SDBA eNews: September 22, 2016

In This Issue

Hacker Hour: Incident Response Round Table

One of the best ways to train key employees on the incident response team is to conduct a walk through or functional test of the current incident response plan.

Join Secure Banking Solutions on Wednesday, Sept. 28, for Hacker Hour: Incident Response Round Table. The discussion will cover typical cybersecurity incidents to be ready for and share ideas on how to handle these events. SBS will share how its helping organizations create and maintain a good incident response plan/process.

The webinar will be held at 2-3 p.m. CDT. Learn more and register.

ABA to Hold National Compliance School

The ABA will hold the National Compliance School on Oct. 22-28, 2016, at Emory Conference Center Hotel in Atlanta, Ga.

This program features comprehensive instruction in core federal banking laws and regulations. Ideal for banking professionals with less than five years of experience or those in need of a refresher, it covers essential technical aspects of all major compliance regulations and provides the basic foundation to develop and maintain an effective compliance program and support business initiatives.

The full program includes three core modules: deposit/operations, lending, and compliance management (a FREE half-day program). Attend all three, or the modules of your choice. Newly-expanded curriculum includes RESPA and TILA and TRID session in the lending compliance module. Learn more and register.

Question of the Week

If the bank sends the 45-day, force-placement notice prior to expiration of the flood insurance policy, does it meet the statutory notice requirements?

Answer: No—the bank is required to send notice upon determining that the flood insurance policy actually has lapsed in order to meet the statutory requirement. Any notice sent prior to lapse may be sent as a courtesy, but would not satisfy the statutory notice requirement.

Not a Compliance Alliance member? Learn more about membership with Compliance Alliance by attending one of our live demos:

Compliance rules and regulations change quickly. For timely compliance updates, subscribe to Compliance Alliance’s email newsletters.

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.

Top Ag Banking Awards Go to Indiana Banker and Kansas Educator

ABA has announced the recipients of both the Bruning and Blanchfield Awards, the association’s premier awards presented for contributions to ag banking. Gene Miles, president and CEO of First Farmers Bank and Trust Company, Converse, Ind., will receive the Bruning Award, and Kansas State University ag economics emeritus professor Barry Flinchbaugh will be given the Blanchfield Award. Both awards will be presented at the ABA National Agricultural Bankers Conference, Nov. 13-15 in Indianapolis.

Miles is receiving the Bruning Award for his leadership and outstanding dedication to providing credit and financial guidance to farmers and businesses in rural America. He has been an agricultural banker for more than 35 years, serving in nearly every capacity within the institution and leading through volunteer service.

Flinchbaugh will be recognized with the second annual Blanchfield Award for contributions of a non-banker to ag and rural banking. In addition to his work as an economist, Flinchbaugh has been a frequent participant in the National Agricultural Bankers Conference and a leader in developing U.S. agricultural policy. Read more. Register for the conference.

SD Secretary of State Compiles 2016 Ballot Question Pamphlet

South Dakota Secretary of State Shantel Krebs' office has compiled a pamphlet of the 2016 ballot questions. It provides the title, explanation and effect of a vote for each ballot question provided by the South Dakota Attorney General. No other statements on the pamphlet reflect the opinion of the State of South Dakota or the Attorney General.

According to state law, the Secretary of State shall distribute public information on any constitutional amendment, initiated or referred measure submitted to the electors for approval. It must contain a statement in support and a statement against, if any can be identified. The Secretary of State is not responsible for the content, objectivity or accuracy of the statements written by the proponents and opponents.

The Secretary of State compiled the information as supplied by the writers, was not verified by the Secretary of State, and does not reflect the position of the State of South Dakota regarding the legality or effect of the amendments or measures. View the pamphlet.

Senators Challenge Wells Fargo Chief in Hearing

During a Senate Banking Committee hearing on Tuesday, senators of both parties challenged Wells Fargo Chairman and CEO John Stumpf over the recent enforcement action against the bank for unauthorized deposit and credit card accounts created by Wells Fargo employees to meet sales goals. During his appearance, Stumpf apologized for “wrongful sales practice behavior in our retail banking business” that is “against everything we stand for as a company.”

