SDBA eNews: February 4, 2016

In This Issue

March 1 Deadline for GSBC Scholarship

 
The Graduate School of Banking at Colorado (GSBC) partners with the SDBA each year to offer the GSBC Future Leaders Scholarship. The scholarship is awarded to one banker per state, per year, and recipients must be first-year students.

Scholarship recipients receive $1,325 per year for three years to attend GSBC’s annual school session. The 66th school session will be held July 17-29, 2016, at the University of Colorado at Boulder.

The 2016 scholarship application deadline is March 1. Candidates will be notified by March 31 of selection decisions. A separate application for the school must also be completed. Visit GSBC's website to apply for the school and the scholarship. Questions, contact Deb Gates, SDBA, at 800.726.7322.


FDIC Updates Video Resources for Interest Rate Risk

 
The FDIC yesterday released updated videos to help bank directors, management and staff better understand and manage interest rate risk. Topics covered by the videos include current industry trends, responsibilities of the bank’s board and management team, types of interest rate risk, different risk measurement systems, key modeling assumptions, internal controls and independent review. Access the videos.



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Questions/Comments

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

Still Time to Register for SDBA's State Legislative Day on Wednesday


It's not too late to make plans to attend the SDBA’s 2016 State Legislative Day on Wednesday, Feb. 10, in Pierre.

The day will include a luncheon and banking legislation review, visit with Gov. Dennis Daugaard, discussion on the 2016 race for the White House, and an evening reception and dinner with legislators and constitutional officers

This year's featured speaker is Dr. Steffen W. Schmidt, university professor of political science at Iowa State University in Ames, Iowa. The 2016 race for the White House is proving to be one of the most interesting and intense in the past 50 years. Dr. Schmidt will  slice and dice this exceptional political season in his presentation "Fear and Loathing in the Campaign Trail 2016."

Events will be held at the Ramkota RiverCentre in Pierre. 


Time Running Out to Oppose Looser CU Membership Rules

 
ABA, as well as the SDBA, is calling on all bankers to send personalized comments to the National Credit Union Administration opposing the agency’s plan to expand the already loose fields of membership from which federal credit unions can draw their customers.

Under NCUA’s wide-ranging proposal, FCUs would be able to apply to serve combined statistical areas, which are larger than metropolitan areas; areas contiguous to their existing core-based statistical areas; and entire congressional districts, including at-large districts that encompass entire states. NCUA would also facilitate easier conversions to community charters, easier expansion of fields of membership in rural areas and expansion of FOMs for “service facilities.”

ABA has provided a convenient online template for customized letters, as well as a set of key points to help bankers make the case against the proposal. Comments are due by Monday, Feb. 8.


CFPB Uses Bully Pulpit on Overdraft, Checking Account Screening

 
The Consumer Financial Protection Bureau yesterday announced several actions and statements that it said would facilitate customer access to checking accounts. It wrote to large banks urging them to offer overdraft-free checking options and issued a bulletin reminding financial institutions of accuracy requirements when reporting customer information to checking history databases used to screen consumers.

“The vast majority of Americans do, in fact, have a relationship with a bank,” said ABA SVP Virginia O'Neill. “There is a wide variety of reasons why some people are not in the financial mainstream, and the thousands of banks of all sizes across the country actively offer a multitude of deposit products to meet diverse customer needs.”

The letter, sent by CFPB Director Richard Cordray to the CEOs of the 25 largest U.S. retail banks, emphasized that it “is not being sent in reference to any sort of regulatory requirement, but instead is simply a suggestion that I urge you to consider in serving your customers.” However, he urged banks to offer a “lower-risk” account, whether checking or prepaid, that would not permit overdrafts and thus would not preclude customers with a poor history of managing their accounts. “We urge banks and credit unions that do not currently offer transaction accounts designed to help consumers avoid overdrafts to do so,” he said.

“America’s banks are continually working on innovative technologies and services to bring consumers without a bank account into the fold,” O'Neill said. “We appreciate Director Cordray’s recognition of these efforts and remain dedicated to featuring a full range of product choices that can accommodate a number of diverse consumer preferences.”

