SDBA Bank Technology Conference to be Held Next Week

Technology photo There is still time to register for the SDBA's Bank Technology Conference to be held Sept. 8-9, Wednesday and Thursday, in Sioux Falls. This conference will provide attendees the opportunity to learn from industry experts, network with IT colleagues, and visit with exhibitors to see and experience the latest in products and services.

Sessions at this year's event include: cryptocurrency, ransomware and disaster recovery planning, staying viable in the fintech future, how to know your security program is effective, speed networking, the art of communicating to the board and vulnerability management. The conference will begin with a reception with exhibitors on Wednesday evening.

The event will be held at the Hilton Garden Inn Sioux Falls South. See the full agenda and register to attend.

With Section 1071 Proposal, CFPB Outlines Plan for Collecting Small Biz Loan Data

The CFPB yesterday issued its long-awaited proposal for implementing Section 1071 of the Dodd-Frank Act, which concerns the collection of credit application data for small businesses, including women-owned and minority-owned small businesses. The extensive 913-page proposal would require lenders to report: the amount and type of small business credit applied for and extended; the race, ethnicity and sex of the small business owners; and several key elements of the price of the credit offered. A lender’s employees or officers who are involved in considering a small business application would be prohibited from accessing the business’s demographic information, unless the lender determines that such a “firewall” is infeasible.

The rule would apply to financial institutions, including banks, credit unions and nonbanks, that originate at least 25 credit transactions in each of the two preceding calendar years that meet the definition of “business credit” under Regulation B and that involve “small businesses”—which the Bureau would define as businesses with $5 million or less in gross annual revenue for the business’ preceding fiscal year. Products subject to the 1071 rule would include business and agricultural-purpose loans, lines of credit, credit cards and merchant cash advances. The proposed rule does not provide an asset-based carve-out for banks or any other general exemptions for particular categories of financial institutions.

Lenders would be required to collect data on a calendar-year basis and report it to the CFPB by June 1 of the following year. They would also be required to retain evidence of compliance, including a copy of small business lending application registers, for at least three years. The Bureau will make the data available annually to the public on its website and is seeking comment on a balancing test it will apply to determine whether any information should be redacted from the public data set to protect privacy of small businesses.

When finalized, compliance would not be required for 18 months after publication in the Federal Register, and the Bureau proposed allowing lenders to voluntarily collect the demographic data one year before the compliance deadline. ABA is currently reviewing the proposed rule and will submit a comment letter to the Bureau. Comments are due 90 days after the proposal is published in the Federal Register. For more information, or to submit feedback for ABA’s comment letter, contact ABA’s Kitty Ryan.

ABA Urges Bankers: Ask Lawmakers to Oppose New IRS Reporting Rule

ABA is calling on bankers to contact their lawmakers and express opposition to any new reporting requirements for banks to track and report customer accounts and financial transactions to the IRS. A vote on the issue is expected in the coming days.

The new reporting requirements would raise questions about customers’ right to privacy, create unnecessary and expensive burdens for banks and raise the cost of tax preparation for small businesses, ABA noted.

While all banks would be affected, small community banks with limited internal resources will be especially burdened by this new requirement, ABA said in a message to members, adding that new requirements will require “a massive and expensive compliance effort to track and report inflows and outflows on all bank products.” Take action now.

ABA Calls for Interoperability as Fed Develops FedNow

In a comment letter to the Federal Reserve yesterday, ABA offered feedback on a recent proposal to revise Regulation J to accommodate the new FedNow Service, which is expected to go live in 2023. The proposal would create a new subjection in Regulation J that will apply solely to FedNow transactions.

In the letter, ABA called on the Fed to strive towards interoperability with the the Clearing House's RTP Network and, at a minimum, to adopt policies and procedures that are consistent with existing industry practices. ABA also recommended that the definition of “immediately” in Reg J remain undefined, at least until FedNow conducts a technical assessment of what would be reasonable.

ABA also recommended that the Fed change its intended plans to apply Electronic Funds Transfer Act (EFTA) and Uniform Commercial Code Article 4A (UCC 4A) to consumer transactions with any inconsistencies to be governed by the EFTA, emphasizing that EFTA should apply only to consumer transactions. The proposed method would create legal gaps in the areas of finality, acceptance and allocation of liability among participating banks, ABA said. The Association added that any gaps created by removing the application of UCC 4A to these transactions can be better addressed in FedNow Service Operating Circulars, which ABA also urged the Fed to make subject to public notice and comment. Read the letter. For more information, contact ABA’s Steve Kenneally.

