In This Issue

• CFPB to Delay TRID Effective Date to October 1
• SDBA To Offer Critical Training on New Integrated Disclosure Rules
• Regulators Focusing on Change Management in Exams
• ABA Ag Expert Highlights Roles of All-Size Banks in Serving Farmers
• FDIC Proposes Changes to Deposit Insurance Assessments
  
• ABA Issues Reminder on .bank Registrars as June 23 Nears

CFPB to Delay TRID Effective Date to October 1

Consumer Financial Protection Bureau Director Richard Cordray announced yesterday that the bureau is proposing to push back the effective date of the TILA-RESPA integrated disclosures by two months, from Aug. 1 to Oct. 1, in an effort to avoid closing headaches as the busy fall homebuying season kicks off. The CFPB will issue a proposed rule making the change shortly.

"We made this decision to correct an administrative error that we just discovered in meeting the requirements under federal law, which would have delayed the effective date of the rule by two weeks," Cordray said. "We further believe that the additional time included in the proposed effective date would better accommodate the interests of the many consumers and providers whose families will be busy with the transition to the new school year at that time."

ABA welcomed the news. "This extension will help protect consumers from disruptions during a traditionally busy period for home purchases," said ABA President and CEO Frank Keating. "It will also help to ensure new loan origination systems and compliance software under development by lenders and the vendors on whom they rely will be adequately installed and debugged, and staff training completed, before the effective date."

ABA has engaged in a months-long advocacy effort to persuade the CFPB to delay the rule or provide a hold-harmless period after the rule takes effect for lenders that make good-faith efforts to comply. In a survey shared with the bureau, ABA found that a large majority of banks did not expect to receive their new TRID-compliant systems from vendors until July or later, leaving little to no time to test systems and train staff. By extending the effective date, the CFPB will provide additional time to install and test new systems while removing the risk of civil litigation during the two-month window.

Keating also thanked the CFPB for its announced intent to take good-faith compliance efforts into account in its initial supervisory and enforcement approach. "The TRID rules remain among the most complex with which the banking industry has had to comply, and the quality of compliance should be expected to improve based on the industry's learning curve once systems go live," he said. Read Cordray's statement.

SDBA To Offer Critical Training on New Integrated Disclosure Rules

 
The SDBA is offering “Understanding and Implementing the New Integrated Disclosure Rules” on June 29-30 at the Hilton Garden Inn in Sioux Falls.

The rule completes the Dodd-Frank mandate to combine the disclosures required by the Truth-in-Lending (TILA) and Real Estate Settlement Procedure Acts (RESPA). This comprehensive, two-day program explains the hundreds of pages of new regs regarding the integrated disclosures.

After implementing all Dodd-Frank revisions effective in January 2014, many creditors seem to be suffering from a "compliance change hangover." Now it is time to move on to the next big challenge–the massive effort to implement the new integrated disclosures. Banks' policies and procedures need to be updated, and decisions must be made regarding which tasks will be performed by the institution and which will be performed by a servicing agent.

More information and register.

Regulators Focusing on Change Management in Exams

 
Change management and vendor risk management are key overarching compliance concerns, according to senior regulatory officials at ABA’s Regulatory Compliance Conference yesterday.

“We live in a world of rapid change,” said Eric Belsky, director of consumer and community affairs at the Federal Reserve. He noted that compliance requirements have shot up in the last few years, in part due to “the sheer number of new regulations,” and that banks “need to have clear policies and procedures” to address not just the regs themselves but also the flow of changes in regulations.

Grovetta Gardineer, deputy comptroller for compliance at the OCC, echoed Belsky’s comments and added that the OCC also monitors how banks handle changes in their markets, products and overall risk profile. Regulators also said they are looking closely at vendor risk management, from due diligence prior to selection to ongoing monitoring of the relationship.

Regulators emphasized that overall, community banks are performing well in examinations. At the outset of the financial crisis, “most community banks were well-rated on consumer compliance,” said Mark Pearce, the FDIC’s director of consumer protection. “It started off at a very high level and has only gotten better, which is remarkable given the number of regulatory changes.”

ABA Ag Expert Highlights Roles of All-Size Banks in Serving Farmers

It takes banks of all sizes to meet the needs of America’s agricultural producers, newly appointed ABA SVP Steve Apodaca said in a front-page interview with American Banker today. “Not all large banks can do all types of loans,” he pointed out. “If you’re a large bank you put in credit risk parameters that everyone has to follow. A community bank can tailor a product very specifically to the needs of a small business and have an advantage in terms of relationships.”

However, for large agribusinesses, “your needs won’t be met by a small community bank with $150 million of assets. You’re going to go to a mid-tier bank or one of the large banks.” Apodaca spent more than 25 years in banking, most recently as a commercial and ag lender at Wells Fargo in New Mexico, before joining ABA last month.

Apodaca also discussed trends in commodity prices that can affect ag lenders -- which will be a hot topic at ABA’s National Agricultural Bankers Conference, Oct. 25-28 in Kansas City -- as well as the competitive threat posed by a Farm Credit System that is lending aggressively outside of its farm-focused mandate. Read the interview.

FDIC Proposes Changes to Deposit Insurance Assessments

The FDIC on Tuesday proposed a rule change in how smaller banks are assessed for deposit insurance, basing assessments on recent experience with bank failures. Under the proposal, which the FDIC said would be revenue-neutral, some banks would pay more and some would pay less -- but “because it measures risk more accurately, the model reduces the subsidization of riskier banks by less risky banks,” the FDIC said.

The rule would adjust the statistical model the FDIC uses to predict an insured bank’s risk of failure to incorporate lessons learned from the post-2007 wave of bank failures. Instead of using broad risk categories keyed to CAMELS ratings and capital levels, assessments would be based on a “financial ratios model” incorporating some new metrics that the FDIC found relevant to predicting failures. The model uses information already included in Call Reports, so banks would not be required to report any new information.

The rule, which applies to banks with less than $10 billion in assets, would take effect when the Deposit Insurance Fund reaches 1.15 percent of insured deposits, which it is expected to be next year and when assessment rates are already scheduled to go down. Bankers can use a downloadable FDIC calculator to determine how the proposal would affect their assessment rate.

ABA staff have for some time been discussing refinements to the assessment system with the FDIC. Comments on the proposal are due 60 days after it is published in the Federal Register.

• Read the proposed rule.
• Download the FDIC calculator.
• Read ABA’s summary of the proposal.
• For more information, contact ABA’s Rob Strand.

ABA Issues Reminder on .bank Registrars as June 23 Nears

With the general availability period for applying for .bank domains coming on June 23 at 8 p.m. EDT, ABA urges bankers considering a .bank domain to carefully select a registrar in advance based on considerations of both service and price. ABA recently updated its webpage of registrars approved for .bank domains and offered several questions bankers may wish to consider as they select a registrar.

General availability for .bank domains opens on the evening of June 23, but registration of bank names that have been previously registered in an international trademark directory continued during the .bank “sunrise” period that ends today. Nearly 700 banks have applied for .bank domains during the sunrise period.

• View the list of approved registrars. 
•  Learn more at register.bank.