|
News
SDBA Updates
SDBA Events
Online Education
Compliance Alliance
The House Financial Services Committee voted to advance nine bills on a range of issues that were supported by the American Bankers Association. During a series of votes yesterday and today, the committee favorably reported:
- H.R. 5577, the NFIP Extension Act of 2026, led by Rep. Andrew Garbarino (R-N.Y.), would extend the National Flood Insurance Program through Sept. 30, 2026, and make it retroactive to Sept. 30 of this year. The vote was 53-0.
- H.R. 6553, the Tailoring and Indexing Enhanced Regulations (TIER) Act, led by Rep. Andy Barr (R-Ky.), would index various asset-based thresholds for bank regulations to nominal GDP. The bill focuses on mid-size and regional banks and primarily includes indexing for enhanced prudential standards, periodic and supervisory stress tests. The vote was 33-19.
- H.R. 6554, the Community Bank Representation Act, by Rep. Monica De La Cruz (R-Texas), would expand community bank representation on the Federal Reserve board by providing a more explicit role in the supervision and regulation of banks with less than $17 million in total assets, indexed annually for nominal GDP. The vote was 30-23.
- H.R. 6536, Rural Depositories Revitalization Study Act, by Rep. Ralph Norman (R-S.C.), would require the prudential regulators to jointly study ways to improve the growth, capital adequacy, and profitability of rural depository institutions and to identify regulatory barriers to the formation of new depository institutions. The vote was 50-0.
- H.R. 6551, the New Bank Application Numbers Knowledge Act (New BANK) Act, by Rep. Barry Loudermilk (R-Ga.), would require the Fed, FDIC, the Office of the Comptroller of the Currency and the National Credit Union Administration to publish annual reports on applications received for federal depository institution charters, depository institution holding companies, federal deposit insurance and state depository institution charters. The vote was 53-0.
- H.R. 6546, Merger Process Review Act, by Rep. Roger Williams (R-Texas), would require the inspector general of each banking regulator to review its merger review procedures every three years and submit a report to Congress. The vote was 52-0.
- H.R. 6570, the Merger Agreement Approvals Clarity and Predictability Act, by Rep. Scott Fitzgerald (R-Wis.), would require the comptroller general to study the use of commitments, conditions and other aspects of the merger review procedures by regulators in connection with bank merger applications. The vote was 52-0.
- H.R. 6544, The Regulatory Efficiency, Verification, Itemization and Enhanced Workflow (REVIEW) Act, by Rep. William Timmons (R-S.C.), would amend the Economic Growth and Regulatory Paperwork Reduction Act of 1996, or EGRPRA, to build on the existing regulatory review process by increasing the frequency from every 10 years to every seven year It also would require the Fed, FDIC, OCC and NCUA to conduct an internal review of the cumulative effects of their regulations. The vote was 29-22.
- H.R. 6550, the American Financial Institution Regulatory Sovereignty and Transparency (American FIRST) Act, by Rep. Barry Loudermilk (R-Ga.), would require the Fed, OCC and FDIC to include in their annual reports information on their interactions with global financial regulatory or supervisory forums like the Basel Committee. The vote was 29-23.
The committee also voted 50-1 to advance its bipartisan housing package, the Housing for the 21st Century Act (H.R. 6644). ABA has not taken a position on the bill.
ABA Banking Journal: Fed rescinds guidelines for weighing crypto requests from non-FDIC insured banks
December 17, 2025 
The Federal Reserve today rescinded a 2023 statement on how it would evaluate requests from non-FDIC insured banks to engage in cryptocurrencies and replaced it with a new statement to potentially lower the barrier for those institutions to get approval.
The 2023 statement said that state-chartered but non-FDIC-insured financial institutions “will be subject to the same limitations on activities, including novel banking activities, such as crypto-asset-related activities.” The new statement maintains that principle but adds that different activities should be subject to different regulations. As a result, it “acknowledges that uninsured state member banks may be permitted by the board to engage in activities as principal that are impermissible for insured state member banks, provided that such activities are conducted in a manner consistent with bank safety and soundness and preserving the stability of the U.S. financial system,” according to a board memo.