Meanwhile, the bureau issued a compliance bulletin reminding those who furnish customer data to credit bureaus of their obligation to submit accurate information to all kinds of consumer reporting agencies. “This obligation, which has been required under Regulation V since July 2010, applies to furnishing to all CRAs, including furnishing to specialty CRAs, such as the furnishing of deposit account information to CRAs,” the CFPB said. “Furnishers must have policies and procedures that meet this requirement with respect to all CRAs to which they furnish.”

The bureau also released several consumer-oriented resources on selecting lower-overdraft-risk accounts, managing a checking account and accessing a checking account history with a consumer reporting company.


Extra Time Provided for Banks to Request Direct Access to DoD Database


ABA has won additional time for banks to request access to a key compliance resource. Following requests from ABA and other groups, the Department of Defense last Friday extended the deadline to request direct access to the Pentagon’s Defense Manpower Data Center database until Feb. 15.

“With the additional time secured, ABA urges all banks to request direct access,” said ABA SVP Nessa Feddis. “Under the new Military Lending Act requirements, all banks are well-advised to verify the military status of all applicants for covered consumer loans.”

Directly accessing the database provides lenders with the quickest way to verify military status for applicants applying for consumer credit -- other than a mortgage or purchase money loan -- as required by the MLA, which takes effect in October. The free direct connection provides immediate answers, whereas making batch queries via the DMDC website can take up to 24 hours.

The third option for complying is to request information about applicants from the three principal credit bureaus. Both the database and the website provide information about all covered borrowers, including dependents, however, the credit bureaus do not provide information about dependents under the age of 18.

In order to access the database directly, bankers must email [email protected] by Feb. 15. Bankers may include a subject line stating “Request of [bank name] for direct connection to the DMDC database to determine military status” and repeating the request, along with the bank’s full name, address and contact information in the body of the email. For more information, contact Feddis.


House Passes ABA-Advocated Liquidity Bill


The House Monday night passed H.R. 2209 by a voice vote. The bipartisan bill, which is part of ABA's Agenda for America's Hometown Banks, would further expand the ability of banks to count municipal securities as high-quality liquid assets under the Liquidity Coverage Ratio.

"ABA has long argued that the high quality nature of municipal securities should be recognized under the LCR and that discouraging bank investment in municipal securities would make funding for state and local entities more expensive and difficult," ABA said in a memo sent to House members. The association added that "allowing a more diverse set of assets will strengthen the credibility of the LCR by ensuring that the definition of HQLA incorporates the significant variety of liquidity sources that banks have safely relied upon in the past." Read ABA’s memo.


ABA Calls for More Congressional Oversight for FCS

 
In a letter to the House Agriculture Committee on Monday, ABA President and CEO Rob Nichols called on members of Congress to more closely examine the activities of the Farm Credit System, citing a number of ways in which the GSE has been allowed to operate outside the scope of its mission. The letter comes almost two months after the committee held its first oversight hearing of the FCS in more than a decade, called after persistent advocacy efforts by ABA and the state associations.

Among the key concerns raised at the hearing was the FCS’ ability to make loans to "similar entities," an authority that Nichols said has extended far beyond its original purpose and has since been used to fund telecommunications giants like Verizon and AT&T, as well as non-agricultural initiatives such as casinos and raceways. “We do not believe allowing the FCS to use its tax-advantaged subsidy to participate in corporate lending was Congress’ intention with similar entity lending, and [we] urge the committee to eliminate these practices,” Nichols wrote.

The letter also called for closer scrutiny of indirect lending and shadow banking activities by FCS institutions and better standards for evaluating the FCS’ lending efforts to young, beginning and small farmers -- which have declined significantly over the last decade. It also raised concerns about FCS institutions retaining mineral rights on foreclosed properties.

These concerns highlight the need for more frequent monitoring of the Farm Credit System, Nichols said, expressing his hope that the December hearing would be the first step toward more routine oversight of the GSE in the future. Read the letter.