SDBA eNews: December 3, 2015

In This Issue

SBS Launches SBS Institute 2.0

Secure Banking Solutions (SBS) has relaunched the SBS Institute 2.0 – a new and improved version of the Cybersecurity Certification Programs bankers have come to know and love.

You will see some new certifications launched as a part of the process, but you’ll also see the names of some of SBS' cornerstone certifications altered slightly to add clarity to the course.

Additionally, SBS is very excited about its new learning paths – a guide to helping bankers create an ongoing learning program that can meet their training and education needs for years to come. Read more.

Proactively Manage Your Liabilities To Reduce Interest Rate Risk

The majority of economists agree: Rates will rise in December 2015. Even U.S. interest rate futures increased to a 70 percent chance of a December rate hike.

Could it be that a rate hike is finally eminent? Yes – and now is the time to reassess your rate exposure.

Deluxe will hold a free webinar "Liability Management: Preparing for Rising Rates," Thursday, Dec. 10, at  1 p.m. CT. Speaker Dan Reichert, a client support consultant with Deluxe, will cover liability structure, funding sources, FHLB and your liquidity policy, rate sensitivity, and recommendations on what to do now.

Register now to discover the steps to take to reduce risks associated with rising interest rates, including using performance-management technology, to monitor indices and maximize margins.

Third Quarter SD Business & Economic Data Analysis

Question of the Week

Is the bank required to report an unsecured, home improvement loan on its LAR?

Answer: The short answer is – it depends. Unsecured home improvement loans may be reported if the institution classifies them as home improvement loans. If they are not classified as home improvement loans, they do not have to be reported. 

In other words, if the bank classifies the loan as a home improvement loan, then you should report the loan on the HMDA LAR; however, if the loan is not classified as home improvement, then the bank would not have to include it on the HMDA LAR.

Learn more by attending one of our live demos:

Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call 888.353.3933 or email.

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

House Ag Committee Members Ask Tough Questions of FCS Regulator

Yesterday’s House Agriculture Committee hearing on the role of the Farm Credit System featured pointed questions to the FCS’ top regulator about mission creep, retained mineral rights following foreclosures, and the risk to taxpayers posed by the GSE’s “similar entity” financings of telecommunications giants like Verizon and AT&T.

The billions of dollars in FCS financing for large non-farm businesses -- principally by FCS lender CoBank -- has “done considerable damage to the Farm Credit brand,” said Rep. Rick Crawford (R-Ark.). It is also “putting the whole system at risk,” said Rep. Austin Scott (R-Ga.), who added that “what they’re doing might be technically legal, it is my opinion that it is outside the scope and intent of the FCS. I don’t think CoBank’s going to stop until someone stops them.”

Lawmakers also questioned the Farm Credit Administration’s credibility as a regulator. “Is there any transaction that you would look at and say this is not appropriate?” asked Rep. Dan Benishek (R-Mich.). “I haven’t heard anything like that today.” Rep. Michelle Lujan Grisham (D-N.M.) emphasized the need for “striking a balance” in regulating the FCS to prevent it from “competing inappropriately with community banks.”

Persistent ABA and state association advocacy was key to the hearing being called. It was the first congressional oversight hearing of the Farm Credit System in more than a decade, and lawmakers expressed a desire to see additional hearings. “If we don’t have this hearing annually, we simply won't be doing the oversight we need to,” said Rep. Steve King (R-Iowa).

ABA and the state associations also brought bankers and state executives to Capitol Hill in advance of the hearing to brief lawmakers and their staff. In his remarks, Rep. Scott Desjarlais (R-Tenn.) thanked the Tennessee Bankers Association and a community banker he met with before blasting the FCS for making loans for vacation homes, “exotic animal hobby farms” and large restaurant chains like Cracker Barrel. Watch the hearing. Learn more at

Target Settles Bankers' Data Breach Claims

According to documents filed yesterday, Target has agreed to pay approximately $39.4 million to settle claims by card issuers over its 2013 data breach. Of the settlement amount, $20.25 million will go directly to settlement class members, either on a per-card basis, over and above any amount received through the network settlements, or as a percentage of total fraud losses, minus any amount received through the network settlements.

The remaining settlement amount, approximately $19.1 million, will go to MasterCard to cover distributions paid under the network’s Account Data Compromise program. Issuers would be eligible to make claims under the settlement agreement provided they have not already released claims against Target.

