SDBA eNews

October 28, 2021

SDBA Holds NEXT STEP: Emerging Leaders Summit in Sioux Falls

Photo of SDBA Emerging Leaders SummitEighty-five emerging bank leaders from across the state gathered in Sioux Fall yesterday for the SDBA's NEXT STEP: Emerging Leaders Summit. The annual event is designed to help cultivate, connect, engage and empower South Dakota’s future bank leaders.

Topics at this year's event included the challenge of leadership, having tough conversations in the workplace, what not to say to handle complex and diverse situations, lessons in leadership, banking in the time of COVID-19 and self management versus crisis management. The event also included ignite sessions presented by five emerging bank leaders, speed networking and a reception the evening prior at Hotel on Phillips. 

Thank you to this year's sponsors which helped make the Emerging Leaders Summit a success: IntraFi Network, First PREMIER Bank, BankWest, Bell Bank, Dakota Prairie Bank, First Bank & Trust, First Fidelity Bank, First Interstate Bank, Pioneer Bank & Trust and Richland State Bank.

Scholarships Now Available Through South Dakota Bankers Foundation

Photo of college students.Looking for ways to recruit new bankers to your organization? The Sound Dakota Bankers Foundation can help. Don’t miss out on the opportunity to apply for a $2,000 scholarship to award to a potential future banker.

Applications must be submitted through the parent bank, however, scholarships may be awarded through any of your organization’s locations. These scholarships must be awarded to South Dakota college juniors/seniors with an expressed interest in banking/financial services or second-year South Dakota technical school students with an expressed interest in banking/financial services. 

The South Dakota Bankers Foundation is now accepting applications for scholarship funds. Learn more and apply for a scholarship. Questions, contact Halley Lee at [email protected] or 605.224.1653.

Twenty-One House Democrats Call for IRS Reporting Proposal to be Cut from Spending Bill 

A group of 21 Democratic representatives wrote to House leadership yesterday calling for the removal of the Biden administration’s controversial proposal for financial institutions to report information on gross inflows and outflows on all accounts above a certain de minimis threshold. “We respectfully request that this proposal be withdrawn from further consideration in favor of a more targeted approach,” the lawmakers wrote to House Speaker Nancy Pelosi (D-Calif.) and House Ways and Means Committee Chairman Richard Neal (D-Mass.).

The Democrats said that they share the proposal’s goal of reducing the so-called tax gap but that “the data that would be turned over to the IRS is overly broad and raises significant privacy concerns. We have little information about how the IRS plans to protect or use this massive trove of data. Americans expect their bank or credit union to safeguard their financial information. This proposal would erode trust in financial services providers.”

Even after the administration and senior legislators floated an increase in the de minimis threshold, “a significant number of taxpayers will continue to meet the reporting criteria. Most of these taxpayers are not the wealthy tax evaders who are the stated targets of this proposal.” The lawmakers added that they have heard from “hundreds of thousands of constituents” opposed to the proposal.

Combined with united GOP opposition, the lawmakers’ letter indicates a majority of the House opposes the IRS provision. It comes one day after Sen. Joe Manchin (D-W.Va.) indicated his opposition in the evenly divided Senate. However, amid the fluid negotiations on Capitol Hill, ABA continues urging bankers and their customers to keep up calls and emails to oppose the proposal. Read the letterCall Congress now.

OCC Issues FAQs on Proposed Rule to Rescind 2020 CRA Regulations

The OCC on Tuesday issued a set of frequently asked questions on its notice of proposed rulemaking to rescind its 2020 Community Reinvestment Act rule and replace it with rules based on the 1995 CRA rules that were jointly adopted by the OCC, Federal Reserve and FDIC. The FAQs reiterate the OCC’s intention to work with the federal banking regulators on a separate joint rulemaking to modernize CRA regulations.

Activities that meet the qualifying criteria under the 2020 CRA rule will still receive CRA consideration if the activity was “originated, made, purchased or conducted while the June 2020 CRA rule is in effect,” the OCC said. The FAQs also address examination administration, assessment areas, targeted geographic areas and strategic plans. Read the FAQs.

DOJ, CFPB, OCC to Target So-Called Digital Redlining

The Department of Justice, the OCC and the CFPB last Friday announced a sharper enforcement focus on redlining and discriminatory lending practices and announced the first settlement reached under the new program.

