SDBA eNews: March 24, 2016

In This Issue

GSBC Scholarship Deadline Extended to April 8

The application deadline for the Graduate School of Banking at Colorado (GSBC) Future Leaders Scholarship has been extended to April 8.

The scholarship is offered to members of GSBC's co-sponsoring state banker associations and is typically awarded to one banker per state, per calendar year. Recipients receive $1,325 per year for three years of attendance at the annual school session and must enter as a first-year student.

The 2016 school session is July 17-29 at the University of Colorado Boulder. Recipients will be notified of selection decisions by April 29.

Congress Extends Foreclosure Protection for Service Members

Congress voted on Monday to renew a part of the Servicemembers Civil Relief Act that provides one-year foreclosure protection for military personnel leaving active duty through 2017. Service members will continue to be protected from foreclosure for one year following the end of their service.

The original extension -- which expanded the standard 90-day foreclosure protection for military personnel -- expired at the end of 2015. ABA was part of a coalition of trade associations that successfully lobbied Congress in support of the renewal. The newly extended protection takes effect once signed by the president, and will be retroactive to Jan. 1, 2016. Read more.

Question of the Week

If we have a customer that brings in a cashier’s check for deposit, but we have reason to believe the cashier’s check is fraudulent, could we place an exception hold for reason to doubt collectibility?

Answer:  Yes, you may. Regulation CC states, in Section 229.13 (e) : (1) In general. Sections 229.10(c) and 229.12 do not apply to a check deposited in an account at a depositary bank if the depositary bank has reasonable cause to believe that the check is uncollectible from the paying bank. Reasonable cause to believe a check is uncollectible requires the existence of facts that would cause a well-grounded belief in the mind of a reasonable person. Such belief shall not be based on the fact that the check is of a particular class or is deposited by a particular class of persons. The reason for the bank's belief that the check is uncollectible shall be included in the notice required under paragraph (g) of this section.

Therefore, reason to doubt collectibility is a valid reason to place a check hold on a cashier's check that has been brought in for deposit. Keep in mind, however, that notice of the hold must be provided to the customer.

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SDBA Seeking Bankers to Serve on Standing Committees

The SDBA is looking for bankers to serve on its standing committees for 2016-2017.

SDBA committees are: Agricultural Credit Committee, Credit Card Committee, Legislative Committee and Trust Committee. Committee terms are one year beginning May 1, 2016, and ending April 30, 2017, with the exception of Legislative Committee members who serve three-year terms.

Those who are currently serving on a committee will not be automatically reappointed and need to complete the committee appointment request form.

As a volunteer for the Association, bankers will be contributing to a stronger banking industry, and the SDBA is confident that they will enjoy a personal sense of accomplishment as well. The SDBA respects the time commitment that each committee member has made and works hard to ensure the meetings are well run and productive. Committees meet once or twice a year to initiate activities and recommend policy.

The deadline to request appointment to serve on an SDBA committee is May 1. Learn more and request to serve on a committee.

Nichols Urges Three Actions to 'Power Up' Banker Advocacy

In recent emails to ABA banker leaders and member bank CEOs, ABA President and CEO Rob Nichols announced ABA’s new “Power Up” initiative, which is designed to increase bankers’ clout and voice with policymakers. To “power up” banker advocacy, ABA is asking all bank CEOs to engage in grassroots leadership, join BankPac or a state association’s federal PAC, and donate to the Fund for Economic Growth.

“All of these steps are aimed at dramatically expanding bankers’ participation in the political process and thereby increasing our political strength,” Nichols said, emphasizing the importance of personal action by bankers. He noted that grassroots action builds invaluable personal relationship with lawmakers. Signing a BankPac authorization form will permit ABA to help banks implement a simple employee deduction plan that can yield positive results, he added. Meanwhile, contributions to the Fund -- the renamed 501(c)(4) organization started in 2012 by ABA leaders -- provides an alternative means of educating policymakers and the public and influencing the political environment.

The initiative comes after Nichols conducted a thorough audit of the banking industry’s overall advocacy efforts. “We found we do some things well, but also that there were other things we should be doing better, differently, new or on a grander scale,” he said. “We’ll be implementing changes on our end, including using new social and digital advocacy tools to better communicate, mobilize and coordinate our efforts.”

This is not an overnight effort, Nichols added. “I expect we will need a good two years to fully ‘power up,’” he wrote. “But with your support and leadership, I’m confident we will build banking’s clout and create a more positive policy environment for your customers and communities.” Nichols will host a free webinar on April 6 to explain the Power Up initiative and answer questions.

CFPB Rule Broadens QM Coverage for Rural, Underserved Areas

The Consumer Financial Protection Bureau on Tuesday issued an interim final rule broadening the availability of certain special provisions for small creditors operating in rural or underserved areas. The rule implements a regulatory relief measure, long advocated by ABA, that Congress passed in December.

