SDBA eNews: May 14, 2015

In This Issue

GSB Enrollment Deadline Nearing

There are just seven weeks remaining before the June 15 enrollment deadline for the 2015 Graduate School of Banking (GSB) session to be held Aug. 2-14, 2015, in Madison, Wis., and the incoming class is filling quickly.

Due to limited enrollment, it's very possible the first-year class will reach capacity ahead of the published deadline. Those interested in attending are encouraged to apply early while space remains

Those who enroll at GSB-Wisconsin will begin a life-changing and career-enhancing journey of professional challenge, academic rigor and personal growth. Questions, contact GSB at 800.755.6440 or email [email protected].

Hacker Hour: Take a Walk in the Shoes of the Hacker

Financial Institutions hire vendors like Secure Banking Solutions to conduct annual penetration testing all the time. Do you ever wonder what they do? What do the hackers see? What is your institution really paying for? 

Join SBS for a one hour webinar on May 27 revolving around the "penetration test." SBS will talk about what it does and what banks should look for in a vendor. This will be an open forum to discuss specific questions. Please submit any questions to [email protected].

Register for the webinar.

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

Visa to Boost Tier Reimbursements for Reissued Cards

ABA Plays Lead Role in Securing Improvement for Banks of All Sizes

Visa announced today that it will increase the reimbursement levels for all of its card-issuing banks when they reissue cards following a data breach. The move follows aggressive ABA advocacy with Visa to secure higher reimbursements -- particularly for community banks, which typically have greater costs than large-volume issuers.

Visa will adopt a tiered reimbursement system to replace its current reimbursement level of $2.50 per reissued card. Issuers with less than $500 million in annual Visa purchase volume, which includes most community banks that issue Visa cards, will qualify to receive $6 per card. Issuers with $500 million to $10 billion in volume will receive $3.85 per card and the biggest issuers, with more than $10 billion in volume, will receive $2.65 per card. Issuers will also be reimbursed an additional $1 for every chip card they reissue. The changes take effect with breaches for which Compromised Account Management System email alerts are sent on or after July 1.

ABA Chairman John Ikard welcomed Visa’s action as “an important step that helps ensure that banks won’t incur excessive -- and inequitable -- costs for taking action to protect their customers from fraud.” He thanked Visa for recognizing that “card replacement is just one cost, with call centers, staff labor, internal research and mailings adding a significant expense that can’t be ignored.”

Read more. For more information, contact ABA’s Molly Wilkinson.

ABA Survey: TILA-RESPA Compliance Systems Not Ready

Mortgage bankers preparing for the implementation of the TILA-RESPA integrated disclosures are uncertain that they and their vendors will be ready for the switchover to the new disclosure regime, which takes place for all mortgage applications starting Aug. 1, according to an ABA survey released yesterday.

Nearly three-quarters of banks are using a vendor or consultant to assist with TRID implementation. Of those using a vendor, only 9 percent had received their completed systems by the end of April. A full 58 percent said they expected to receive their systems in July or later -- or that they had not yet received a delivery date -- leaving little to no time to test systems and train staff before Aug. 1.

Further complicating implementation, just one-third of banks expect systems to be delivered all at once, and 42 percent said they would be delivered in stages, pushing back the date at which a bank can test its full system. For nearly a quarter of banks using vendors, the final software system will not cover every type of loan the bank offers, requiring it to produce specialty disclosures in house, switch vendors at short notice or, as one in five respondents said they would consider, stop offering the mortgage product.

“The survey indicates a critical shortfall. Banks need at least three months to install, test and debug systems and train staff,” said ABA EVP Bob Davis. “If bankers are uncertain about the level of potential supervisory tolerance, we expect a measurable reduction in credit availability during a transition period.”

ABA shared the survey results with the Consumer Financial Protection Bureau yesterday as part of its advocacy for a short “grace period” in which lenders may be held harmless for TRID implementation errors made in a good-faith effort to comply. ABA also supports legislative proposals to provide this grace period and will testify today on the subject before the House Financial Services Committee. View the survey results.  Read ABA’s letter to the CFPB.

