SDBA eNews: August 14 2014

In This Issue

Federal Reserve Policy & Interest Rate Risk Webinar

Interest rate risk is at the top of most banks’ watch lists these days. As bank balance sheets have become increasingly sensitive to the liability side of the ledger, rate changes could have a significant impact on profitability.

In a  free webinar on Sept. 9, former vice chairman of the Federal Reserve, Alan Blinder, one of the co-founders of Promontory Interfinancial Network and an acclaimed economist and author, paints a detailed picture of the current economic situation and explores what goes into the Federal Reserve’s monetary policy. Topics include:

  • Overview of current economic conditions and key market data.
  • Factors most likely to influence market reactions.
  • Evaluation of the timing and degree of a potential Fed rate increase.
Learn more and register.

FICO Announces Credit Score Changes

FICO last week announced changes in the way its credit scores are calculated that are expected to result in higher scores for some consumers.

Specifically, FICO said it would no longer count past-due accounts that have been paid to a collection agency, and it would differentiate medical from non-medical collection accounts. "This will help ensure that medical collections have a lower impact on the score, commensurate with the credit risk they represent," FICO said.

The company estimated that the new method, which will be available in the fall, will increase the score of consumers whose only major credit blemishes are unpaid medical debts by 25 points. Read more.

SDBA Taxation Equality Awareness Campaign


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

SDBA To Hold Bank Technology Conference Sept. 23-24

Technology PhotoTechnology continues to be one of the top 10 challenges a bank faces today, according to a recent community banking poll. Electronic banking provides enormous benefits to consumers in terms of ease and cost of transactions. But as technology continues to evolve, how do community banks offer the advantage of leading-edge technology and still maintain the image of providing great service to their customers?  

Technology is not threatening unless it is viewed as such. The SDBA’s 2014 Bank Technology Conference on Sept. 23-24 at the Clubhouse Hotel & Suites in Sioux Falls will provide ways to help community bankers feel less threatened and more comfortable as they tackle their banks’ operation challenges, along with opportunities provided in this ever-changing world of mobile devices and electronic payment systems.

In response to evaluations following last year’s conference, the SDBA has changed the format of its 2014 Bank Technology Conference. The conference will begin with a reception and dinner with the exhibitors, followed by an evening keynote speaker. Following breakfast, the second day will offer training provided by some of the nation’s top banking IT experts.  

Learn more and register.

ABA to Bankers: Urge House to Pass TRIA

ABA is urging bankers to ask their House members to pass the bipartisan, Senate-approved Terrorism Risk Insurance Act renewal bill. S. 2244 would extend TRIA for seven years while increasing the amount the private sector would be required to cover after a terrorist attack.

Competing legislation passed by the House Financial Services Committee offers a shorter renewal period with less favorable terms on deductibles, the damage threshold and when the legislation is triggered. ABA’s grassroots alert offers talking points to help bankers persuade their House members to adopt the Senate’s version instead.

In addition to writing letters, bankers can raise the issue with their House members during in-person visits during the remainder of the August recess. ABA offers a packet of resources for bankers on advocating during the recess.

Crapo Challenges Education Department Rulemaking

Senate Banking Committee Ranking Member Mike Crapo (R-Idaho) on Tuesday criticized the Department of Education’s proposed rulemaking on student loan disbursement, which ABA has said goes beyond student aid to regulate deposit accounts offered to college students.

The rulemaking could “create a backdoor and burdensome regulation on traditional banking products,” Crapo wrote, “which ultimately may force financial institutions to exit campus markets leading to diminished student choice, restricted convenience, and more unbanked young people.”

Specifically, Crapo raised concerns that the rulemaking exceeds DoE’s statutory authority, that DoE has failed to consult with prudential banking regulators and that the department is moving too fast in seeking to finalize the rule this fall. Read the letter.

FinCEN Issues Advisory on Culture of Compliance

The Financial Crimes Enforcement Network on Monday issued an advisory urging financial institutions to strengthen their culture of Bank Secrecy Act compliance.

“Shortcomings identified in recent anti-money laundering enforcement actions confirm that the culture of an organization is critical to its compliance,” the advisory says. It specifically encourages institutions to ensure that:

  • Leadership is actively engaged in compliance efforts.
  • Compliance is not compromised by revenue interests.
  • Relevant information is shared with compliance staff.
  • Adequate human and technological resources are devoted to the compliance function.
  • The compliance program is tested by an independent, competent party.
  • Leadership and staff understand how their BSA reports are used.

Read the advisory.

FinCEN: 105 Financial Institutions Serving Pot-Related Businesses

The Financial Crimes Enforcement Network has received more than 1,000 suspicious activity reports on marijuana-related businesses, FinCEN Director Jennifer Shasky Calvery said Tuesday in Washington. The SARs received indicate that 105 financial institutions are currently banking marijuana-related businesses, she added.

Under FinCEN’s February guidance, more than 500 SARs were filed as “marijuana limited,” meaning that marijuana is the only red flag in a state where local law permits marijuana. Nearly 125 SARs were labeled “marijuana priority” to flag FinCEN’s attention to possible violations, and more than 475 documented the termination of a marijuana-related business’ account. Financial institutions may file SARs not only for businesses that directly sell or process marijuana but also those that provide goods or services to pot businesses, such as a landlord or vendor.

“From our perspective the guidance is having the intended effect,” Shasky Calvery said. “It is facilitating access to financial services, while ensuring that this activity is transparent and the funds are going into regulated financial institutions responsible for implementing appropriate AML safeguards.” Read the speech.

CFPB Issues Consumer Advisory on Virtual Currencies

The Consumer Financial Protection Bureau on Monday issued a consumer advisory about virtual currencies such as Bitcoin, XRP and Dogecoin and announced it was now accepting complaints about such products.

The advisory warns that virtual currencies are targets for hackers and fraudsters and can be more costly to use than credit cards or cash. It also notes that there is little recourse for consumers if the virtual currency they store on their own computers is stolen.

“If you trust a company to hold your virtual currencies and something goes wrong, that company may not offer you the kind of help you expect from your bank or debit or credit card provider,” the CFPB said.

In soliciting complaints, the bureau noted that complaint data will be used to enforce consumer protection laws and, “if appropriate, take policy steps.” Read the advisory.