State Bank Regulators Finalize Model Regs on Virtual Currency
The Conference of State Bank Supervisors on Tuesday finalized its new framework for model state-level regulation of virtual currencies such as bitcoin. The task force said its goal was to ensure that consumers are protected when using virtual currencies, that markets remain stable and that transactions are transparent to law enforcement.
The framework seeks to employ a “technology-neutral” approach based on licensing and monitoring activities one party performs on behalf of another that are already covered under state laws. These include money transmitting, exchanges and third-party services that facilitate these functions or store virtual currencies.
In its comment letter earlier this year, ABA welcomed the framework and noted that the CSBS approach would help protect consumers, ensure a level playing field, promote security and be responsive to market and consumer demand. View the framework.
ABA Welcomes Relief Bill for FHLB Mortgages
ABA wrote to Sen. Heidi Heitkamp (D-N.D.) on Tuesday thanking her for introducing S. 1974, the Relationship Lending Preservation Act. The bill would provide the same regulatory treatment to mortgages sold to the Federal Home Loan Banks that Qualified Mortgages and GSE loans currently enjoy.
“ABA has long argued that loans originated by a bank and held in that bank’s portfolio should be given [QM] status, as the credit and underwriting risk borne by the bank will ensure that the loan is underwritten to high quality standards,” ABA said. “Like loans held in portfolio by banks, [FHLB] loans are well underwritten, and safety and soundness concerns will require that the ability of borrowers to repay the loan is well established.”
ABA asked Heitkamp to expand the bill’s coverage to all loans sold to the FHLBs, regardless of originator size, since underwriting standards for these loans do not differ for lenders of different sizes. Read the letter.
ABA Asks FDIC to Reconsider Parts of Assessment Proposal
While expressing support for the purpose of FDIC's proposal to revise premium assessments for banks with under $10 billion in assets, ABA in a comment letter Friday also recommended several changes.
"ABA appreciates the intent to make the 'small bank assessments' system more forward looking," the letter said, noting that much has been learned from the 500-plus bank failures since the current system was developed in 2006. "However, we question whether some of the proposed changes would reliably differentiate risk of failure among banks through future economic cycles."
ABA expressed support for the proposal's elimination of the CAMELS-by-capital risk categories and application of a uniform assessments formula, which would avoid a jump in assessments for banks in certain circumstances. But the formula's proposed extreme increase in weighting for the tier 1 leverage ratio would unfairly penalize "well capitalized" banks that do not hold excess capital. ABA recommended it be aligned with the weighting in the current formula.
In addition, ABA commented, the FDIC should reconsider formula factors like the loan mix index -- which penalizes certain loan concentrations associated with recent bank failures, regardless of a bank's underwriting quality or risk hedging -- and the measures of core deposits and one-year asset growth. Instead, the proposed formula should give more weight to a bank's CAMELS rating. "No mathematical formula ... can gauge the performance and condition of an individual bank, and the potential for it to fail in the future, as well as supervisors do during on-site examinations," ABA said. Read the letter. For more information, contact ABA's Rob Strand.
ABA-Opposed CU Member Biz-
Lending Bill Introduced in Senate
ABA on Friday voiced its opposition to a bill, introduced last week by Sens. Rand Paul (R-Ky.), Sheldon Whitehouse (D-R.I.) and Jack Reed (D-R.I.) that would raise the member business-lending cap for certain credit unions from 12.25 percent to 27.5 percent of total assets. The legislation would raise the cap for well-capitalized credit unions that have a history of member business lending, have operated near the current cap for at least one year and have received approval from the National Credit Union Administration.
“Given NCUA’s and credit unions’ lack of expertise in business lending, it remains unclear whether this highly controversial bill is necessary or wise,” said ABA EVP James Ballentine. “ABA will continue to fight all efforts to change or circumvent the member business lending cap.”
The bill is a companion to H.R. 1188, which was introduced in the House in March. ABA, the state bankers associations and bankers have successfully opposed similar legislation in previous Congresses, and ABA helped generate a record 3,000 comment letters, nearly all in opposition, to an attempt by the NCUA to circumvent the existing statutory cap. ABA will continue to resist efforts to expand the ability of tax-exempt credit unions to exceed their mission by reaching business markets already well-served by taxpaying community banks. Read the bill.
FinCEN Chief: 'Unusual Number' of Credit Unions Not Filing SARs, CTRs
Many credit unions have not filed any Bank Secrecy Act-mandated Suspicious Activity Reports or Currency Transaction Reports for the past two years, Financial Crimes Enforcement Network Director Jennifer Shasky Calvery told a credit union group on Tuesday.
“Some early research we are looking at suggests that we have a surprisingly larger ... statistically relevant and unusual number of credit unions that over a seven quarter period filed neither a SAR or CTR,” she said at a government relations event sponsored by the National Association of Federal Credit Unions. “There could be problems with the data," she added, but called the number of non-reporters “surprising.”
ABA Foundation Announces 'Safe Banking for Seniors' Initiative
The ABA Foundation last week announced a new campaign -- Safe Banking for Seniors -- to help bankers educate seniors and their caregivers on the risks of financial fraud.
As with other ABA Foundation financial literacy programs, the foundation will provide bankers with event materials, lesson plans, media outreach tools and best practices. Bankers will be encouraged to use the resources at outreach events throughout the year, and to team up with other organizations and agencies in their communities.
“Bankers are often the first line of defense against elder financial fraud from educating and advising customers to spotting the signs of abuse,” said ABA President and CEO Frank Keating. “We take our role seriously, and the more we can work together as citizens, bankers and government officials, we can protect our seniors from fraud.”
The materials will be available to bankers in January. To receive them and other program updates, sign up at aba.com/Seniors. For more information, contact ABA Foundation staff.
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