Fed Vice Chair for Supervision Michelle Bowman said the new statement was issued in recognition that new technologies offer efficiencies to banks and improved products and services to bank customers. “By creating a pathway for responsible, innovative products and services, the board is helping ensure that the banking sector remains safe and sound while also modern, efficient, and effective,” she said.
Fed Governor Michael Barr dissented, noting that the original statement passed by unanimous consent under the principle that the same bank activity should be subject to the same regulation. “Therefore, I cannot agree to rescind the current policy statement and adopt a new one that would, in effect, encourage regulatory arbitrage, undermine a level playing field and promote incentives misaligned with maintaining financial stability,” he said.
Full Article
ABA Banking Journal: FDIC proposes application process for banks seeking to issue stablecoins
December 16, 2025
The FDIC today proposed rulemaking to establish a process under which banks and savings institutions can seek agency approval to issue stablecoins through a subsidiary, as allowed by the GENIUS Act passed by Congress earlier this year.
According to a staff summary of the proposal, institutions would be required to submit applications with a description of the proposed payment stablecoin and the proposed activities of the subsidiary of the applicant. The applications must list relevant financial information of the subsidiary; a description of its ownership and control structure; and relevant policies, procedures and customer agreements, including for custody and safekeeping. Institutions must also submit an engagement letter with a registered public accounting firm.
The FDIC would notify an applicant as to whether the application is considered substantially complete no later than 30 days after it was submitted. The agency must make a determination on whether to approve the request no later than 120 days after an application is deemed substantially complete.
“This proposed rule is the FDIC’s first action to implement the GENIUS Act,” FDIC Acting Chairman Travis Hill said in a statement. “In the months ahead, we expect to issue a proposed rule to establish the statutorily mandated capital, liquidity and risk management requirements for subsidiaries of FDIC-supervised institutions that are approved to be [permitted payment stablecoin issuers], among other GENIUS Act-related workstreams. We will also continue to explore ways to provide regulatory clarity regarding activities related to digital assets and tokenized deposits more broadly.”
Comments on the proposal are due 60 days after publication in the Federal Register.
Full Article
ABA Banking Journal: How banks can avoid the dangers of AI slop
Banks can achieve powerful results with generative AI platforms, but poor-quality AI output can harm operations and reputations.
December 16, 2025 | Steve Morgan
Imagine being able to improve service levels by 50%, increase quality levels to nearly 100% and reduce workloads by 20 to 80% across all areas of customer service and operations. That opportunity isn’t on the horizon. It’s here right now. But with that kind of promise comes real risk that without the right approach, the same tools that drive progress can just as easily create new problems.
Phrases like “AI slop,” “hallucinations” and “confabulation” have entered the conversation. At the end of the day, they all point to the same thing which is the potential for mistakes or poor content when using AI. “AI slop,” in particular, refers to low-quality or generic output, typically on the creative side.
Now, making mistakes with technology is nothing new, especially in banking. Our industry has long been an early adopter of innovation, from ATMs and tap payments to digital wallets and automated operations. I’ve seen technology implementations go wrong firsthand. So, what’s different now with AI, and how can we avoid those same pitfalls while delivering true value for customers and the bank?
What’s new . . . what isn’t
Let’s start with what hasn’t changed. Solid project management and effective change management are still essential. In fact, they’re even more critical now, given the significant impact AI and automation can have on roles, some of which may be partially or fully transformed. Managing these impacts requires real human expertise and empathy.
What is different is the scale and speed of what’s possible. Generative AI opens the door to revising entire processes end-to-end. GenAI excels in creative and ideation spaces, helping us visualize new process flows, redesign customer journeys, and accelerate innovation.
For example, you can use genAI to generate a new process flow by uploading existing diagrams or even a video walkthrough of a system. But while AI can accelerate design, it also increases the need for human expertise to guide and challenge the results, such as testing whether each step truly adds value, where automation makes sense and when human interaction is still essential.
AI can’t answer all these questions because not everything is digitized or accurate. When I ran lending operations, the only way to get service-level details across all areas was to ask me or my team directly. AI can accelerate design time, but it still needs people to interpret, refine, and validate.
