SDBA eNews: March 12, 2015

In This Issue

GSB Graduates to Receive Certificate of Executive Leadership from Wisconsin School of Business

Under terms of a new agreement between the Wisconsin School of Business’ Center for Professional and Executive Development and the Graduate School of Banking (GSB) at the University of Wisconsin-Madison, students who enroll in the Graduate School of Banking starting in 2015 will receive a Certificate of Executive Leadership from the Wisconsin School of Business, in addition to a GSB diploma, after successfully completing the 25-month program.

This agreement, which provides the opportunity for GSB students and alumni who enrolled in the Graduate School of Banking prior to 2015 to obtain the certificate by completing two courses outside of GSB, is a continuation of a long-standing partnership between the two institutions that began in 1945.

Students wishing to enroll in the 2015 session should complete an online application no later than June 15, 2015, subject to admission criteria and space availability. Learn more.

OCC Revises Summary of Deposit Account-Based Credit Rules

In response to concerns expressed by ABA members and others in the industry that its Comptroller’s Handbook guidance on deposit-related consumer credit -- including overdraft protection and deposit advances -- included changes to previous policy, the OCC on Friday issued a new booklet replacing the one withdrawn late last month.

The new booklet “is intended as a summary restatement of existing laws, regulations, and policies applicable to deposit-related credit products and services,” the OCC said in releasing the booklet.

“Examiners and members of the public may use this booklet as reference for obtaining an overview of the topic. Nothing in this booklet should be interpreted as changing existing OCC policy.”  Visit OCC's website.

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

Ag Credit Conference Pre-Session on SDDA's Ag Mediation Program

South Dakota Department of Agriculture (SDDA) will hold an informational session prior to the SDBA's Agricultural Credit Conference on Wednesday, April 15, from 3:30-4:30 p.m. The session will be held in Amphitheatre II at the Ramkota RiverCentre in Pierre.

This session will provide an update on the mediation program, changes to the program including fee changes, changes to the free financial counseling services offered by SDDA, as well as the current forms being used and the process for a mediation case. 

SD law requires a creditor to go through mediation on agricultural debt more than $50,000 prior to any legal action. Voluntary mediation is also an option. This session will provide great information for seasoned bankers as well as new agricultural lenders. 

Those who plan to attend SDDA's session should RSVP by email or call 605.773.5436. Questions, contact Terri LaBrie, finance administrator, at 605.280.4745 or via email. Register for the SDBA's 2015 Ag Credit Conference.

Fed Approves U.S. Banks' Capital Plans

The Federal Reserve yesterday approved the capital plans of 28 out of 31 large banks participating in the Comprehensive Capital Analysis and Review. Only two banks -- both foreign -- saw their plans rejected, while one U.S. bank won a conditional “non-objection.”

The Fed’s annual CCAR evaluates the capital planning processes and capital adequacy of the largest banks, including their proposed capital actions such as dividend payments, share buybacks and issuances. The agency can object to a capital plan based on qualitative or quantitative concerns, and it considers factors such as a firm’s projected capital ratios under a hypothetical scenario of severe stress and the strength of the firm’s capital planning processes.

The Fed objected to capital plans from Deutsche Bank Trust Corp. and Santander Holdings USA on qualitative concerns. It did not object to Bank of America’s plan but required it to submit a new one by the end of the third quarter to address certain issues in its capital planning processes.

The Fed noted that U.S. firms have substantially increased their capital since the first round of stress tests in 2009. The 31 bank holding companies in this year’s test have increased common equity capital by $641 billion since the beginning of 2009, reaching $1.1 trillion by the end of 2014. Read the CCAR results.

ABA: Oppose Credit Union Member Business Lending Bill

ABA yesterday urged Congress to oppose H.R. 1188, a bill that would that would raise the member business-lending cap for certain credit unions from 12.25 percent to 27.5 percent of total assets.

The bill is designed to benefit only a select group of “growth obsessed” credit unions in order to secure large commercial loans at the expense of taxpayers, ABA President and CEO Frank Keating said in a letter to Congress.

“The argument that the credit union business loan cap is somehow constraining credit union small business lending is a falsity,” said Keating. “We believe it is wrong to permit credit unions to use their tax subsidies to cherry-pick loans that taxpaying community banks would gladly make.”

Keating added that the average U.S. family of four pays more in federal income taxes than the entire credit union industry. “If the credit union industry continues to seek expanded authorities beyond Congressional intent and continues to become more like banks, they should pay federal income taxes like banks.”

ABA, the state bankers associations and bankers have successfully opposed legislation similar to H.R. 1188 in previous Congresses. Read the letter.

CFPB Report Documents Exam Issues

The Consumer Financial Protection Bureau yesterday issued a “Supervisory Highlights” report that outlined several areas of concern its examiners have found related to deposits, mortgage origination, fair lending, consumer reporting and debt collection.

The report noted that some institutions had changed the way they assess overdraft fees, such as by switching from a ledger-balance to an available-balance method, but did not sufficiently disclose these changes. Because the changes increased the likelihood that consumers would incur fees, the practices were deemed unfair or deceptive.

Examiners also found instances of weak compliance management systems, including inadequate board and employee training; social media advertisements by loan originators that failed to include required disclosures; and fair lending violations stemming from automatic denials of applicants that rely on non-employment income, such as Social Security.

Other issues flagged relate to improper mortgage loan originator compensation, delayed delivery of good faith estimates and insufficient or untimely adverse action notices, among other things. Read the report.

Credit Reporting Bureaus Seek to Improve Report Accuracy

The three main credit reporting bureaus -- Equifax, Experian and TransUnion -- on Monday announced an agreement with New York’s attorney general to take steps that would improve report accuracy and adjust the ways reports are disputed.

Among the changes are a requirement that furnishers of report information, including creditors, investigate customer disputes and report their findings to the bureaus.

“We welcome the proactive steps credit bureaus are taking to enhance the usefulness, predictability and reliability of credit reports,” said ABA SVP Nessa Feddis. “Everyone benefits -- consumers, banks and other users of credit reports, and the credit bureaus themselves.” In testimony before Congress last fall, ABA Chairman John Ikard emphasized the value that bankers place on accurate credit reports. Read more.

ABA Issues FAQ on Samsung Pay

With Samsung becoming the latest provider of a mobile wallet service, Samsung Pay, ABA released frequently asked questions to help bankers understand the new service. The FAQ covers several questions bankers may have, including how its transactions are secured, where it will be accepted and how issuers can participate.

Starting this summer, users of the recently unveiled Galaxy S6 phone will be able to conduct transactions with Samsung Pay. Like Apple Pay, the platform uses near field communication to allow users to pay at a point of sale by holding up their phones to a receiver. Samsung Pay also uses tokens that create one-time card numbers for each transaction, making the data stored by a merchant useless if breached.

Unlike Apple Pay, Samsung’s mobile wallet can also emulate magnetic stripe transactions. Magnets on the back of the phone replicate the signal produced by the stripe on a traditional card, allowing Samsung Pay users to pay by holding their device up to a standard card-stripe reader. Read the FAQ. For more information, contact ABA’s Rob Morgan.