SDBA eNews

April 15, 2021

Basel Committee Publishes Paper to Guide Work on Climate Risk 

The Basel Committee yesterday published two papers on climate-related risk that will serve as a “conceptual foundation” as the committee works to incorporate climate risk into the Basel regulatory framework. The first report addressed climate-related risk drivers and their transmission channels, noting that the effects of climate risk may vary risk based on geography, sector and economic financial system development. The paper also noted that several traditional risk categories used by banks—such as credit risk, market risk, liquidity risk and others—can be used to capture climate risk.

“To explore this further, a comprehensive analysis could usefully be undertaken on how climate-related financial risks can be incorporated into the existing Basel Framework,” the paper noted. “Part of the Basel Committee’s near-term work would be to identify gaps in the current Basel Framework, where climate-related financial risks may not be sufficiently addressed.”

The second paper provided an overview of conceptual issues related to climate-related financial risk measurement and methodologies, as well as practical implementation by banks and supervisors. The report noted that to date, most of the work to measure these risks has centered on “mapping near-term transition risk drivers into counterparty and portfolio and exposures” and that most banks have focused on credit risk when attempting to assess climate-related financial risk.

Looking ahead, “key areas for future analytical exploration relate to measurement gaps in data and risk classification methods, as well as methodologies suitable for assessing long-term climate phenomena not always of a standard nature,” the report said.

Senate Confirms Gensler as SEC Chairman

By a vote of 52 to 45 yesterday, the Senate confirmed Gary Gensler to serve as chairman of the Securities and Exchange Commission. Gensler previously served as chairman of the Commodity Futures Trading Commission from 2009 to 2014, where he led rulemaking to implement several Dodd-Frank Act reforms to swaps and derivatives markets.

“We congratulate Gary Gensler on his confirmation to serve as chair of the Securities and Exchange Commission and look forward to working with him to further our shared goal of protecting investors and promoting capital formation at this important moment for the economy,” ABA President and Rob Nichols said in a statement after the vote. “The SEC plays a critical role in overseeing our financial markets and ensuring they are healthy and competitive. Gensler’s broad experience in government, the private sector and academia will serve him well as he leads the commission.”

ABA Issues Staff Analysis on Common Questions to Inform Banks' Vaccine Policies

As COVID-19 vaccines become more widely available, ABA has published a members-only staff analysis on the federal rules around requiring vaccines for employees, tracking vaccination status and providing sick leave. ABA also provided guidance on non-legal considerations that banks may wish to address as they develop a vaccine policy.

The Equal Employment Opportunity Commission has stated that mandatory vaccination policies are permitted, but a federal statute has called that conclusion into question, ABA noted in the staff analysis. The EEOC also has stated that requesting proof of receipt of a COVID-19 vaccine is permissible. ABA noted that “knowledge of an employee’s vaccination status may be helpful in structuring the bank’s worksite,” as a vaccinated employee does not need to quarantine if the employee comes into close contact with an infected employee under guidance issued by the Centers for Disease Control and Prevention.

Even if the bank does not require its employees to receive the vaccine, ABA suggested that it may be prudent to try to accommodate employees who refuse to receive the vaccine, such as by separating the employee’s workspace from other employees or having the employee work from home. The Association also observed that no federal law requires paid sick leave for employees to receive the vaccine or who contract COVID-19, but that several ABA members are providing paid sick leave for COVID-19-related reasons. Read the staff analysis . For more information, contact ABA’s Jonathan Thessin or Paul Benda.

SBA Issues Notice Extending PPP; Clarifies Eligibility for Borrowers in Bankruptcy 

The Small Business Administration last Thursday issued a procedural notice to lenders regarding the extension of the Paycheck Protection Program. Pursuant to the PPP Extension Act of 2021, SBA said that it would shut down its PPP platform to new loan guaranty applications at 12 a.m. EDT on June 1. SBA will then have an additional month to process any pending applications, before shutting down processing on 12 a.m. EDT on July 1.

The SBA last week also issued an update to its frequently asked questions on the PPP. The new answer provides clarity regarding when an applicant or owner is no longer considered to be “presently involved in any bankruptcy” for PPP loan eligibility purposes.

Chapter 7 bankruptcy filers will no longer be considered “presently involved in any bankruptcy,” after the bankruptcy court enters a discharge order in the case. For Chapter 11, 12, or 13 bankruptcy filers, the bankruptcy court must enter an order confirming the plan in the case. For any type of bankruptcy, if the bankruptcy court has entered an order dismissing the case, applicants or owners will no longer be considered “presently involved in any bankruptcy” for purposes of the PPP. SBA noted that “the discharge order, the order confirming the plan or the order of dismissal, whichever is applicable, must be entered before the date of the PPP loan application.” 