Avoiding slop and managing risk
Avoiding AI slop starts long before an output is generated. It requires looking back at how we’ve built and governed models and content in the past. Banking has been using AI and algorithms for years in credit and lending models, trading, and risk management. These systems work because they’re governed by checks and balances, including human oversight. Reports are reviewed by internal audit, risk, compliance and regulators. This structure doesn’t disappear with the introduction of more advanced AI. In fact, it becomes even more important.
And it’s not just about reviewing the output. It really begins with how we design the instructions, context and constraints that shape the AI’s behavior. Designing those instructions is now a critical human responsibility. When AI is left to “reason” freely in real time, its responses can be inconsistent, unpredictable and difficult to govern. That level of improvisation might be fine during early design or brainstorming, but it’s not something banks can comfortably rely on in live customer interactions. In production, AI needs to follow structured, governed workflows.
Processes, policies and escalation paths must still be followed. Even when an AI agent is the one that triggers workflows or automations, those processes need to be auditable, explainable and trusted. That’s especially critical in banking, where trust is the foundation of every relationship, and where it can be broken by something as simple as a service error or as complex as a faulty credit decision.
To avoid AI slop and mistakes, there must be expert review. And no, not from another AI agent. While we’re now developing specialized AI agents, such as those trained on regulatory frameworks or sanctions, there must always be a point where human expertise enters the loop.
Think of it like lending decisions. All credit card applications could be processed 100% straight through. But at certain thresholds covering, for example, affordability or default risk, a person steps in to review the decision or sample-check the algorithm’s performance. Teams also monitor approval and declination variation rates across channels to ensure expected outcomes. The same logic must apply to AI agents. Humans define the task, set the boundaries, determine the workflow and step in wherever nuance or elevated risk demands it.
Keeping humans in the loop
A practical example of successful change and achieving this balance between AI and human expertise can be seen at Santander in Brazil, one of the country’s largest banks with more than 70 million customers. Like most institutions, Santander’s legal operations team manages high-stakes processes that demand both precision and speed through responding to courts, managing case outcomes, and ensuring compliance with strict timelines. Errors can result not only in fines or regulatory issues, but also in lasting damage to client relationships.
To improve both efficiency and accuracy, Santander applied genAI and workflow automation across its legal operations, completely re-imagining the process. Over the course of three months, the bank’s teams worked closely with internal and external legal experts to train and refine the models.
The results were impressive: a77% reduction in workload, 99% accuracy in interpreting and responding to 200-plus-page legal documents and a95% service-level attainment.
The key to success wasn’t just the technology itself, but a disciplined approach to training and change management. The bank improved model performance from roughly 66% accuracy to over 99%, while carefully managing the people side of transformation as hundreds of roles evolved.
Delivering on AI’s promise
We have a tremendous opportunity to fundamentally re-engineer and re-imagine how banking operates. But to deliver on that promise, we must apply the right balance of human expertise alongside AI and automation.
When that balance is achieved, we can truly realize the promise of AI: driving better outcomes for customers, employees and the industry as a whole.
URGENT ACTION NEEDED: GENIUS Act Stablecoin Loophole Threatens Bank Deposits
We are raising an urgent concern regarding the federal GENIUS Act and a potential interest (or rewards) payment loophole that poses a direct risk to bank deposits.
As currently interpreted by stablecoin affiliates and crypto exchanges, the Act’s language may allow them to incentivize customers to move funds from insured bank deposits into stablecoins by offering interest-like rewards—without being subject to the same regulatory, safety, and consumer protection standards as banks.
This creates an uneven playing field, accelerates deposit flight risk, and undermines the role of banks in local lending and economic stability.
For additional context, click the blue hyperlinks below for the following:
1. A letter that the SDBA sent to Senator Rounds (copying Senator Thune and Congressman Johnson) regarding a recent meeting the SDBA had on this important matter.
2. A comparison table explaining the difference between banks, exchanges and stablecoin issuers.
It is critical that Senator Thune and Senator Rounds hear directly from South Dakota bankers, asking them to take action and address this important issue, and “close this loophole.”
