SDBA eNews: July 23, 2015

In This Issue

FHLB Des Moines Accepting Applications for Strong Communities Award

The application period for the Federal Home Loan Bank of Des Moines  Strong Communities Award is now open. Member financial institutions have until Aug. 31, 2015, to apply for a chance to win $15,000 to promote small business growth and retention in their communities.

Each year, FHLB Des Moines highlights the work its members do by awarding the Strong Communities Award to deserving projects within its district. The award demonstrates the value that communities throughout the FHLB Des Moines district derive from small business and economic development projects.

FHLB Des Moines members and partners throughout the district, including 13-states and three U.S. Pacific territories, are eligible to apply.

The process to determine two $15,000 winners, one urban and one rural, will feature a voting component that will be open to the public. For information about the award or how to apply, visit or contact Mitch Fastenau at 515.281.1069.

SBS To Hold Cybersecurity Assessment Software Webinar

After months of anticipation, the FFIEC released its Cybersecurity Assessment Tool on June 30, 2015. Now the question is: are my regulators going to expect us to implement this tool before our next examination? How do I actually use this tool? 

To help financial institutions efficiently complete their assessment, Secure Banking Solutions has released "Cyber-RISK," its FREE cybersecurity assessment software.

Instead of creating your own spreadsheet or version of the FFIEC tool, your institution will now have the power of TRAC™ automation to complete your assessment. This easy-to-use software will also quickly generate management-ready reports and give your institution an idea of what to do next.

To learn more, join SBS for a free software showcase webinar on Monday, July 27, 10 a.m. CDT or Tuesday, July 28, 8 a.m. CDT. Register for Monday's webinar. Register for Tuesday's webinar.

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

NCUA Head to Testify as Agency Subverts Congressional Intent

National Credit Union Administration Chairman Debbie Matz will appear before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit today -- her first appearance before Congress since 2011 -- and ABA urged House members to hold NCUA accountable for its efforts to subvert congressional intent.

“Once called a ‘rogue federal agency’ by a federal judge, over the past month it has become obvious that NCUA has again become a cheerleader for the $1 trillion industry it is charged with supervising,” ABA said. The association pointed out that NCUA is working to expand credit union fields of membership, make preferential capital rules for CUs and expand an overbroad “low-income” designation.

Most outrageous, ABA said, is NCUA’s recent proposal to expand credit union business lending. “The agency’s new proposed rule on business lending is a stunning snub to Congress,” ABA wrote, noting that the 12.25 percent cap on MBL assets is a longstanding deliberate choice by Congress. “Acting with willful blindness to Congressional intent, NCUA now claims 12.25 percent is ‘shorthand’ for the cap, and that the agency can raise it on its own,” ABA continued.

ABA noted that NCUA’s proposal would make the MBL cap “irrelevant” through a massive loan syndication program. “NCUA has not established that it is prepared to supervise institutions with a dramatically expanded business loan portfolio,” ABA said, warning that taxpayers and credit union members are put at risk by NCUA’s “demonstrated poor track record” of supervision. Read the letter. Take grassroots action.

Keating Op-Ed Challenges CU's Business Lending Push

ABA President and CEO Frank Keating kept up the pressure on NCUA and the credit union industry with an op-ed this morning in The Hill noting that -- in addition to being exempt from taxes -- credit unions enjoy a “compliant federal regulator that often acts like a cheerleader for the industry it is supposed to be supervising.”

Keating challenged NCUA’s proposed member business lending rule, which he called an “unjustified giveaway to the largest credit unions -- those with more than $500 million in assets, which account for 76 percent of all CU business loans.”

He also pointed out that NCUA’s longstanding effort to dilute credit union membership requirements makes a mockery of the statutory cap on member business loans. “When credit unions have so-called common bonds like ‘lives in Washington State,’ or when they advertise that ‘anyone can join,’ or when they use Potemkin ‘associations’ to sign up virtually anyone as a customer, membership ceases to be a meaningful requirement,” he wrote.