In addition to traditional redlining enforcement methods, CFPB Director Rohit Chopra said that the CFPB would also be “closely watching for digital redlining, disguised through so-called ‘neutral algorithms.’” Chopra noted that “algorithms can help remove bias, but black-box underwriting decisions are not necessarily creating a more level playing field and may be exacerbating the biases feeding into them,” and that “the speed at which banks and lenders are turning lending and marketing decisions over to these algorithms is concerning to me.”

Under the initiative, the Justice Department’s civil rights division will partner with U.S. attorneys’ offices to “mobilize resources focused on making fair access to credit a reality in underserved neighborhoods across our country,” Attorney General Merrick Garland said. Garland noted that the program is DOJ’s “most aggressive, coordinated effort to address redlining.” Several investigations are currently ongoing, he said, adding that he expects to open more in the months ahead. Assistant Attorney General Kristen Clarke added that the initiative will focus on “all types of lenders of all sizes, including non-depository institutions and credit unions.” Read more.

FSOC Recommends Next Steps for Regulatory Framework on Climate Risk

The Financial Stability Oversight Council (FSOC) last Thursday said that climate change represents an “emerging threat” to U.S. financial stability and approved a report containing more than 30 specific recommendations that its member agencies can take to identify and address climate-related financial risk.

Among other things, the report recommends regulators continue their efforts to consider and incorporate climate-related risks into their regulatory and supervisory programs, determine whether new guidance or additional regulations are needed, and use scenario analysis as a tool for assessing climate-related financial risk. During the FSOC meeting last Thursday, Federal Reserve Chairman Jerome Powell noted that the Fed is currently in the process of developing a scenario analysis framework and would provide a progress update at a later time.

The report also calls for the use of enhanced climate-related risk disclosures. Specifically, FSOC recommended that regulators review existing public disclosure requirements and consider updates that would build on the work of the Task Force on Climate-Related Financial Disclosures. Regulators should also consider whether such disclosures should include disclosures of greenhouse gases produced and financed by financial firms, FSOC said.

Additionally, the report also calls for the establishment of a dedicated FSOC committee to assess climate-related financial risks, as well as an advisory committee that would comprise a wide range of industry stakeholders. The new advisory committee would be a forum for FSOC members to share information and approaches. The report also directs the regulatory agencies to increase their internal capacity to identify, measure, assess and report on climate-related financial risks and their effects on financial stability and to address any gaps that hinder the gathering and analysis of reliable data.

Treasury Secretary and FSOC Chair Janet Yellen noted that “we must be crystal clear that an emerging threat is not the same as a hypothetical one, and it would be foolish to confuse the two.”

Notably, FDIC Chairman Jelena McWilliams abstained from the vote to approve the climate report, citing concerns about the limited timeframe under which the recommendations were developed. Read the report. For more information, contact ABA's Joe Pigg.

ABA to Host Webinar on CECL Best Practices, Transition

The ABA will host a free webinar on Tuesday, Nov. 2, at 1 p.m. CDT about the current expected credit loss standard and the 2023 deadline. Attendees will learn best practices and about findings from SEC registrants to help ease the transition. Speakers will discuss a timeline for 2023 adopters and lay out a roadmap for a successful transition. The webinar will also go over tips for structuring a CECL transition project and major steps and milestones to actively track progress. Register now.

SDBA to Hold IRA Update Seminar Next Week

The SDBA will hold the IRA Update Seminar on Thursday, Nov. 4, at Hyatt Place, Sioux Falls South in Sioux Falls. This seminar builds on the attendees’ knowledge of IRA basics to address some of the more complex IRA issues their financial organizations may handle. The course will also include all changes that have occurred and discuss any pending legislation. This is a specialty session; previous IRA knowledge is assumed. The instructor uses real-world exercises to help participants apply information to job-related situations. Learn more and register

  Compliance Alliance logo

Question of the Week

Question: Can a bank provide an access device for a home equity line of credit (HELOC)?

Answer: This is permissible, with several risk considerations for the bank. Under Regulation Z, § 1026.2(a)(15)(ii), a debit card that can access a HELOC is a credit card. Additionally, § 1026.12(d)(1), further prohibits the bank from exercising the right of setoff for credit card balances. Therefore, whereas a HELOC without a credit card generally provides a right of setoff, subject to certain requirements, the bank loses this right when providing a debit card to access a HELOC.

Regulation Z, § 1026.2(a)(15) –  

Regulation Z, § 1026.12(d) –

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