SDBA eNews: September 25, 2014

In This Issue

Deadline to Place Ad in 2015 SD Bank Directory Nearing

The SDBA is currently selling advertising in its 2015 South Dakota Bank Directory. The directory is an indispensable reference tool for financial executives and those conducting business with financial decision makers in South Dakota.

Participating in the 2015 South Dakota Bank Directory is a cost-effective advertising strategy that will reach financial industry leaders who utilize this valuable tool on a daily basis and provide your organization with a full year of advertising.

A limited number of full-color ads are still available on the tabbed divider pages. Full-page and half-page black-and-white ads are also available in the front section of the directory. The deadline to place an ad is Monday, Sept. 29. Learn more.

ABA Releases Analysis of MasterCard 'Zero Liability' Changes

ABA yesterday released a staff analysis of MasterCard’s new rules expanding zero liability provisions, with new conditions, to PIN transactions.The new rules take effect on Oct. 17.

ABA’s analysis describes potential operational or policy changes, including notice requirements. Read the staff analysis. For more information, contact ABA’s Nessa Feddis or Steve Kenneally.

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

ABA Carefully Watching Walmart Checking Entry

Walmart yesterday announced a new checking account product solely available in its stores. The product, called “GoBank,” is being offered through prepaid card provider Green Dot Corporation’s FDIC-insured bank, Green Dot Bank.

Walmart said that GoBank is aimed at the underbanked and unbanked, with “almost any” individual over 18 able to set up an account. GoBank will charge $8.95 per month but waive the fee with a monthly direct deposit of at least $500. Walmart also said the product would charge no fees for overdrafts or bounced checks.

ABA has repeatedly opposed Walmart and other unregulated nonbanks entering the banking business, and ABA President and CEO Frank Keating once again expressed caution about the nation’s largest retailer providing traditional banking services.

“While our industry is always seeking new ways of reaching the unbanked, we are watching Walmart very carefully,” Keating said. “Is a bank or Walmart offering these services? Do consumer protection laws, data security mandates and regulatory oversight apply? It seems to us that regulators should be looking very closely at these questions.” Read more.

Kansas City Fed Chief Calls for Community Bank Reg Relief

The Dodd-Frank Act, Basel III and other regulatory efforts aimed at the largest financial institutions have “impinged” on community banks, Federal Reserve Bank of Kansas City President Esther George said at a research conference on Tuesday. She singled out consumer compliance regulation as an example where “the pendulum has swung too far.”

George noted that “for banks that depend on relationship lending with customized terms and conditions, the regulations and the focus on identifying specific undesirable products seems to run counter to the requisite subjectivity that underlies the strengths of community bank lending.” She expressed concern about “a prosecutorial tone” in exams that forces “bank customers to prove they aren’t crooks and bankers to prove to regulators that they aren’t deceptive and unfair.”

The increasing complexity and prescriptiveness of rules also harm community banks through outsized compliance costs, even though they tend to have higher capital levels to begin with, George said. Meanwhile, she continued, “the substitution of rigid rules for examiner judgment has altered the supervisory process without adding value and has instead created higher costs of compliance.” Read the speech.

ABA-Advocated Bills Rack Up Co-Sponsors

Thanks to grassroots advocacy from bankers, ABA-advocated legislation has continued to rack up co-sponsors over the past several weeks. H.R. 2673, which would designate all mortgage loans held in portfolio as qualified mortgages, now has 54 bipartisan co-sponsors. H.R. 4521, which would expand the Consumer Financial Protection Bureau’s mortgage rule relief for small servicers and creditors, now has 36 co-sponsors.

Meanwhile, the CLEAR Act reg relief package (H.R. 1750 and S. 1349) has 39 co-sponsors in the Senate and 176 co-sponsors in the House, and the examination fairness bills (S. 727 and H.R. 1553) have 25 Senate sponsors and 156 House co-sponsors.

ABA continues to encourage bankers to write to their lawmakers asking them to support and co-sponsor these bills -- and to thank them if they already have -- using the following links:

Keating: CFPB Plan to Publicize Complaint Stories is Mistaken

The Consumer Financial Protection Bureau’s plan to include customers’ unauthenticated stories in its complaint database exceeds its statutory mandate and imposes excessive risks on banks and customers, ABA President and CEO Frank Keating said in a comment letter yesterday.

Keating compared the CFPB’s approach to the longstanding approach of the prudential regulators, in which complaints are kept confidential and shared with banks to correct problems and address supervisory concerns. The bureau’s approach, however, “erodes customer privacy, impairs the confidential nature of the exchange between customer and banker, compromises the supervisory process and introduces unreliable and misleading information into the market,” he said.

The legislative language and history authorizing CFPB complaint collection indicates that the bureau should follow the other regulators’ long-standing confidential process. “This mistaken policy is made possible only by the bureau, however well-intentioned, endeavoring to act without statutory authority and contrary to congressional intent,” Keating said. Read the letter.

ABA Calls Out Federal Employee CU Advertising that All Can Join

Washington, D.C.-based Agriculture Federal Credit Union must stop advertising that “everyone is welcome” to join, ABA said in a letter Monday to the National Credit Union Administration. ABA cited AgFed’s website, which says “Everyone is welcome. Join today.” It also invites ineligible individuals to join by becoming members of CityDance for $20.

ABA urged NCUA to order AgFed not to advertise that everyone can join and to conduct a quality assurance review of CityDance to ensure that it truly meets the associational common bond requirement.

Prompted by aggressive ABA advocacy, NCUA last year warned credit unions to avoid “overly aggressive marketing campaigns ... providing consumers with misleading information about single and multiple common bond membership requirements.” The agency is also conducting reviews of third-party groups that CUs use to circumvent common bond requirements. Read the letter.

ABA Issues Apple Pay FAQ

As customers waited in long lines Friday to purchase the iPhone 6, which is equipped with Apple’s new payment system Apple Pay, ABA released a frequently asked questions document to help bankers understand Apple Pay. The FAQ covers several questions bankers may have, including what makes Apple Pay different from using a plastic card, how cards can be linked to Apple Pay, how banks can participate and how to communicate with customers about Apple Pay.

Starting in October, Apple Pay will be available on the iPhone 6, which is equipped with near field communication technology that allows a user to make payments at participating merchants using the existing card network system.

To increase security, Apple Pay uses tokens that create one-time card numbers for each transaction and requires a biometric fingerprint scan to complete the payment. Even if card transaction data were breached at a point of sale, the card issuer would not need to reissue the card. Read the FAQ. For more information, contact ABA’s Steve Kenneally.