SDBA eNews

February 17, 2022

South Dakota Banking Industry Defeats Government Mandate Bill

The SDBA and its membership were successful this week in defeating a bill before the South Dakota Legislature that would have mandated how banks should operate their businesses. Senate Bill 182 titled “Prohibit discriminatory actions against persons engaged with the firearm industry” was brought by special interest groups outside South Dakota. The legislation was aimed only and squarely at banks and would have restricted a bank’s ability to do business with the state if a bank has policies regarding banking firearms customers. 

The measure would have eliminated a banking institution’s capacity to make fair business and lending decisions on financial factors. Instead, it mandated that banks who conduct business with the state are required to do business with a specific industry, regardless of considerations, including credit history or the ability to repay.

The bill was defeated before the Senate Commerce and Energy Committee by a vote of 6-2 on Tuesday, and an attempted "hoghouse" of HB 1314 (deleting the entire content of a bill and replacing it with different material) failed yesterday in the House Judiciary Committee.

"On behalf of the SDBA and its engaged member bankers, the Independent Community Bankers of South Dakota, South Dakota Chamber of Commerce & Industry, Greater Sioux Falls Chamber of Commerce and Elevate Rapid City,  I would like to tip my hat to each of you for your enormous efforts in defeating this measure," said SDBA President Karl Adam. "SDBA Legal Counsel Brett Koenecke and I can’t thank you all enough for your contribution to this effort—enormous to say the least."

The SDBA called on bankers this week and last week to contact legislators, send emails and share their opposition to the legislation. The SDBA will continue to monitor the issue as there is a remote chance that proponents could maneuver to keep the bill alive. 

Republican Lawmakers Call for Changes to CFPB's Section 1071 Proposal

Three GOP lawmakers yesterday raised concerns about the CFPB’s pending rulemaking to implement Section 1071 of the Dodd-Frank Act. Citing concerns received from industry stakeholders, including banks of all sizes, Reps. Blaine Luetkemeyer (R-Mo.), French Hill (R-Ark.) and Roger Williams (R-Texas) flagged several issues and called on the CFPB to remedy these issues within the final rulemaking.

In particular, the lawmakers expressed concerns about the potential effects of the rule on small banks and urged the CFPB “to exclude as many small financial firms as possible” and also called for a longer implementation period, given the complexity of the rule.

The lawmakers also took issue with a provision of the proposed rule that would require financial institutions to guess the race of applicants who choose not to provide their information. “Loan officers at financial institutions have no expertise to determine the race or ethnicity of individuals, nor should they,” the lawmakers wrote, calling for the removal of the provision. Finally, they emphasized that the CFPB “must fully disclose what information will become public before the final rule is issued and must conduct a separate rulemaking process, including notice and comment, related to this provision of the law.”

The lawmakers’ concerns echoed several previously raised by ABA and the state bankers associations in their comment letter to the Bureau last month. Read the lawmakers’ letterRead the ABA/state association comment letter.

FSB: Crypto Assets Could be Threat to Global Financial Stability 

The crypto-asset market could reach a point where it presents a threat to global financial stability, according to a new report released yesterday by the Basel, Switzerland-based Financial Stability Board.

The fast-evolving nature of crypto assets, scale, as well as structural vulnerabilities and “increasing interconnectedness” with the traditional financial system could threaten global financial stability, the FSB warned. The international nature of crypto markets “also raise the potential for regulatory gaps, fragmentation or arbitrage,” according to the report.

While the nature and use of crypto assets varies across jurisdictions, financial stability risks could rapidly escalate, the FSB said in the report, adding that there is a need for an evaluation of possible policy responses.

The FSB acknowledged there are significant data gaps impeding risk assessments of crypto assets, due to trading and lending platforms falling outside of regulatory boundaries and reporting requirements. The FSB also warned that crypto asset participants, products and markets “may be failing to comply with applicable laws and regulations.” Read the report.

ABA to DOJ: Bank Merger Guidelines Outdated

ABA told the Department of Justice on Tuesday that the 1995 bank merger competitive review guidelines are outdated and do not take into account the competitive effects of online banking and competition from nonbanks. Responding to a request for public comment from the DOJ, the Association pointed out that under current application of the guidelines, small institutions may be prevented from merging if the government assumes they are the only competitors in their geographic markets—a finding that fails to reflect online channels and financial services that do not depend on physical branch networks.

ABA said that the 25-year-old guidelines fail to reflect the “tremendous changes” the market for financial products and services has undergone, including use of online banking, the interstate expansion of bank branch networks, enhanced market access made possible by advertising and communication innovations, and the increased market presence of nonbank financial firms, including fintech firms.

The Association added that a review of the guidelines “is important to the health of the U.S. financial system and economy” and that competitive impact analysis should take into account financial services provided to a market through channels other than branch networks and by nonbank firms. Read more. For more information, contact ABA's Hu Benton.

DOL Seeks Input on Climate-Related Financial Risks for Retirement Plans

The U.S. Department of Labor filed a request for information last Friday seeking public input on its forthcoming work on retirement savings and climate-related financial risks. The request is intended to assist the Department in identifying steps it can take “to further protect the life savings and pensions of U.S. workers and families from the threat of climate-related financial risk.” The RFI stems from an executive order directing DOL to ensure the resilience of retirement savings through regulatory action.

Among the questions for public comment, the RFI asks how DOL should address the protection of retirement savings from climate-related financial risks, as well as what data should be collected from plan sponsors, administrators and service providers.

Other questions DOL is seeking information on include whether the annual reporting Form 5500 or other form or method should be used to collect the data, whether plan administrators should be required to publicly report the steps they take to manage climate-related financial risks, and the results and outcomes of any such steps taken. The deadline for comments is May 15. Read more. For more information, contact ABA's Tim Keehan.

Application Deadline Nearing for GSBC Future Leaders Scholarship

The Graduate School of Banking at Colorado (GSBC) is offering the Future Leaders Scholarship to one banker per state, per year. The 2022 scholarship amount is $1,500, and recipients must enroll as first-year students. The 2022 GSBC annual school session will be held July 17-29 in Boulder, Colo., and the deadline to apply for the Future Leaders Scholarship is March 1. Learn more about the scholarship. Learn more about the annual school session

SDBA Offers Breaking into Banking Webinar

Commercial banking can be intimidating because of its complexity and the risk-oriented nature of the work. The SDBA will hold Breaking into Banking 101: Fundamentals of Commercial Banking virtually via Zoom on Wednesday, Feb. 23. This course is a clear and thorough introduction to the key concepts, terminology, and processes involved in credit and lending. It doesn’t assume much prior knowledge of the topic, so it’s ideal for those in their first year in the industry. Learners will walk away with a clear understanding of their job and how their specific role fits into the bank’s overall profitability goals. Learn more and register

ABA to Host Webinar on CECL Implementation

ABA will host a webinar on March 3 at 1 p.m. CST about best practices for CECL implementation. Attendees will hear recent CECL implementation strategies from Peter Albero, EVP at Salisbury Bank in Lakeville, Conn., and Candace Richardson, internal audit manager and CECL officer for Security State Bank in Basin, Wyo. The discussion will also include time for questions about the implementation process. Attendees can submit questions ahead of the webinar. Register now.

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