SDBA eNews: September 18, 2014

In This Issue

Hacker Hour: Business Impact Analysis

The cornerstone of a good business continuity plan starts with a good business impact analysis (BIA). But, where do you start? What does it look like? How do you use it? Can you automate it?

Join Secure Banking Solutions on Oct. 1 for a 45-minute discussion on what the company has seen for BIA and the best practices they recommend in developing a good business continuity program. Learn more and register.

Free Pre-Conference on Changing Ag Credit Environment

ABA’s National Agricultural Bankers Conference -- Nov. 9-12 in Omaha, Neb. -- will feature a free pre-conference seminar on the evolving agricultural credit risk environment. Ag economists David Kohl and Robert Craven and staff from Farmer Mac will discuss how ag bankers can manage risk in their portfolios in turbulent times.

General session speakers at the conference will include futurist Lowell Catlett, seed breeder Harry Stine, economist Ed Seifried and former CIA officer James Olson.

Other sessions will discuss developing issues in big data, effective communication, economic outlooks, the next generation of farmers and an analysis of the 2014 Farm Bill. Register now.

SDBA Taxation Equality Awareness Campaign


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Upcoming Events

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Sponsorship Opportunity

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

Still Time to Register for SDBA's 2014 Compliance School

Compliance is one of the most crucial and consuming issues inthefinancial industry today. The regulatory agencies are making it clear through their examinations of banks that no institution can afford to be without a comprehensive, well- managed compliance program. Your compliance officer must be able to run the process, including a bank-wide training program, like a well-oiled machine.

The SDBA will hold its 2014 School of Compliance Sept. 29–Oct. 2 at the Clubhouse Hotel & Suites in Sioux Falls. It ensures that financial institutions have the latest knowledge and preparation they need to properly handle compliance issues.

Constant changes and the highly-charged regulatory environment make this information more important than ever to your financial institution. You will have the opportunity to interact with nationally-known compliance experts and with others involved in compliance from institutions similar in size to your own.

Learn more and register.

CFPB to Extend Oversight to Nonbank Auto Lenders

After issuing controversial guidance last year to banks that offer indirect auto loans through car dealers, the Consumer Financial Protection Bureau is seeking to expand its oversight of the auto lending market. The bureau yesterday proposed a rule that would allow it to supervise nonbank auto finance companies.

The rule would cover nonbanks making more than 10,000 auto loans per year, capturing an estimated 38 companies that originate approximately 90 percent of all nonbank auto loans and serve 6.8 million borrowers in a year.

The CFPB also released a report on its previous supervision of auto loans and a detailed description of the proxy methodology the bureau uses to identify potential fair lending violations. Read more.

House Passes ABA-Advocated Reg Relief Provisions

The full House on Tuesday passed by 327 to 97 an ABA-advocated bill making several technical corrections to the Dodd-Frank Act, representing regulatory relief for financial institutions of all sizes. The bill includes three measures that had independently passed the House.

These include an exemption from Volcker Rule prohibitions for collateralized loan obligations issued prior to Jan. 31, 2014, that clarifies the definition of CLO ownership in a way that would allow more banks to retain CLOs. The bill would also clarify the qualified mortgage points-and-fees test so as not to harm wholesale originators and exempt bank end users from margin requirements when using swaps to mitigate risk.

The bill, sponsored by Reps. Andy Barr (R-Ky.) and Gary Miller (R-Calif.), also includes a Senate-passed measure allowing the Federal Reserve to apply insurance-specific capital requires to insurers designated as systemically significant.

The House also passed by 320 to 102 a regulatory relief bill that includes an ABA-backed technical correction to the SEC registration threshold for savings and loan holding companies. On Monday, it passed a bill allowing banks to offer prize-linked savings accounts. Read ABA’s joint letter on the Barr-Miller bill.

Plagge: Community Banks Face 'Avalanche of Regulation'

An avalanche of regulation is harming community banks, ABA Chairman Jeff Plagge told the Senate Banking Committee Tuesday. Plagge, president and CEO of Northwest Financial Corp., Arnolds Park, Iowa, stressed that the imbalanced “one-size-fits-all” regulatory climate has directly hurt the operations of smaller banks and, by extension, raised the costs of credit for bank customers.

“The impact goes beyond just dealing with new compliance obligations -- it means fewer products are offered to customers,” he said. “This means less credit in our communities. Less credit means fewer jobs, lower income for workers and less economic growth,” For example, he added, 58 percent of banks have canceled or delayed a new product because of regulatory burden, and 44 percent have ended an existing product or service.

Plagge urged senators to pass several relief bills that would reduce unnecessary notice requirements, mandate cost-benefit analysis for accounting rules, expand the safe harbor for mortgage lending, allow more banks to qualify as rural if appropriate. Meanwhile, he added, prudential regulators should adopt a customized examination approach that would give credit to well-run banks that know their customers. Read the testimony.

ABA, State Associations Pitch Relief for Highly-Capitalized Banks

The federal banking agencies should allow highly-capitalized banks to bypass the cumbersome calculations required by the Basel III capital standards, ABA and the state bankers associations said in a letter on Monday.

“This proposal is not intended to reduce the amount of regulatory capital banks need,” the associations said. “It is designed to be a regulatory relief measure for banks that can demonstrate they have significantly more regulatory capital than the new Basel III standards require.”

The associations proposed that banks with common equity Tier 1 risk-based capital ratios of at least 14 percent be allowed to use existing and less complex Basel I standards in calculating assets. A bank capitalized at the 14 percent level holds more than twice the Basel III requirement, making Basel III’s asset measurement requirements superfluous.

“For those banks, this considerable and costly work would yield no additional supervisory or safety and soundness benefits,” the groups added. “Neither would it provide any service of any kind to any potential bank customer.” Read the letter.

New Low-Income Mortgage Product Unveiled

The Neighborhood Assistance Corporation of America and the American Enterprise Institute last week unveiled a new home loan format aimed at helping low-income, minority and first-time borrowers build home equity faster.

The “Wealth-Building Home Loan” features a 15-year term with a fixed rate and full amortization. The loan amortizes more quickly, allowing borrowers to accumulate equity faster, and features a maximum loan-to-value ratio of 100 percent that allows borrowers to repurpose a 5 percent down payment to drop the rate by 1.25 percent.

The loan will provide 90 percent of the buying power of a conventional, 30-year mortgage and equal the buying power of a Federal Housing Administration loan, AEI’s researchers said. It would also reduce foreclosure risk by 70 percent through the shorter loan term and underwriting comparable to the Veterans Administration’s, they added.

AEI and NACA announced the new product at a North Carolina Bankers Association conference in Raleigh, N.C. Bank of America will be the first bank to offer the loan, which will be available through NACA’s 37 offices within two months. They said that pilots for middle-income borrowers would follow. Read more.