“If NCUA gets away with further eroding the already tenuous limits on member business lending, it will eliminate another distinction between credit unions and banks—and further undermine credit union lobbyists’ argument that they should pay no federal taxes,” Keating concluded. “The credit union industry should perhaps be careful what it wishes for.” Read the op-ed.

ABA-Backed Regulatory Relief Provisions Attached to Spending Bill

The Senate Appropriations Subcommittee on Financial Services yesterday approved a spending bill for fiscal year 2016 that includes the text of the ABA-backed financial reform bill introduced earlier this year by Sen. Richard Shelby (R-Ala.). Shelby’s proposal would provide regulatory relief for community, mid-size and regional banks, tailor the regulatory structure for systemically important banks and begin restructuring within the Federal Reserve System and at Fannie Mae and Freddie Mac.

The appropriations process provides an alternative legislative mechanism for moving the regulatory relief provisions forward, including 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.

“This is the five-year anniversary of Dodd-Frank,” said Sen. John Boozman (R-Ark.), who chairs the subcommittee. “We are losing community banks all the time because of one-size-fits-all and the compliance costs. This is just an effort to use every tool that we’ve got in an effort to provide them with some relief.”

In addition to the Shelby provisions, the spending bill would replace the Consumer Financial Protection Bureau director with a five-member commission and bring the CFPB’s budget into the congressional appropriations process. Read more. Take grassroots action.

ABA-Opposed Revenue Raisers Still in Play in Senate Highway Bill

According to news reports this morning, several ABA-opposed provisions are still in play as revenue-raising measures in the Senate's highway spending reauthorization bill, even though the bill failed to advance on a procedural motion on Tuesday.

The measures the industry objects to include a substantial cut to the dividends paid on Federal Reserve Bank stock to Fed member banks with over $1 billion in assets and an extended increase in the guarantee fees charged by Fannie Mae and Freddie Mac. 

The plan would reduce the dividend “for the first time since the creation of the Federal Reserve and without any analysis or study of any kind,” ABA and other banking groups noted in a letter last Thursday. Fed member banks -- which include any nationally chartered bank -- are required to be Fed members and thus required to hold the illiquid stock. As a result, the groups said, “the dividend reflects the unique structure and constraints of holding Federal Reserve Bank stock.”

ABA EVP James Ballentine on Friday added that reducing or eliminating dividends on mandatory stock holdings would “reduce the incentive for state-chartered banks to join the Federal Reserve System,” noting that “there is little logic to solving a short-term funding problem by revising such a long-standing structural element of the Fed.”

ABA continues to urge bankers to call their senators opposing the measures. Download talking points on Fed dividends.

Fed Proposes Changes to Dodd-Frank Stress Tests

The Federal Reserve on Friday proposed several changes to the Dodd-Frank Act-mandated stress tests for banks with more than $10 billion in assets. Starting with the 2016 testing cycle, the proposal would remove the requirement to calculate a Tier 1 common capital ratio, which is expected to be superseded by the common equity Tier 1 capital ratio under Basel III.

For bank and S&L holding companies with between $10 billion and $50 billion in assets, the proposal would eliminate fixed assumptions about dividend payments for company-run stress tests. It would also delay the application of stress testing for S&LHCs for one year.

For banks subject the advanced approaches capital framework, the proposal would delay the incorporation of the supplementary leverage ratio for one year, to 2017, and “indefinitely” defer the use of the advanced approaches risk-weighted assets in stress testing. Comments are due by Sept. 24. Read the proposed rule. For more information, contact ABA’s Hugh Carney.

FinCEN Updates List of AML/CFT Jurisdictions

The Financial Crimes Enforcement Network on Monday released a revised list of jurisdictions that are subject to countermeasures or enhanced due diligence due to anti-money laundering and counter-terrorist financing deficiencies (section I), as well as jurisdictions with AML/CFT deficiencies that are working to correct them (section II).

Ecuador was been moved off the section I list for enhanced due diligence in recognition of progress made and added to the section II list. Indonesia was removed from the section II list due to its progress in remedying AML/CFT deficiencies, while Bosnia and Herzegovina was added to the section II list. View the list.