SDBA eNews

February 20, 2020

National Taxpayers Union Calls on Lawmakers to Revisit CU Tax Exemption

Congress should focus its attention in 2020 on the tax treatment of large, bank-like credit unions and reconsider the merit of the tax exemption these entities enjoy, according to a new issue brief published by the National Taxpayers Union on Wednesday. The brief comes on the heels of a Tax Foundation research note published late last year which found that the credit union tax exemption was “not justifiable.”

In the brief, NTU’s Thomas Aiello pointed out that just more than 300 credit unions have assets of more than $1 billion and collectively hold more than two thirds of the total assets of the industry. Moreover, “nearly all membership and asset growth of the credit union industry as a whole has occurred just within credit unions of this category.” That growth includes purchases of taxpaying banks by tax-exempt credit unions, a disturbing trend that Aiello also highlighted.

“Permanently taking taxpaying business entities off treasuries’ tax rolls and shrinking the tax base is a textbook example of poor tax policy,” he wrote. “The purpose of the tax code is supposed to be neutral, rather than helping one particular business gain the upper-hand in a free market.” Should the credit union tax exemption be allowed to continue, he added, it would keep an estimated $22 billion in revenue off the tax rolls over the next decade. Read the brief. Read the Tax Foundation research note

Sen. Moran Urges Support for Ag Banking Legislation

In a recent column in the Kansas Banker magazine, Sen. Jerry Moran (R-Kan.) urged support for an ABA-advocated bill that would end taxation of interest earned from agricultural real estate loans. The Enhancing Credit Opportunities for Rural America Act would not only reduce servicing costs for community banks providing these types of loans, it would also level the playing field between banks and the tax-advantaged Farm Credit System—making it easier for banks to support the farm sector through real estate loans.‌ South Dakota's Sen. Mike Rounds is also a co-sponsor of the bill. 

“The ECORA Act will promote business growth, stimulate job creation and serve as an incentive for community banks to invest in rural housing,” Moran wrote. “It will provide lower interest rates for Kansas farmers and ranchers struggling with low commodity prices. The act will also help sustain the presence of rural community banks by making them more competitive and able to meet the financing needs of their customers.” Read more. ‌

Funds Available for Specialty Crop Advancement in South Dakota

The South Dakota Department of Agriculture (SDDA) has announced that funds are available for Specialty Crop Block Grants. Grant funds can be used for marketing, promotion, research, food safety, nutrition, distribution and best management practices to advance the specialty crop industry. Specialty crops are generally defined as fruits, nuts, vegetables, honey, and some turf and ornamental crops. A full list of specialty crops is also available on the USDA website.

“These grants give farmers a way to increase the demand for the specialty crops they are already growing,” said SDDA Grant and Loan Specialist Nicole Prince. “This year’s projects are maximizing the value of specialty crops and contributing to South Dakota’s greater agricultural economy.”

Stakeholders have identified this year’s top priorities as enhancing the competitiveness of specialty crops through increased sales, increased access, and greater capacity as well as sustainable practices of specialty crop production resulting in increased yield, reduced inputs, increased efficiency, increased economic return, and/or conservation or resources. 

The deadline for applications is April 3, 2020. This year, SDDA is asking for proposals prior to USDA announcement of funding, so applicants should base their budgets on their project needs. Projects that are selected for funding will have the opportunity to meet with the review team and make additional adjustments to the budget based on the grant funding awarded to the state. Learn more and apply for a grant.

ABA, TBA Ads Recognize Rep. Cuellar's Support of Pro-Growth Policies

ABA yesterday released its first voter education advertising of 2020, unveiling ads in partnership with the Texas Bankers Association that urge Texans to contact Rep. Henry Cuellar (D-Texas) and thank him for supporting pro-growth economic policy.‌

“We are proud to partner with Texas bankers to shine a spotlight on Henry Cuellar’s strong support of legislation that is critically important to banks and their communities,” said ABA President and CEO Rob Nichols. “We appreciate his willingness to advance commonsense policies that promote economic growth in Texas and across the country.”