The announcement of the first-ever class action settlement in a data breach case follows a $67 million settlement reached with Visa in August. MasterCard and Target earlier this year announced a $19 million settlement, which was rejected when too few MasterCard issuers accepted the agreement. Under the settlement, Target will give up the right to challenge MasterCard’s assessment of liability, which it had been seeking to retain.

ABA advocacy with Visa and MasterCard has won higher levels of reimbursements from the networks for operating costs related to future data breaches, such as reissuing cards in the wake of a large breach. ABA continues to advocate for improvements to ensure that breached entities bear the responsibility for costs following a breach.

Final Highway Bill Includes Modified Fed Dividend Cut

A group of senators and representatives on Tuesday issued a reconciled version of a long-term highway funding bill that includes a modified but still substantial cut to the dividends paid on the Federal Reserve Bank stock that national banks and other Fed member banks are required to hold.

The provision -- strongly opposed by ABA -- was included in the Senate’s version of the bill, but the House voted to strip the provision out last month. A version of the Senate provision prevailed during the reconciliation process despite strong objections from a united banking industry and from House Financial Services Committee leaders.

The final legislation, which will now be voted on by both the House and Senate, will apply the cut only to banks with more than $10 billion in assets. Effective Jan. 1, the dividend paid to those banks will drop from 6 percent to the latest high yield on 10-year Treasurys (currently around 2.15 percent, higher than the originally proposed 1.5 percent), but no higher than 6 percent. The $10 billion threshold would be indexed to inflation.

“Rewriting a significant portion of the Federal Reserve’s charter and siphoning off a bank dividend payment to pay for highway infrastructure sets a bad precedent that should give other industries serious cause for concern,” said ABA’s Rob Nichols. “Banks shouldn’t be used like an E-ZPass to pay for highways. Dramatically reducing the dividend rate -- without hearings, consultation with committees of jurisdiction, study or analysis of any kind whatsoever -- is extremely bad public policy.”

The reconciled legislation also retains a measure from the House version that draws on amounts exceeding $10 billion in the Fed’s capital surplus account.

ABA-Advocated Reg Relief Measures Make It Into Highway Bill

While ABA opposed cutting Fed dividends to pay for the highway bill, the final legislation also includes several regulatory relief measures that are part of ABA’s Agenda for America’s Hometown Banks and that ABA has sought this Congress.

These provisions would: expand the number of banks eligible for the 18-month exam cycle, equalize the SEC registration and de-registration thresholds for savings and loan holding companies, reduce the burden of unnecessary privacy notice paperwork, expand Trups CDO relief for smaller bank holding companies and establish a process for designating an area rural for purposes of Consumer Financial Protection Bureau exemptions.

“While we were extremely disappointed that the final bill undermines a key agreement underpinning the U.S. banking system, we were pleased to see several long-overdue regulatory relief provisions included,” said ABA EVP James Ballentine. “These are bipartisan, common-sense reforms that will strengthen the ability of America’s hometown banks to serve their customers and communities.”

The final bill also leaves out an ABA-opposed extension of higher guarantee fees, includes language reauthorizing the Export-Import Bank and repeals a provision in the recent budget bill that would have hindered the private-sector delivery of crop insurance.

On a related note, the ABA will today deliver to Capitol Hill a petition for regulatory relief signed by more than 18,000 bankers. The petition is a key part of ABA’s efforts to have reg relief provisions included in the omnibus spending bill currently being negotiated by members of Congress. The petition is just one part of what bankers can do to advance reg relief, including calling and tweeting senators and registering for ABA grassroots text alerts. Learn more at

Final Overtime Rule Expected in July

A final rule from the Department of Labor raising the exemption threshold for overtime pay could come as early as July 2016, according to the DOL’s semiannual regulatory agenda released last week. The proposed rule would update the Fair Labor Standards Act to more than double the overtime pay exemption threshold from $23,660 to $50,440. Read more. For more information, contact ABA's Cris Naser.

SDBA To Hold IRA Essentials Seminar Dec. 16 in Sioux Falls

The IRA Essentials Seminar gives attendees a solid foundation of IRA knowledge. Real case problems and examples are included throughout the day to help participants apply information to job-related situations.The SDBA will hold IRA Essentials on Dec. 16 at the Ramkota Inn in Sioux Falls.

Attendees will leave this session able to work with IRA holders and process basic IRA transactions with confidence. The course is for people who are in a backup position or an IRA support person wanting to stay current, but this is also a great review course for those that have been away from IRAs for a couple of years.

This course goes in a logical order from opening an IRA, to talking about contribution rules, then on to distribution rules and regulations, which includes RMDs and death distributions, plus the course will address moving money as a transfer or rollover. Learn more and register.