In This Issue

• 86 Representatives Call for Community Banker on Fed Board
• ABA Seeks Co-Sponsors on High Priority Reg Relief Bills
• USDA: Additional FSA Farm Ownership Loan Funding Available
• Fed Keeps Tapering on Signs of Economic Pickup
• Supreme Court to Review Loan Officer Overtime Exemption
• OCC Issues Interim Exam Procedures for Volcker Rule

86 Representatives Call for Community Banker on Fed Board

Eighty-six members of the House yesterday wrote to President Obama urging him to appoint someone with community bank experience to the Federal Reserve Board. There are currently two vacancies on the seven-member board.

“We believe it’s in the Federal Reserve’s best interest to have a representative who understands the unique needs and perspectives of community banks when key economic and regulatory decisions are debated,” the bipartisan letter said.

The letter was spearheaded by Reps. Sean Duffy (R-Wisc.) and Ed Perlmutter (D-Colo.). It follows a letter from several senators and repeated statements by Fed Chairman Janet Yellen emphasizing the importance of community bank expertise on the board. ABA and the state bankers associations also have made similar appeals. Read the letter.

ABA Seeks Co-Sponsors on High Priority Reg Relief Bills

ABA is asking bankers to urge their House members to co-sponsor three regulatory relief bills that recently passed the House Financial Services Committee:

• Portfolio lending. This alert urges co-sponsorship for H.R. 2673, which would deem all loans held in portfolio as qualified mortgages.
• Mortgage relief. This alert urges co-sponsorship for H.R. 4521, which would exempt lenders with less than $10 billion in assets from the Dodd-Frank Act's escrow requirements and servicers handling fewer than 20,000 loans from the servicing rule.
• Regulatory clarity. This alert urges co-sponsorship for H.R. 4466, which would require regulators to review and reconcile conflicting regulations before finalizing rulemakings.

“Thanks to a strong initial grassroots effort, these bills are on Congress’ radar screen,” said ABA EVP James Ballentine. “But to get them to a vote on the House floor, we need more co-sponsors from both parties. The best way to get there is for bankers to share the real-world impact of these bills in their communities.”

Bankers can click on the links above to use ABA’s automated system to send customized letters urging their members to co-sponsor the bills. For more information, contact ABA’s Erin Scheithe.

USDA: Additional FSA Farm Ownership Loan Funding Available

The U.S. Department of Agriculture’s Farm Service Agency significantly increased funding in the Direct Farm Ownership program in fiscal year 2014 and anticipates another significant increase in funding, to $1.5 billion in FY 2015, pending congressional action. More than $300 million in loan funds are available to fund Direct FO loans for the remainder of FY 2014, which ends on Sept. 30.

The additional funding creates an opportunity for FSA to expand its partnership with banks by providing credit to eligible farmers for purchasing, enlarging or making capital improvements to a farming operation. The limit for direct FO loans is $300,000. FSA offers two programs linked to joint financing: a joint financing arrangement and a down payment loan program.

“Leveraging the resources of the Direct FO program with bank credit creates the potential to reach many more farmers, particularly beginning farmers, who want to purchase land,” said ABA SVP John Blanchfield. More information is available from local FSA offices.

Fed Keeps Tapering on Signs of Economic Pickup

The Federal Reserve will continue its planned reduction in purchases of Treasury bonds and mortgage-backed securities, tapering the purchases from $45 billion per month to $35 billion in July, the Federal Open Market Committee said yesterday. The committee acted unanimously based on indicators that economic growth is rebounding in recent months.

The FOMC maintained its recent forward guidance on short-term interest rates -- which remain between 0 and 0.25 percent -- under which the Fed will evaluate progress toward its economic objectives using a wide array of indicators.

The committee based its decision to continue tapering on improving labor market indicators, rising household spending and business investment, lower fiscal drag and stable long-run inflation expectations. Read more.  Read the FOMC statement.

Supreme Court to Review Loan Officer Overtime Exemption

The Supreme Court on Monday agreed to hear an appeal of last year’s D.C. Circuit Court of Appeals decision invalidating a Department of Labor rule that required banks to pay mortgage loan officers overtime. In the case of Mortgage Bankers Association v. Harris, the appellate court ruled that the department could not change its determination of exemption under the Fair Labor Standards Act without going through a formal rulemaking process.

The Labor Department had ruled in 2006 that mortgage loan officers were exempt employees under the FLSA, but it reversed itself in 2010. The Mortgage Bankers Association sued DOL, arguing that the government could not “significantly revise” its “definitive interpretation” without conducting an official rulemaking with notice and comment.

OCC Issues Interim Exam Procedures for Volcker Rule

The OCC last week issued interim examination procedures by which examiners will assess banks’ progress toward complying with the Volcker Rule prior to the rule taking full effect in July 2015. Under the procedures, banks are expected to identify any activities subject to Volcker’s ban on proprietary trading and ownership in or sponsorship of a covered fund.

For banks that engage in these activities, examiners will assess progress toward establishing an adequate compliance program. Banks will be expected to issue reports to help the bank and the OCC identify prohibited trading and make plans to conform their covered fund securitization, asset management and sponsorship activities with the rule. Download the exam procedures.