TBA President and CEO Chris Furlow added that Cuellar “understands the key role community banks play in creating opportunity and jobs… and it’s important that Texans know about his strong support for legislation that will help people buy a home and start a business.”

The voter education ads will run in both English and Spanish. See the ads.

ABA Offers Feedback on Regulatory Burden of 1071 Reporting

ABA this week offered feedback to the Consumer Financial Protection Bureau on a survey intended to gauge the potential one-time costs associated with preparing to collect and report data on small business lending, as required by section 1071 of the Dodd-Frank Act. ABA—which has long raised concerns about small business data collection—emphasized the need to fully understand not just the implementation costs but also the ongoing compliance costs, which it cautioned would likely increase the cost of credit for small business borrowers.

Regarding the survey itself, ABA said that the CFPB’s estimated completion time of 30 minutes was too low. The association noted that small business lending tends to be conducted by various lines of business and systems within a bank, making it challenging to accurately respond to several questions in the survey, such as those involving the number and dollar amounts of originations of various credit products. ABA also offered specific comments on several of the individual survey questions. Read the letter. For more information, contact ABA’s Kitty Ryan.

Podcast: Adding Value in AML with Tech, Talent

Two challenges for today’s anti-money laundering professionals: focusing on high-value functions and eliminating false positives that consume unnecessary resources. On the latest episode of the ABA Banking Journal Podcast—sponsored by Franklin Madison—Nicholas Piccininni, who leads a 1,500-person financial crimes risk management team at Wells Fargo, explains how Wells puts technology to use to tackle these challenges.

One question he asks: “Are we doing tasks [just] because we want to do those tasks, or are they adding value?” More data isn’t enough. AML professionals need to understand what’s driving higher Suspicious Activity Report totals—it could be the presence of more bad actors in the system, or it could just be a sign of a growing customer base.

Piccininni discusses how Wells Fargo employs artificial intelligence and machine learning techniques in the financial crimes area, as well as its use of robotics applications “to pull data from across the company so [AML professionals] don’t have to go into 30 systems.” He also explores sanctions-related screening techniques that “eliminate false positives so we don’t have people going through reams of data.” Listen to this episode.

Agencies Extend CRA Proposal Comment Period

The FDIC and OCC yesterday extended by 30 days the comment period for their proposal to modernize Community Reinvestment Act regulations. Comments are now due April 8.

ABA encourages members to comment on the proposal and has compiled a guide to help bankers draft their comment letters. The members-only resource highlights several key aspects of the proposal—such as assessment areas, performance measurement and data collection—that bankers can address. The guide also provides instructions for filing letters once completed. Access the guide. For more information, contact ABA’s Krista Shonk

CFPB Publishes Blog on Social Security Scams

With Social Security scams on the rise, the CFPB has published a new blog post intended to help consumers recognize the common signs of these scams, which typically involve a caller falsely claiming to be a government employee and warning of an issue with the victim’s Social Security number, account or benefits.

Hallmarks of these types of scams include a call threatening arrest or legal action; emails or texts that contain personally identifiable information; messages or emails containing misspellings or grammar mistakes; request for payment by gift or pre-paid card, cash or wire transfer; or an offer to increase Social Security benefits in exchange for payment. Read the blog post.

Compliance Alliance

Question of the Week

Question: In regards to the six-transaction limit imposed in Regulation D, can a bank reduce this limit to only two transactions?

Answer: Yes, the bank may set stricter limits than required under Reg. D. There is not a prohibition in doing using a stricter limit as long as it is disclosed in the bank's account agreement to avoid any potential UDAAP issues. 

Not a 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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ABA Releases Core Provider Information, Banker Analysis

In the latest update from ABA’s banker-led Core Platforms Committee, ABA yesterday shared information it has received from four major core processors as well as an analysis of the cores’ responses by bankers on the committee.