Study Shows Agriculture Continues to Drive South Dakota's Economy

The Department of Agriculture and Natural Resources (DANR) in cooperation with AgUnited for South Dakota, South Dakota Dairy Producers, South Dakota Corn Utilization Council, Central Plains Dairy Foundation and East River Electric Power Cooperative have released an economic contribution study of South Dakota agriculture.

Based on the study, agriculture, forestry and related industries contribute $32.1 billion to South Dakota’s economy, which is 29.3% of the state’s total economic output, and 129,753 jobs in South Dakota, which is 21.1% of all jobs in the state. The study also showed $11.7 billion in total value added including $5.6 billion from livestock production, $3.3 billion from corn production, $2 billion from other agriculture industries and $860 million from forestry production.

“This study confirms the resiliency of agriculture related industries in South Dakota,” said DANR Secretary Hunter Roberts. “Over the past few years, we have seen floods, a pandemic and now drought. The continued success of the industry is a testament to the hard-working farmers and ranchers in South Dakota.”

The study was prepared by Decision Innovation Solutions. View the full study.

Registration Open for FDIC Operational Resiliency Tech Sprint

Registration is now open for the FDIC's newest tech sprint to develop measures, data and other capabilities to understand how resilient banks are to major disruptions.

The FDIC is asking participants—including banks, nonprofits, academic institutions, private sector firms and members of the public—to consider “what would be the most helpful set of measures, data, tools or other capabilities for financial institutions, particularly community banks, to use to determine and to test their operational resilience against a disruption?”

Interested parties have until Sept. 12 to submit applications to participate. The FDIC’s tech lab, FDITECH, will evaluate the submissions and select participants to further develop their proposed solutions. Read more.

ABA's #BanksNeverAskThat Campaign Toolkit Now Available

A free banker toolkit is now available for ABA’s award-winning #BanksNeverAskThat anti-phishing campaign. Registration is open and participating banks now have access to the updated toolkit full of ready-to-use graphics, social posts, digital signage, printables and more. The toolkit material can be co-branded, bank-branded or ABA-branded. Participation is free for every bank, regardless of ABA membership.

ABA will host a webinar on Wednesday, Sept. 8, at 1 p.m. CDT about the campaign that includes information about phishing scams and why banks should amplify the issue to customers. The webinar will also cover best practices for deploying the ready-made assets on social media platforms and benefits of participating in #BanksNeverAskThat.

Created in 2020 to help consumers fight phishing fraud, last October’s #BanksNeverAskThat campaign saw nearly 1,700 banks participate. This year, ABA hopes to recruit even more banks to join the industry-wide effort. Last year, more than 200,000 people visited BanksNeverAskThat.com to learn about phishing tactics, and 52,000 people tested their scam spotting skills, while sharing their knowledge with thousands of others.

Register for the campaign.
Register for the webinar.
For more information, contact [email protected].

Hotel Block Added for SDBA's Women in Banking Conference

Photo of women in an office. If you plan to attend the SDBA's LEAD STRONG: Women in Banking Conference and missed out on a hotel room at the Sheraton Sioux Falls, rooms are available at the Holiday Inn and Suites Sioux Falls Airport (across Russell Street from the Sheraton).

The SDBA will hold the Women in Banking Conference on Sept. 14-15 at the Sioux Falls Convention Center. The event is designed to encourage, support and inspire women to succeed in the workplace and will benefit all levels of staff interested in the enhancement and career growth of women in South Dakota banking.

To reserve a hotel room at the Holiday Inn and Suites Sioux Falls Airport, call 605.331.2040, press 2 and ask for a room from the SD Bankers block. The block will expire on Sept. 10.

If you haven’t yet registered to attend the Women in Banking Conference, click here.

Compliance Alliance logo

Question of the Week

Question: If we have an established escrow account for a borrower on a residential mortgage loan, upon paying of the loan, before we pay the pertinent insurance and taxes, do we refund any excess to the borrower?

Answer: Yes. Once the loan is paid off, RESPA, § 1024.4(b)(1), requires refunding the escrow balance to the borrower within 20 days of payoff.

(b) Refund of escrow balance —

(1) In general. Except as provided in paragraph (b)(2) of this section, within 20 days (excluding legal public holidays, Saturdays, and Sundays) of a borrower's payment of a mortgage loan in full, a servicer shall return to the borrower any amounts remaining in an escrow account that is within the servicer's control. RESPA, § 1024.4(b)(1), https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1024/34/

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

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 and ask for our Membership Team.

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