SDBA eNews: July 30, 2015

In This Issue

Annual Workshop on Community Bank Investments: Sept. 9-11, 2015

Volatile economic conditions and rising interest rates will create uncertainty as well as opportunities for community bankers in the coming year. 

The Workshop on Community Bank Investments & Asset Liability Management, sponsored by the Graduate School of Banking at Colorado, examines potential strategies in determining the appropriate balance sheet mix and structure of earning assets and funding sources to better manage liquidity and interest rate risk while improving overall profitability. 

The conference will be held Sept. 9-11, 2015, at Wynn Las Vegas. Register online by Aug. 15. Space is limited.

ABA Seeks Bankers' Input on Third Phase of EGRPRA Review

With the regulatory agencies currently seeking comments in the third phase of their decennial Economic Growth and Regulatory Paperwork Reduction Act review cycle, ABA is inviting bankers to share their perspectives on ways to streamline regulation related to consumer protection; money laundering; and directors, officers and trustees.

Comments are due on Sept. 3.

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

ABA 'Agenda' Bills Sail Through House Committee

With bipartisan majorities, the House Financial Services Committee yesterday passed several bills that are part of ABA’s Agenda for America’s Hometown Banks.

“Today’s votes are an important step toward removing statutory and regulatory barriers that constrain lending and make it harder for banks to meet the needs of their local communities,” said ABA President and CEO Frank Keating. “We look forward to working with the committee and the full House as this process moves forward.”

Bills to make more institutions eligible for the 18-month exam cycle (H.R. 1553) and eliminate unnecessary restrictions on sales of privately held stock (H.R. 1839) passed without opposition, while bills to improve exam fairness (H.R. 1941) and institute a hold-harmless period for the TILA-RESPA integrated disclosures until Feb. 1, 2016 (H.R. 3192) carried by 45-13 margins. H.R. 1210, which would designate portfolio loans as Qualified Mortgages, passed by 38-18, while H.R. 766, which would roll back Operation Choke Point, was approved by 35-19.

ABA, Groups Continue Urgent Message on Fed Dividends

With a provision that would reduce the dividends paid on Federal Reserve Bank stock to Fed member banks still included in the Senate’s Highway Trust Fund reauthorization bill, ABA and four other trade groups representing the entire banking industry yesterday urged House leaders to reject the revenue-raising provision.

The proposal would be unsound policy, rewriting the Federal Reserve’s charter without any prior study or analysis simply as a temporary measure to pay for an estimated $17 billion in highway spending. “That is $17 billion that would no longer be available to the economy for loans and other investments,” the groups said. “There would be a significant impact on economic growth beyond its $17 billion value.”

The groups also noted that Fed member banks are required to hold the stock, which has unique features that make it “dead capital” and underline the importance of the dividend. “Paying for [the highway bill] in this fashion lacks fairness, is not the result of a thoughtful process, and would reduce economic growth,” they said. Read the letter.

Washington Times Editorial: Credit Unions Have 'Captured' NCUA

The National Credit Union Administration is a “captured regulatory agency,” as evidenced by the credit union industry’s attempt to have NCUA “end run” limits on business loans imposed by Congress, the Washington Times said in a Sunday editorial.

NCUA “now proposes to expand the ability of credit unions to make risky large loans by raising limits imposed by Congress to prevent abuse of their special status,” the newspaper said. “The most aggressive credit unions want to compete with community banks, whose practices are not now within the purview of the regulators.”

The paper’s editorial board noted that Congress imposed limits on member business lending “to help the credit unions keep in mind that they were designed to serve customers … of modest means” with meaningful common bonds and that the tax exemption credit unions enjoy is attributed to that historic role that credit unions are now seeking to avoid. Read the editorial.

Appellate Court: Legal Challenge to CFPB May Proceed

Reversing a lower court decision, a three-judge panel of the D.C. Circuit Court of Appeals on Friday allowed key parts of a constitutional challenge to certain provisions of the Dodd-Frank Act to proceed. The appellate court held that State National Bank, Big Spring, Texas, has standing to challenge the constitutionality of the Consumer Financial Protection Bureau and President Obama’s original recess appointment of CFPB Director Richard Cordray and that both of these claims are "ripe" for being heard.

The court upheld the district court’s determination that State National Bank does not have standing to challenge the constitutionality of the Financial Stability Oversight Council, which does not oversee or regulate it. The court also affirmed the lower court’s determination that a group of 11 states that joined the lawsuit do not have standing to challenge the “orderly liquidation authority” granted to regulators by the Dodd-Frank Act and that their claim is not ripe.

With Friday's decision, the claims for which State National Bank has standing may now return to the lower court for further proceedings. Read the opinion.

ABA Ads Urge Payments Innovations, Not Mandates

ABA this week is running ads in Capitol Hill publications and on D.C.-area talk radio stations urging Congress to let the payments industry continue to develop innovative solutions to secure payments -- and not mandate static technologies such as chip-and-PIN, which is fast becoming out of date.

“Innovation is driving the payment industry to create better ways to protect your financial data. However, some want Congress to mandate a specific technology to secure payments,” ABA President and CEO Frank Keating says in the radio ad. “That would be a costly mistake as today’s technology will quickly be out-of-date.”

Visit for more. The initiative is sponsored by ABA's Card Policy Council, which represents major card-issuing banks and card networks. View the print ad. Listen to the radio ad.

Washington Examiner Takes Skeptical Look at Farm Credit

The Washington Examiner yesterday took a skeptical look at the growth of the Farm Credit System and its tax-advantaged GSE status. “This rapid expansion has prompted calls for oversight from members of Congress and heightened fears that the Farm Credit System could be America's next Fannie Mae,” the Examiner said.

The article examined calls from members of Congress to investigate the FCS, the involvement of FCS institutions in financing major deals involving telecom giants like Verizon and the FCS’ poor track record of serving young, beginning and small farmers.

“We openly accept any fair competition,” ABA VP Ed Elfmann told the Examiner. “Small rural banks are doing a great job of partnering with the USDA and Farmer Mac ... the [agricultural] economy is good and bankers are getting creative.” Read the article. Learn more at