Stumpf announced new initiatives in response to the scandal, which resulted in the firing of 5,300 employees in recent years. “We will end product sales goals for everyone in our retail banking business,” he said. “We want to make sure nothing gets in the way of doing what is right for our customers.”

He also said the company would extend the scope of its investigation to 2009 and 2010 and that it had implemented a new procedure of sending a confirmation email to customers when a new deposit account is opened and an acknowledgement letter after a customer applies for a credit card.

Stumpf insisted that the goal of Wells Fargo’s robust cross-selling program, and associated product sales goals, was to serve customers. “The goal here is not products; the goal here is deep relationships,” he said. “We had the wrong tool in place to make that happen… We should have realized much sooner that the best way to solve the problems in the retail banking business was to completely eliminate retail banking product sales goals.”

ABA President and CEO Rob Nichols said dishonest practices have no place in banking, which relies fundamentally on trust. “We strongly condemn any kind of dishonest or unethical behavior at any bank at any time. Preserving customer trust is a bank’s paramount duty.”

“It’s important to remember that there are more than two million women and men working for America’s banks who proudly focus every day on meeting the needs of their customers,” he added. “This should not cast a shadow over their work, which helps communities and the economy grow.”

OCC to Banks: Expect Closer Scrutiny of Cross-Selling

With Wells Fargo’s product sales quotas in regulatory cross-hairs, Comptroller of the Currency Thomas Curry warned on Tuesday that large and midsize banks should expect closer examiner scrutiny of sales practices.

“The actions against Wells Fargo highlight that we must continue our efforts to improve and refine the agency’s supervisory program, to sharpen our early warning processes, and to enhance our supervisory capabilities, particularly with respect to our largest, most complex banks,” Curry told the Senate Banking Committee. “At the same time, I have directed our examiners to review the sales practices of all the large and midsize banks the OCC supervises and assess the sufficiency of controls with respect to these practices.”

During the hearing, senators raised questions about the timeline of when Wells Fargo first reported the problems with unauthorized accounts to regulators. Stumpf said that he first became aware of the problems in late 2013, prior to which they were being handled by the compliance and audit functions within Wells Fargo’s retail banking unit.

Curry noted that the OCC first received consumer and employee complaints in 2012, and Consumer Financial Protection Bureau Director Richard Cordray said that the CFPB learned about the problem through tips in mid-2013.

“We had known about these types of problems from our sources, but if any institution feels they can divide and conquer the regulators, they should know that that is a mistake,” Cordray added, urging financial institutions to self-report known issues promptly to all relevant regulatory agencies. Read Curry’s testimony.

ABA Urges Congress to Address FSA Loan Shortfall

ABA and several agricultural trade associations wrote to the House and Senate Appropriations subcommittees on agriculture on Monday asking lawmakers to include additional funding for the Farm Service Agency’s farm loan programs in the FY 2017 budget bill. The FSA is currently facing an estimated $215 million shortfall in operating loans, creating a backlog that could delay applications from any new borrowers that apply for funding after Oct. 1.

With the current fiscal year ending on Sept. 30, Congress will likely pass a continuing resolution to fund the government through December, before passing a final appropriations bill for FY 2017. The groups pointed out that if Congress fails to include language in the continuing resolution to address the shortfall, “FSA will likely run out of money during the CR period, just when farmers need the program the most.”

They further requested that Congress increase funding for direct and guaranteed operating loans in the final FY 2017 spending bill to address both the applications carried over from 2016 and the increased demand predicted for the upcoming year. Read the letter.

ABA Provides Advice for Comments on Small-Dollar Loan Proposal

To help bankers write persuasive comment letters on the Consumer Financial Protection Bureau’s small-dollar lending proposals, ABA provided an outline of key points and issues. Comments on the controversial rule are due by Oct. 7, and ABA urges bankers who may be affected by the proposal to write to the bureau.

Bankers are urged to describe the real-life effects the proposed rule would have on their small-dollar loan programs. ABA fears that if the proposed rule is finalized without significant changes, it would curtail, if not eliminate, the ability of banks to make these loans. View points for comment letters. For more information, contact ABA’s Jonathan Thessin.