Shelby's Sweeping Financial Reform Bill Would Advance ABA Goals

Senate Banking Committee Chairman Richard Shelby (R-Ala.) on Tuesday released a draft of a sweeping financial reform bill that would provide regulatory relief for banks of all sizes, tailor the regulatory structure for systemically important banks and begin restructuring within the Federal Reserve System and at Fannie Mae and Freddie Mac.

The bill’s regulatory relief provisions include nearly two dozen measures that are part of ABA’s Agenda for America’s Hometown Banks, many of which have been introduced as standalone measures or in other relief packages in both houses of Congress. ABA President and CEO Frank Keating thanked Shelby for his proposal, which he said “would provide much-needed regulatory relief,” and said ABA looks forward to working with committee members as the process moves ahead.

Among its regulatory relief provisions, Shelby’s bill would allow mortgages held in portfolio to receive the qualified mortgage safe harbor, establish an independent exam ombudsman, reduce the burden of unnecessary privacy notice paperwork, help rural customers receive CFPB mortgage exemptions, extend the exam cycle for more institutions, require a study of Basel III’s treatment of mortgage servicing assets, permit short-form Call Reports for highly rated community banks and exempt banks with less than $10 billion in assets from the Volcker Rule.

The bill would also raise the threshold for designation as a systemically important financial institution from $50 billion in assets to $500 billion, while also raising the threshold for Dodd-Frank Act-mandated stress testing from $10 billion to $50 billion in assets. Several regulatory asset thresholds in the bill would be indexed to inflation.

The Senate Banking Committee is tentatively scheduled to consider the bill on May 21, a date that could shift as discussions continue on Capitol Hill. Committee Ranking Member Sherrod Brown (D-Ohio) called the proposal an “industry wish list,” insisting instead on a smaller, more targeted package. ABA will engage its grassroots network to help preserve its Agenda priorities contained in the draft. Read the draft bill.  Read a section-by-section summary.

FHFA to Revisit Affordable Housing Goals for FHLBs

After hearing from Federal Home Loan Banks that uncertainty about affordable housing goals is limiting their mortgage purchases from member institutions, the Federal Housing Finance Agency will revisit the goals, FHFA Director Mel Watt said yesterday.

A 2010 FHFA regulation set a threshold of $2.5 billion in mortgage purchase activity after which the FHLBs would be subject to additional affordable housing requirements. “As I understand it, a number of the FHLBs have stayed below the threshold amount because of their uncertainty about how the goals would be applied,” Watt said. “That is not a desirable outcome, either for your members or for serving the affordable housing needs of your communities.”

As a result, he said, “FHFA plans to consider alternatives that will not close off FHLB members’ access to liquidity yet will meet the intent and spirit of the law.” Read the speech.

ABA Names Apodaca as New Head of Ag Banking

Steve Apodaca on Monday joined ABA as SVP and head of the Center for Agricultural and Rural Banking. He was previously a VP and business relationship manager with Wells Fargo in Las Cruces, N.M., where he was involved in lending to farmers and ranchers. His 25-year career in banking includes service in agricultural, commercial and real estate lending at banks of all sizes.

“Steve’s extensive background as a commercial banker with a focus on agricultural lending makes him an excellent addition to our Center for Ag and Rural Banking,” said ABA EVP James Ballentine. “He will be able to provide essential insight to the challenges and opportunities for our members in rural America.” Read more.

Bankers Invited to Attend the Governor's Agricultural Summit

The Governor's Agricultural Summit July 9-10 at the Lodge in Deadwood will bring together leaders in business, finance, education, government and production agriculture to demonstrate agriculture's comparative advantages and discuss ways to harness the industry's potential for economic development. 

This year’s program will include an agricultural tour of the Black Hills and the Governor’s Ag Ambassador Award Luncheon hosted by Gov. Dennis Daugaard. The Summit will also feature:

  • State of Ag Address by South Dakota Secretary of Agriculture Lucas Lentsch

  • Political, Scientific and Social Challenges in Agriculture Today with Brian Klippenstein, Protect the Harvest

  • Trade Opportunities for South Dakota Agriculture featuring Dr. Dermot Hayes, Iowa State University

  • Opportunities for South Dakota Producers moderated by Denny Everson

  • What’s Ahead for South Dakota Agriculture with Dr. Steve Meyer, Paragon Economics, Inc.

Space is limited and registration is required. Register and more information.