In This Issue

• Kristina Schaefer and David D. Nelson Elected to SDBA Board of Directors
• CFPB Proposal Would Undermine Benefits of Arbitration
• FDIC Seeks Feedback on Engaging Underbanked Through Mobile
• ABA Invites Entries for 2016 Community Commitment Awards
• Fed Moves Forward with Executive Compensation Proposal
• ABA Warns Consumers of 'Grandparent Scam'

Kristina Schaefer and David D. Nelson Elected to SDBA Board of Directors

 
The South Dakota Bankers Association (SDBA), the professional and trade association for South Dakota’s financial services industry since 1884, recently held elections for two of the nine seats on its Board of Directors. Elected to serve on the SDBA Board of Directors were:

• Kristina Schaefer, General Counsel & Director of Risk Management, First Bank & Trust, Sioux Falls
• David D. Nelson, Sr. Vice President & Branch Manager, First Fidelity Bank, Platte

Schaefer and Nelson began their three-year directorships on May 1. This is their first term on the SDBA Board of Directors.

Through the SDBA, hundreds of South Dakota bankers volunteer each year to serve on SDBA boards, committees and task forces to educate the state’s consumers and promote financial literacy.

Learn more about Schaefer and Nelson.

CFPB Proposal Would Undermine Benefits of Arbitration 

 
The Consumer Financial Protection Bureau today released a proposal that would prohibit customers from waiving their ability to participate in class action suits and limit drastically the use of mandatory arbitration agreements for financial products and services. Many banks include mandatory arbitration clauses in their credit card and deposit account agreements in order to manage the unpredictable costs of class action lawsuits.

The proposal would also require institutions that continue to employ arbitration to submit certain claim records, agreements and arbitrator communications related to ongoing arbitrated disputes to the bureau. The CFPB said it would use the records to monitor arbitration and that it would publish redacted records on its website. The rule would take effect 30 days after the final version is published in the Federal Register, with the rule applying to agreements entered into starting 180 days after the effective date.

The proposal would apply to all extensions of credit under the Equal Credit Opportunity Act, automobile leases, depository services under the Truth in Savings Act, payments products and services subject to the Electronic Funds Transfer Act, debt settlements, credit reports and debt collection. The proposal would cover depository institutions, nonbank lenders and money transmitters.

“Consumers will get less and pay more if the CFPB’s proposal to sideline arbitration and promote class actions is ultimately adopted. Banks resolve the overwhelming majority of disputes quickly and amicably,” said ABA President and CEO Rob Nichols. “When needed, arbitration is an efficient, fair and low-cost method of resolving disputes in a fraction of the time -- and at a fraction of the cost -- of expensive litigation. This helps keep costs down for all consumers.”

The bureau also issued a report from its small business review panel, which raised several concerns about the cost of the proposal to small businesses. The CFPB dismissed most of those concerns in the text of its proposed rule. Comments are due on the proposal 90 days after it is published in the Federal Register.

• Read the proposed rule.  
• Read the small business panel report.
• For more information, contact ABA's Nessa Feddis or Jess Sharp.

FDIC Seeks Feedback on Engaging Underbanked Through Mobile

The FDIC is seeking feedback from bankers on ways of using mobile financial services to meet the needs of the underbanked. The agency recently conducted qualitative research in this area, it said, developing six strategies for banks when promoting mobile services to these customers: improving access to timely account information, expediting access to money, making banking more affordable through better account management, addressing real and perceived security shortfalls and increasing awareness of mobile tools.

Bankers are invited to provide feedback on how they are currently employing these strategies, how best to shape a demonstration project and how interested they are in participating in a demonstration. Comments are due by June 15 and may be emailed to [email protected]. Read more.

ABA Invites Entries for 2016 Community Commitment Awards

ABA invites entries for the 2016 Community Commitment Awards, which recognize and promote the essential role banks play in their communities. The awards, open to banks of all asset sizes and charters, celebrate financial institutions that have demonstrated noteworthy corporate social responsibility.

Banks may enter in one or all seven categories:

• Financial education
• Volunteerism
• Affordable housing
• Community and economic development
• Nontraditional borrowers and the underbanked
• Protecting older Americans
• George Bailey Distinguished Service Award

The awards will be judged by a panel of experts in each field. Winners will be honored in a ceremony during ABA’s Annual Convention in Nashville in October. While the awards are open to banks of all asset classes, institutions will be judged against their peers. Entries are due July 1. Learn more and apply now.

Fed Moves Forward with Executive Compensation Proposal

 
The Federal Reserve Board on Monday voted to re-propose the executive compensation rule mandated by the Dodd-Frank Act, prohibiting incentive-based compensation arrangements for executives that the regulators believe could encourage excessive risk-taking behavior. The National Credit Union Administration, FDIC, OCC and FHFA previously released their versions of the proposed rule, and the SEC is expected to do so in the coming weeks.

The proposed rule would apply to banks with more than $1 billion in assets, dividing banks into three “tiers” based on asset size, with the largest banks subject to the most stringent requirements. Banks classified as “Level 1” (those with more than $250 billion in assets) and “Level 2” (those with $50 billion to $250 billion in assets) would be required to defer a percentage of qualifying incentive-based compensation for executives and significant risk takers for a specified amount of time. Regulators would have discretion over requirements for Level 3 institutions.

The proposed rule also requires institutions to keep a record of senior executives and risk-takers and disclose the incentive-based compensation arrangements of those individuals. Additionally, the rule includes a "clawback" provision that allows a covered institution to recover vested incentive-based compensation if the executive or risk-taker engaged in the behavior was found to have hurt the firm. Read the proposal. For more information, contact ABA's Hu Benton or Shaun Kern.

ABA Warns Consumers of 'Grandparent Scam'

 
In observance of Older Americans Month this May, ABA on Monday issued a press release warning consumers of impersonation scams -- commonly referred to as “grandparent scams” -- where criminals deliberately target older Americans by posing as family members or friends. According to the Federal Trade Commission, more than $42 million was lost to this type of fraud between 2012 and 2014.

ABA encourages consumers to always verify the identity of the caller, ask questions, never give personal information over the phone unless they initiated the call to a trusted party and to trust their instincts and obtain more information before making a financial decision.

“Fraudsters have no problem preying on your goodwill to get inside your wallet,” said Corey Carlisle, executive director of the ABA Foundation. “They’re using social media and internet searches to fabricate convincing stories, so be careful, trust your gut and do your best to confirm who you’re dealing with before sending any money.”

ABA is committed to leading the charge against the financial exploitation of older Americans through its Safe Banking for Seniors campaign. Bankers registering for the program can take advantage of free resources to help them educate seniors and their caregivers on the risk of financial fraud. Learn more about Safe Banking for Seniors. Read ABA’s press release.