SDBA eNews

February 24, 2022

ABA, Trade Groups Urge Congress to Raise Small Business Program Cap

ABA and a coalition of trade groups yesterday urged congressional leaders to increase the authorization level for the Small Business Administration’s 504 loan program. Demand is expected to reach the program’s authorization cap of $7.5 billion in early summer, likely June, the groups said. Without congressional action, the program would be unavailable to small businesses for an entire quarter of the fiscal year until the authorization level resets, they added.

The program previously reached its congressionally authorized cap on Sept. 7, 2021, and SBA was unable to approve new 504 loans until the program’s authorization level reset on Oct. 1. That three-week shutdown of the program caused a number of issues for small-business borrowers, including the loss of real estate and endangered escrow, the groups wrote. Read the letter.

CFPB Outlines Automated Valuation Model Rulemaking Proposals

The CFPB yesterday announced the next step in a joint agency rulemaking to develop quality control standards for the use of computer models, known as automated valuation models, used to help assess home valuations.

The Dodd-Frank Act requires the Bureau, the banking agencies, National Credit Union Administration and the Federal Housing Finance Agency to write a rule to strengthen oversight of the models to “ensure a high level of confidence in the estimates; protect against the manipulation of data; avoid conflicts of interest and require random sample testing and reviews.” The CFPB said the computer models and algorithms improve valuation accuracy for mortgage lenders and appraisers, but the Bureau is concerned that automated valuation models can pose fair-lending risks to buyers and sellers.

The next step, the Bureau said, is to review the options to determine their potential impact on small banks and businesses through initiation of the Small Business Regulatory Enforcement Review Act review process required for all CFPB rulemakings. Read more. For more information, contact ABA’s Sharon Whitaker.

CoreConnection Interview Videos Available for Viewing

Recordings from ABA's Conference for Community Bankers CoreConnection are now available online. Executives including Fiserv President and CEO Frank Bisignano, FIS Chairman and CEO Gary Norcross and Jack Henry Chairman and CEO David Foss participated in the event and discussed strategy, innovation, third party integration, conversions and contracts.

The first ever in-person event, conceived by ABA's banker-led Core Platforms Committee, continued ABA’s ongoing efforts to enhance the relationship and dialogue between banks and the core processors. The recordings also include discussions from 11 other core processors, including CEOs from BrightFi, CSI, DCI, Shazam, Smiley Technologies and UFS Tech, and senior leaders from Finastra, Finxact, SAP Fioneer, TCS and TechnisysView the recordings.

Fed's Bowman 'Struggles' to See CBDC Use Case

While the Federal Reserve seeks public comment on the benefits and risks of creating a central bank digital currency (CBDC), Fed Governor Michelle Bowman said on Tuesday that she “intends to keep an open mind” about a CBDC but that the use case for it is not readily apparent to her.

“I struggle to find a business case for it as well,” Bowman said during a Q&A with Rob Nichols at the ABA Conference for Community Bankers. “We already have a safe, sound, stable and broadly available financial services industry in the United States,” Bowman added. “My big concern would be that a CBDC could disintermediate an already functioning, an already very safe and secure and evolving” financial system.

She reiterated what the Fed said in its paper: that Congress would need to expressly authorize the Fed to offer a future CBDC. “The Federal Reserve does not have ability to offer individual accounts to the public.” Watch Bowman's remarks and Q&A with Nichols.

Biden Administration Imposes New Financial Sanctions Against Russia Over Ukraine

President Biden on Tuesday announced a number of new sanctions against two Russian state-owned financial institutions, five Kremlin-connected individuals and additional restrictions on Russian sovereign debt in response to Russia’s decision to deploy troops to the Donetsk and Luhansk regions of eastern Ukraine.

In a statement, the Treasury Department said the actions ensure that Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank and Promsvyazbank Public Joint Stock Company, along with 42 of their subsidiaries, can no longer do business in the United States and are cut off from the U.S. financial system.

All of these entities’ assets under U.S. jurisdiction will be immediately frozen, Treasury said, adding that U.S. individuals and entities are prohibited from doing business with these institutions unless authorized by Treasury's Office of Foreign Assets Control.