ABA, Financial Trade Groups Urge IRS to Improve 'Get My Payment' Website

ABA and six other financial trade groups last Thursday requested that the Internal Revenue Service improve its Get My Payment website to provide more accurate and timely information about the status of economic impact payments. In a letter to the IRS, the groups called for timely updates to the database that would allow, for example, a recipient to know as soon as possible if his or her ACH payment was returned and reissued as a paper check. The groups also requested that the website accept bank routing information from payment recipients again to reduce reliance on paper checks.

To improve the payment process, the groups also asked that the site include a notice informing recipients that financial institutions do not have access to recipient information and that the information provided on the site may be inaccurate due to delays in updating accurate status of the payment.

The groups also asked the IRS to stress to financial institutions the importance of following guidance about payments inadvertently made to tax preparer accounts. They noted that when these payments are forwarded to the ultimate bank recipient by check and ACH funds may not be protected from garnishment, because there is no standard to identify these forwarded payments. Read the letter.

Appellate Court Finds Websites Not Covered Under ADA, Sets Up Circuit Split

Websites are not considered “places of public accommodation” under the Americans with Disabilities Act, according to a ruling last week from a three-judge panel of the 11th Circuit U.S. Court of Appeals. The decision in the case sets up a conflict with a Ninth Circuit ruling that ADA does apply to websites and mobile apps, known as a “circuit split,” which may increase the chances that the Supreme Court would resolve the dueling interpretations.

In the 11th Circuit case, which applies to Alabama, Florida and Georgia, a customer sued supermarket chain Winn-Dixie Stores over the accessibility of its website. The appellate court found that “[t]he statutory language in Title III of the ADA defining ‘public accommodation’ is unambiguous and clear,” describing 12 types of public accommodations, all of them “tangible, physical places. No intangible places or spaces, such as websites, are listed. Thus, we conclude that, pursuant to the plain language of Title III of the ADA, public accommodations are limited to actual, physical places.”

ABA has long supported banks’ efforts to provide accessible websites while expressing concern that unclear guidance from the Justice Department has left banks and other businesses exposed to litigation risk and demand letters despite their best efforts to comply. ABA and the state bankers associations have also called for greater clarity on whether and how the requirements of the ADA apply to websites and have supported legislation that would achieve this result. Read the opinionView ABA resources on website accessibility. For more information, contact ABA’s Teshale Smith.

ABA to Hold Emerging Leaders Forum Virtually on April 28-29

The future of the banking industry depends on developing the next generation of leaders today. As banking continues to evolve, it is critical for leaders to continue their growth and development.

The ABA will hold the Emerging Leaders Forum virtually on April 28-29. Bankers participating in this two-day virtual forum will hear from ABA leadership and experts on the science of energy management, organizational change, strategic thinking and other thought-provoking topics. Confirmed speakers include ABA Chairman Jim Edwards, ABA CEO Rob Nichols, Dr. Sahar Yousef and Professor Lucas Miller from UC Berkeley, Wharton professor Jonah Berger and expert negotiator Scott Wayne.

Following the forum and included in the cost of registration, bankers will continue their development by taking courses within ABA’s Leadership in Action online training suite and connect with peers through three facilitated virtual discussion sessions. ‌Visit for registration information and additional program details. ABA member registration is just $195 per person. Group pricing is also available.

GSB to Hold CECL Foundations Virtual Workshop

Financial institutions complying with the Current Expected Credit Loss standard (CECL) in 2023 have to manage a myriad of new data, modeling and forecasting considerations. With new requirements comes new expertise and time constraints.

The Graduate School of Banking (GSB) at the University of Wisconsin will be host an in-depth virtual workshop, CECL Foundations, on May 11-12. The workshop will describe the new standard, recommend modeling best practices, identify key players at the financial institution, examine forecasting and share case studies from those who have done it before, including the SEC-filing institutions who implemented last year.

This deep dive into CECL will feature seven hours of live content and will also be recorded and available to registrants for 60 days for scheduling convenience. The workshop will be led by Abrigo personnel of former bankers and industry experts who have worked with hundreds of institutions already on conducting concise, credible and efficient CECL calculations. Learn more and register


Question of the Week

Question: State Bank has a customer who is getting a home equity loan for home improvement and debt consolidation for credit cards. Is the bank required to gather GMI/demographic information and is this HMDA reportable?

Answer: It would be HMDA reportable if the purpose of the loan is for improvement of a dwelling and is also secured by a dwelling. So, assuming that is the case, and it is reportable, then yes, GMI/demographic information would be collected and reported as applicable.


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Contact Alisa Bousa, SDBA, at 605.224.1653 or via email.