To exercise your banking advocacy, please click the link above to send an electronic message to Senators Mike Rounds and John Thune through the co-branded South Dakota Bankers Association (SDBA) Secure American Opportunity (SAO) platform.
➡️Click here to download a detailed visual for how to complete the CALL TO ACTION.
Our voice is strongest when we speak together. Engage, advocate and help shape the future of banking.
As always, thank you for your continued engagement and if you have any questions or need any assistance at all, do not hesitate to reach out to [email protected].
2026 ABA Washington Summit
March 9-11, 2026 | Marriott Marquis | Washington D.C.
 Join the biggest annual gathering of bank leaders in Washington to push for a bank policy framework that lets your bank stay focused on serving your customers, clients and communities. Hear directly from key players in the 119th Congress and the new administration on what the future holds for banks of all sizes.
The SDBA is currently planning to attend the Summit and would like to invite you and your staff to participate as well. Registration is free and you can learn more and sign up here. Join us as we hear from top-notch speakers, connect with our congressional delegations' offices and dine with our friends at the NDBA. You won’t want to miss this opportunity to engage on multiple levels.
If you or one of your staff would like to attend, the SDBA will provide a $500 stipend (1 per member bank) to help defray the costs of any banker attending from a member bank not currently represented on the SDBA Board. There will also be an Emerging Leaders’ Forum and a Women’s Leadership Forum held in conjunction with the Summit.
GSB HR Management School: April 20-24, 2026
Who Should Attend
Whether you’re a veteran HR professional or a newcomer to the HR management field, this information-packed school will provide you with an abundance of take-away material. CEOs and other senior managers are also encouraged to attend to gain a better understanding of how the bank’s HR function is a key element in bottom-line profitability.
What You'll Gain
- A clear understanding of the human resource contribution to bottom-line profitability
- A hands-on approach to learning the business of banking
- How to better select and retain top performers
- An improved performance management process
- Ways to enhance your compensation and benefits program
- How to build career paths for key performers
- Strategies to improve employee productivity, performance, and profitability
- A network of peers to share ideas and resources now and in the future
Enrollment deadline: March 20, 2026
Scholarships DUE February 13. APPLY TODAY!
Details & Registration
Graduate School of Banking: July 26-August 6, 2026
Over the course of 25 months, through a mix of lectures, bank simulations, case study discussions and hands-on projects, you will learn to:
- Retain your best customers
- Increase your market share
- Analyze market conditions to effectively manage risk
- Achieve a sustainable competitive advantage
- Utilize technology effectively to improve performance
- Improve bottom-line results
- Manage change through agile leadership
Enrollment deadline: June 1, 2026
Scholarships DUE May 8, 2026. APPLY TODAY!
Details & Registration
2026 Dakota School of Lending Principles
April 7-10, 2026 | Pierre
 The Dakota School of Lending Principles, hosted by the South Dakota Bankers Association and co-sponsored by the North Dakota Bankers Association on April 7-10, 2026, in Pierre, S.D., is a learning event with one foot grounded in the classroom and one foot in the bank. This school allows students to learn the theory and process of basic lending and then put this knowledge to work in actual nuts and bolts sessions.
The school provides basic instruction appropriate for loan officer trainees, loan support personnel and personal bankers. To ensure exposure to bank structure and terminology, it is recommended that applicants have a minimum of six months lending experience or one year of loan department experience. Applicants not meeting the suggested prerequisites will be contacted to discuss admission qualifications.
Loan Modules
In the four modules on loan types, learn the lending process by studying elements applicable to each loan type: terminology, the application process, interviewing, investigation, credit analysis, loan structure, decision communication and selling. Case studies and exercises provide hands-on learning experience.
Details & Registration
Online Education
Participating in learning opportunities outside the bank can be challenging. Take advantage of the SDBA's extensive selection of webinars and on-demand training to enhance your banking expertise directly from your computer.
GSB Online Seminars
OnCourse Learning
SBS Institute
ABA Training
Compliance Alliance
SDBA eNews Archive
Advertising OpportunityLearn more about sponsoring the SDBA eNews
Questions/Comments
Contact the SDBA at 605.224.1653 or via email
|