Separately, the administration imposed new sanctions on five individuals the Treasury considers to be members of Russian President Vladimir Putin’s inner circle. In addition, Treasury imposed new restrictions on U.S. banks’ ability to finance new Russian debt starting on March 1. Read more.

SDSU Extension 2022 Ag Land Value Survey Now Open

Ag lenders are invited to take part in South Dakota State University Extension's 2022 South Dakota Farm Real Estate Market Survey.  SDSU Extension is requesting select groups of individuals to complete the survey including appraisers, assessors, realtors, agricultural lenders and Extension field specialists.

The principal purpose of the survey is to obtain market value and cash rental rate information, by type of agricultural land, in different regions of South Dakota. Farmers, landowners, investors, lenders, real estate professionals and public officials are the majority users of the data provided by the survey.

The deadline to complete the 2022 survey, which is in its 32nd year, is March 20. Questions, contact SDSU Extension's Jack Davis.

Coin Task Force Issues Paper on Coin Circulation Slowdown

The U.S. Coin Task Force has released a new paper on the state of the coin supply chain in the U.S. and the causes and effects of the coin circulation disruption that occurred during the COVID-19 pandemic. The paper identifies the factors that contributed to the coin circulation disruption, including a significant drop in coin deposits since the outset of the pandemic, a reduction in new coin production at the U.S. Mint in the early days of the pandemic. The Federal Reserve has not had an adequate supply of coin to meet financial institution demand and has begun rationing coin allocations as a result.

The Federal Reserve and the U.S. Mint will use the paper as they work with a third-party consultant to review the coin supply chain and develop recommendations to improve it. In the meantime, the task force continues to encourage consumers to keep coins circulating by spending, depositing, exchanging or donating them, financial institutions to deposit excess coin inventory, and retailers to accept and recirculate coins at their tills. Read the paper. For more information, contact ABA’s Steve Kenneally .

ABA Foundation Invites Teens to Submit Videos for Lights, Camera, Save! Contest

The submission period for the ABA Foundation’s Lights, Camera, Save! contest opened to teen filmmakers on Feb. 21. Lights, Camera, Save! is a national contest that encourages teens to use video to communicate the value of sound money management. Participants create an up-to-30-second video that demonstrates the importance of using money wisely and submit the video to a local participating bank. Banks across the country will be accepting entries through March 31.

Registered banks will host the first round of judging and select a winner to compete on the national level for several awards, including a grand prize of $5,000, a $3,000 second prize and $1,000 third-place prize. National level contestants will go head-to-head on ABA’s Instagram page to determine which videos advance to the final round of national judging.

Bankers can still sign up online to participate in this year’s contest. Register for Lights, Camera, Save! For more information, contact ABA's Jeni Pastier.

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Question of the Week

Question: We have a publicly-traded company that wants to open a checking account. I believe the company would be excluded from the beneficial ownership information, but would we still have to collect information for a controlling person?

Answer: If the customer is a publicly-traded company, then they're excluded from the definition of "legal entity customer" and you're technically not required to collect either prong of beneficial ownership information from them. Since neither the ownership prong nor the control prong need be collected, the information on the control person would not be required by regulation. As always, it’s best to also check internal and/or investor policies as well, as these can have information collection requirements beyond those in the regulations.

"Legal entity customer does not include


(ii) A person described in § 1020.315(b)(2) through (5) of this chapter; "

31 CFR 1010.230(b)(2):  

Ҥ 1020.315 Transactions of exempt persons.

(b) Exempt person.  For purposes of this section, an exempt person is:

(4) Any entity, other than a bank, whose common stock or analogous equity interests are listed on the New York Stock Exchange or the American Stock Exchange or whose common stock or analogous equity interests have been designated as a NASDAQ National Market Security listed on the NASDAQ Stock Market (except stock or interests listed under the separate “NASDAQ Capital Markets Companies” heading), provided that, for purposes of this paragraph (b)(4), a person that is a financial institution, other than a bank, is an exempt person only to the extent of its domestic operations;…”

31 CFR 1020.315(b): 

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