CEO Rob Nichols, who also spoke at the tax-reform event prior to the administration’s release of its tax plan, expressed the association’s general support for common-sense tax reform that would decrease complexity and stimulate economic growth. “A stronger economy is good for our customers and the country, and that’s good for everyone, including our nation’s banks,” Nichols said. “High taxes are the number one concern of small businesses, and tax reform affects all bank customers. We certainly want to understand that impact.”

ABA will continue to evaluate the proposal and engage with lawmakers and the administration as tax reform moves forward. Read the proposal. For more information, contact ABA's John Kinsella or Curtis Dubay.

House Committee Holds Hearing on Choice Act

The House Financial Services Committee yesterday held a hearing on the Financial Choice Act, Committee Chairman Jeb Hensarling’s (R-Texas) sweeping, 600-page bill aimed at reforming parts of the Dodd-Frank Act’s extensive supervisory regime and providing regulatory relief for banks. A markup of the bill is scheduled for next week.

The Choice Act includes a number of regulatory relief provisions long sought by ABA as part of its Blueprint for Growth, including a Qualified Mortgage safe harbor for mortgage loans held in portfolio, more tailored supervision based on an institution’s risk profile and business model and repeal of the Durbin Amendment, which capped prices on debit interchange, as well as the Volcker Rule.

The bill would also reform the Consumer Financial Protection Bureau, renaming it the Consumer Law Enforcement Agency and stripping it of examination powers and “UDAAP” enforcement authority and replace Dodd-Frank’s Orderly Liquidation Authority provision with a new Bankruptcy Code. In addition, it would also allow banks maintaining a 10 percent non-risk weighted leverage ratio to elect into an alternative regulatory regime that would, among other things, exempt qualifying institutions from federal capital and liquidity requirements, blocks on capital distributions, systemic risk regulations and limitations on mergers and acquisitions provided that any new entity also maintains the minimum leverage ratio. Read the bill text.

ABA Calls on Lawmakers to Repeal Durbin Ahead of Choice Act Hearing

Ahead of yesterday’s hearing on the Financial Choice Act, ABA and several financial trade associations sent a letter to members of the committee urging them to support provisions in the bill that repeal the controversial Durbin Amendment, which imposed government price controls on interchange fees.

The groups noted that the amendment has enhanced retailers’ revenues while limiting the range of financial products and services banks are able to offer their customers. “Big box retailers have amassed an $8 billion annual windfall from the Durbin Amendment,” they wrote. “Instead of passing on revenues to their customers in the form of lower prices at the checkout counter, Federal Reserve Board of Richmond data show that 99 percent of retailers raised prices or kept them level after Durbin went into effect. Academics have even described the Durbin Amendment as a wealth transfer from low-income families to retailers.” Read the letter.

Rep. Luetkemeyer Introduces CLEARR Act

 
Rep. Blaine Luetkemeyer (R-Mo.) on Tuesday introduced the ABA-advocated CLEARR Act (H.R. 2133), which would provide relief from certain rules and regulations for community banks. Many of the bill’s provisions are included in ABA’s Blueprint for Growth.

Among other things, the bill would limit the authority of the Consumer Financial Protection Bureau by raising the asset size threshold for CFPB supervision from $10 billion to $50 billion and removing the term “abusive” from the CFPB’s “unfair, deceptive or abusive” acts or practices authority. It would also provide relief in the mortgage lending area by exempting community banks from certain escrow requirements and providing a Qualified Mortgage safe harbor for loans held in portfolio.

Additionally, the bill would repeal the Dodd-Frank Act provision amending the Equal Credit Opportunity Act to require collection of small business and minority-owned business loan data, and it would prohibit federal banking agencies from requiring depository institutions to terminate a specific account or group of accounts unless the agency has a material reason not based solely on reputational risk. Read more.

Regulators Preview Forthcoming Third-Party Guidance

 
Regulatory staff from the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency shared their observations and previewed forthcoming regulatory updates on third-party risk management during a meeting with ABA member bankers in Washington, D.C., this week.

Third-party risk management continues to be an area of focus for examiners, and all three agencies said they are working carefully to assess and address the challenges of fintech relationships in particular. In its study of the risks and benefits relating to fintech, the Federal Reserve has identified third-party guidance as a potential focus area and expressed a desire for any feedback or questions--particularly from community banks--on its guidance relating to fintech due diligence or management of subcontractors. The FDIC added that it is currently reviewing comments on proposed guidance issued last summer on third-party relationships.

Meanwhile, the OCC said that its examiners will be looking more closely at the ongoing monitoring of third-party relationships beyond the due diligence phase and emphasized that banks should have processes in place for ensuring that service providers are delivering on promises outlined in their contracts.

The agency also highlighted a need for more board oversight in the contract process and more reporting up to the board on critical third party activities. The OCC said it expects to issue frequently asked questions in the coming days to supplement its 2013 bulletin on third-party risk management that will provide additional clarity, particularly with respect to fintech relationships, mobile banking, and industry collaboration on third-party risk management.