SDBA eNews: June 29, 2017

In This Issue

Agencies Release List of Areas Eligible for CRA Credit

The federal banking agencies have released the 2017 list of distressed or underserved nonmetropolitan middle-income areas in which banks participating in revitalization or stabilization activities will be considered for Community Reinvestment Act credit. Read more. View the list.

ABA to Host Upcoming Briefing on CRA

To help bankers prepare for upcoming Community Reinvestment Act exams, ABA will host a briefing on Tuesday, July 11, at 1 p.m. CDT with leading CRA expert and author Kenneth H. Thomas, president of Community Development Fund Advisors, LLC.

Thomas will share the results of his proprietary database of thousands of CRA public performance evaluations, and provide insights on the CRA process, including qualitative factors to consider, specific guidelines and how to compensate for weaknesses in various CRA performance tests. Listeners will also hear top 10 takeaways for preparing for their next CRA examination. Register for the briefing.


Question of the Week

Is joint intent required for an application for renewal of existing credit?

Answer: Yes—Joint intent must be evidenced at the time of application for an extension of credit, and an extension of credit includes refinancing or renewing existing credit. See Comment 3 to §1002.7(d)(1), §1002.2(f), and §1002.2(q).

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

State Associations Call on Senate to Advance Reg Relief Legislation

As the debate over financial regulatory reform now shifts to the Senate, 52 state bankers associations including the SDBA last week called on Senate leadership to support a bipartisan reg relief bill that would help create economic growth and improve the availability of credit to consumers.

The associations encouraged lawmakers to support several measures included in ABA’s Blueprint for Growth, including a qualified mortgage safe harbor for mortgage loans held in portfolio, more tailored supervision based on an institution’s risk profile and business model, greater flexibility for savings associations, relief from various reporting requirements, and repeal of the Volcker Rule. They also called for a review of arbitrary asset thresholds and for regulators to consider changes to capital and liquidity requirements.

With the Treasury Department, regulators and individual lawmakers all expressing support recently for various reg reform initiatives, the associations expressed optimism for a bipartisan bill to move through the Senate.

“It is encouraging to see lawmakers of both parties, the House of Representatives and the Treasury Department lay the foundation for changes--regulatory calibrations that can kick-start our economy while maintaining a financial system that is safe, sound and resilient,” they wrote. “We urge the Senate not to allow partisanship to stand in the way of promptly passing much-needed reforms, and we stand ready to work with you in support of the financial needs of America’s communities.” Read the letter.

ABA, Trade Groups Support Proposed CFPB Structural Change

In a joint financial and business trade association letter to House and Senate Appropriations Committee leadership last week, ABA supported the inclusion of language in the fiscal year 2018 spending bill that would transition the Consumer Financial Protection Bureau to a bipartisan, five-member commission.

The groups noted that by a three-to-one margin, registered voters support such a structure for the regulatory watchdog agency, according to data from Morning Consult.

“A Senate-confirmed, bipartisan commission will provide a balanced and deliberative approach to supervision, regulation and enforcement for consumers and the financial institutions the CFPB oversees by encouraging input from all stakeholders,” the associations said. “The current single director structure leads to regulatory uncertainty and instability for consumers, industry and the economy, leaving vital consumer financial protection subject to dramatic political shifts with each changing presidential administration.”

ABA has long supported this approach to reforming the CFPB in order to bring much-needed accountability and diversity of viewpoints. CFPB reform is a key element of the association’s Blueprint for Growth. Read the letter.

Senate Health Care Bill Includes HSA Expansion

The Senate Budget Committee last week released a discussion draft of the Senate health care reform bill, which would repeal many of the Affordable Care Act’s tax provisions, including the “Cadillac tax” on employer health insurance plans and expand the contributions to and utility of health savings accounts.

Under the bill, HSAs would be able to pay for over-the-counter drugs, which was previously restricted by the ACA. Contributions would expand to the statutory out-of-pocket maximum, currently $6,550 for an individual and $13,100 for a family.

New Article Offers Six Strategies for Negotiating Contracts with Third-Party Vendors

As regulators continue to increase their scrutiny of third-party relationships, a new exclusive online feature article on the ABA Banking Journal website highlights strategies for negotiating contractual terms with third-party vendors.

ABA VP and senior regulatory counsel Krista Shonk explores a recent study by the FDIC’s Office of the Inspector General which found that “frequently bank contracts with [third-party service providers] do not adequately describe TSP responsibilities related to business continuity and responses to cybersecurity breaches.” Out of the report came several key takeaways that banks can and should keep in mind when negotiating contractual terms with vendors, Shonk writes.

This article is the first in a new series focused on third-party risk management. "Third-Party Tactics," which will appear bimonthly on the ABA Banking Journal site, explores leading practices and practical tips for third-party risk management. Read the article. For more information, contact Shonk.

CFPB Proposes Further Changes to Prepaid Rule; Issues Compliance Guide

The Consumer Financial Protection Bureau on June 15 proposed several changes to its final rule on prepaid products, whose implementation has been delayed until April 1, 2018. The bureau also invited comments about whether to delay the rule’s implementation date further based on time needed to comply with the latest round of proposed changes.

Specifically, the bureau is proposing to revise the error resolution and limited liability provisions of the prepaid rule to clarify that “financial institutions would not be required to resolve errors or limit consumers’ liability on unverified prepaid accounts.” The CFPB proposed a limited exception to the prepaid rule for credit card accounts linked to “digital wallets” that customers use to store funds, since the credit card accounts are already subject to Regulation Z. The bureau also proposed several minor clarifications and technical adjustments.

The CFPB declined to address ABA’s overarching concern that the rule still requires significant adjustment to ensure banks can confidently offer checking and prepaid accounts without liability risk. In its comments in April, ABA urged the bureau to adopt a more objective definition of “prepaid account” as any product marketed or labeled as a prepaid account or card, rather than the more subjective approach of saying it “is not a checking account, share draft account or [NOW] account.”

The bureau released an updated compliance guide for small entities. The latest version reflects the delay of the effective date and several elements of additional guidance. Comments on the proposed rule are due 45 days after it is published in the Federal Register.

OCC to Host 'Innovation Office Hours'

The OCC’s Office of Innovation will host another round of “office hours” at its New York field office July 24-26 for bankers interested in discussing fintech-related matters, such as new products or services or partnerships between banks fintech companies. Bankers may request a one-hour meeting during the three-day period to meet with OCC staff, ask questions and receive feedback. The agency anticipates holding additional office hours in other cities in the future. Learn more. Request a meeting.