Under the interim rule, small creditors--or banks that made no more than 2,000 first-lien covered transactions and have less than $2 billion in assets--will be eligible for special qualified mortgage provisions if they originate at least one covered mortgage loan on a property located in a rural or underserved area in the prior calendar year. Specifically, it allows small creditors to make certain balloon payments, which are otherwise not allowed under the QM rules.

Previously, small creditors were only eligible for these provisions if they operated predominantly in rural or underserved areas. This new rule significantly enlarges that rural and underserved carve-out.

"We commend the bureau for this rulemaking and for its quick actions to immediately implement these important provisions," said ABA President and CEO Rob Nichols. The interim final rule is the second rule this year the CFPB has issued to address the rural and underserved measures included in the December legislation.

Earlier this month, the bureau issued an ABA-advocated rule establishing a process by which businesses and individuals could appeal the bureau’s designation of a rural area. The CFPB will accept comments on the interim rule for 30 days after its publication in the final register. Read the rule. For more information, contact ABA's Rod Alba.

CFPB Recommends Steps for Banks to Protect Older Americans

The Consumer Financial Protection Bureau yesterday released an advisory and report highlighting voluntary best practices for banks to protect seniors from financial exploitation.

The bureau stressed the importance of employee education, of proper and timely reporting of suspicious activity and of building strong, collaborative relationships with local law enforcement and Adult Protective Services in order to deter elder fraud and educate consumers. It also encouraged banks to continue offering age-friendly services to older customers and to incorporate technologies like predictive analytics into their fraud monitoring programs.

ABA has long been committed to leading the charge against the financial exploitation of older Americans. Nearly 600 banks have registered to participate in the ABA Foundation’s new Safe Banking for Seniors program to help banks across the country educate seniors and their caregivers on the risks of financial fraud.

The program provides free materials and resources to help bankers lead sessions on various topics, including identity theft prevention and financial caregiving. The Foundation is joined by more than 35 state bankers associations, including the SDBA, that have pledged to promote these resources to bankers in their states in an effort to combat the estimated $2.9 billion in losses suffered by seniors each year. Read the CFPB advisory. Learn more about Safe Banking for Seniors.

ABA Seeks More Flexibility, Funding for USDA Guaranteed Loan Programs

ABA on Monday sent letters to the leaders of the House and Senate appropriations subcommittees on agriculture that expressed support for the USDA’s Farm Service Agency Guaranteed Farm Loan Programs and requested, among other things, greater flexibility and funding for specific programs.

For example, the USDA’s Guaranteed Farm Ownership Loan Program is currently funded at $2 billion for the 2016 fiscal year. ABA asked for the program funding to remain at $2 billion for 2017 with the ability for the secretary of agriculture to ask for up to an additional $1 billion if there is a potential budget shortfall. “This will ensure that the program will remain viable and able to assist as many farmers and ranchers as necessary,” ABA said.

For the USDA’s Guaranteed Farm Operating Loan Program, which is currently funded at $1.395 billion for 2016, ABA requested an increase in funding to $1.5 billion for 2017. In addition, the secretary of agriculture should have the ability to ask for up to an additional $1 billion if there is a potential budget shortfall or need for emergency funding.

“ABA has a great deal of concern that this program may experience budget shortfalls due to lower commodity prices in the agricultural sector,” the association said. “With this scenario playing out, it will put much more pressure on the Guaranteed Farm Operating Loan Program to assist farmers and ranchers in meeting their operating loan obligations over the coming years.” Read the House Letter. Read the Senate letter.

Dustin Oedekoven Named Interim South Dakota Ag Secretary

Gov. Dennis Daugaard announced yesterday that Dr. Dustin Oedekoven will serve as interim South Dakota Secretary of Agriculture while the search continues for a full-time replacement for Lucas Lentsch, who announced last month his intention to depart as Ag Secretary.

Oedekoven serves as South Dakota’s state veterinarian and head of the Animal Industry Board. His interim appointment will be effective immediately.

“I am pleased that Dr. Oedekoven has agreed to serve in this capacity,” Gov. Daugaard said. “Dusty is well-respected throughout the agriculture industry and will do a great job leading the department until we identify a permanent replacement.”

A native of Sturgis, Oedekoven has served as state veterinarian since 2009. He received a bachelor’s degree in agricultural science from South Dakota State University and a degree in veterinary medicine from Iowa State University.

After graduation, Oedekoven worked in private practice in Wyoming and then joined the South Dakota Animal Industry Board in 2003. Before becoming state veterinarian, he worked as a staff veterinarian and assistant state veterinarian.