SDBA eNews

August 11, 2022

Action Needed: Ask Congress to Oppose Durbin Expansion Bill

Sens. Roger Marshall (R-Kan.) and Dick Durbin (D-Ill.) introduced a controversial bill that would create new credit card routing mandates that will affect banks that issue credit. As such, the SDBA, in partnership with the ABA, is calling on all bankers to continue to contact their lawmakers and urge them to oppose the measure. 

The Credit Card Competition Act, S.4674, would require covered credit card issuers to add a second network to their customers’ cards, but banks would only be allowed to choose from certain options set by the Fed. In this regard, the bill goes further than the rules put in place for debit card transactions under the Dodd-Frank Act’s Durbin Amendment in 2010, where a bank could choose any two unaffiliated networks. The bill would also require that banks accept virtually any kind of transaction, regardless of the security or fraud recourse it carries, forcing banks to onboard potentially many more than two networks.

ABA and eight financial trade groups raised concerns about the bill after its introduction, noting that the proposed mandates would fall “disproportionately” on small card issuers, including community banks. Contact our lawmakers now.

Hotel Block Extended for 2022 SDBA Tech Conference! 

The hotel block at the Hilton Garden Inn South in Sioux Falls has been EXTENDED for the 2022 SDBA Digital Innovations Conference (formerly Technology Conference)! If you're planning to attend the Conference on Wednesday, August 31 and require overnight lodging, the hotel block has now been extended to Friday, August 12. After Friday though, the block will be released. When you call, ask for the SDBA rate of $124 per room.

Date: Wednesday, August 31 (Join us on Tuesday, August 30 for a Happy Hour!)

Location: Hilton Garden Inn Sioux Falls South

Address: 5300 S Grand Circle, Sioux Falls, S.D., 57108

Phone: 605.444.4500

Time: 8:00 a.m. - 4:35 p.m. CDT

Technology and innovation have been transforming the financial services industry since long before artificial intelligence and iPhones, and your role a professional in the bank is ever-changing, especially in today’s environment. This conference is designed to provide you support while you keep on top of technology trends, navigate the business of banking, and build and sustain your bank’s technology strategy—all to improve access and better serve your customers. We hope this conference will provide you with an opportunity to learn from industry experts, network with colleagues, and visit with exhibitors to see and experience the latest in products and services.

Click here for the full details and to register, and please feel free to forward this invitation to others in your bank whom you feel could benefit from attending this event! Lunch will be provided; however, if you have special requests, such as dietary restrictions or a need for a mother's room, please make me aware of those requests by Wednesday, August 24. Any other questions, please don't hesitate to reach out to [email protected].

GSB Bank Technology Security School - Deadline to Apply is September 6

The Bank Technology Security School will be held at the Fluno Center for Executive Education, on the University of Wisconsin campus in beautiful downtown Madison, Wisconsin, starting October 3. The school will run full days Monday-Thursday and a half day on Friday. We encourage early application as space is limited; however, the final date for enrollment is September 6. 

This popular school from the Graduate School of Banking includes a mix of lecture, small group exercises and individualized application sessions to incorporate practical, hands-on content. The program’s curriculum features two core areas of study—the business of banking curriculum and the IT security curriculum.  

Both new and experienced IT security professionals will benefit from the Bank Technology Security School. This powerful program will give you the skills and knowledge to effectively secure your bank's and your customers' most sensitive information. 

To find out more or to enroll click here. 

Order your 2023 Scenes of South Dakota Calendars!

The SDBA is now taking orders for the 2023 Scenes of South Dakota Calendars! 

Orders placed by September 1 will receive the low price of $1.55 per calendar. After September 1 price will be $1.75 per calendar. Each order will have an additional $25.00 production charge (layout for press run, in-house press proof, boxing, labeling), plus shipping. Orders cannot be accepted after September 15. 

CISA News: Collaboration?

This article highlights a significant problem in the war on cybercrime: sharing & collaboration. As entities get attacked and compromised, many are unwilling to share the forensic data or any information associated with the attacks. Folks, we are on the same team in this scourge against our businesses and governments. From the CISA perspective, we are not interested in the name of ‘who’ was attacked. We have significant regulations regarding protected critical infrastructure information (PCII) that prevents the disclosing of who was attacked. We ARE very interested in the indicators of compromise (IOCs) and tactics, techniques and procedures (TTPs) of the attack. We can share those IOCs & TTPs wide & far across all critical infrastructure entities to warn everybody of the attack patterns. The primary excuse we hear is that ‘we are embarrassed and don’t want to damage our credibility.’ That argument certainly has validity but sharing the forensics (even anonymously) can have a much more powerful impact across all of us.

Can you imagine a research organization discovering the cure for a major disease…and then not sharing the cure? With that said, there are two cyberattacks of interest in the past week. One is a nearby Iowa school district and the other is an unnamed local company. Yes, it does happen here in South Dakota.

A couple suggestions here:

a. Make sure your Incident Response plan includes contacts for CISA, FBI and the SD Fusion Center.

b. If you have cyber insurance, do not include any clauses in that policy preventing your organization from sharing IOCs, TTPs and lessons learned. 

Treasury Cracks Down on a Tool that Helped Launder Billions

The Treasury Department took action yesterday against a tool hackers have used to launder billions in illicit proceeds.

The sanctions are against Tornado Cash, a cryptocurrency mixer viewed as a key linchpin of the criminal underground economy which “pools digital assets to obscure their ownership,” as my colleague Tory Newmyer explained.

The action could be a very big deal, according to cybersecurity and financial services industry observers. But one group representing crypto businesses was highly critical of the development, and the sanctions could run up against some obstacles to their effectiveness.

Tornado Cash

Under the sanctions Treasury issued, it’s illegal for Americans to carry out transactions with Tornado Cash. The mixer has laundered more than $7 billion in virtual currency since 2019, according to Treasury. That includes funds North Korean Lazarus Group hackers stole in what is the largest known crypto heist to date, a $620 million haul in March from software behind video game “Axie Infinity.” In fact, blockchain analytics firm Chainalysis concluded that Tornado Cash played a role in laundering funds from every North Korean crypto hack in 2022.

“Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks,” Brian Nelson, Treasury’s undersecretary for terrorism and financial intelligence, said in a statement.

Here are key things to know about the move:

1. It drew praise in cybersecurity circles.

2. There isn’t unanimous support for the sanctions.

3. It could be a while before A successor may emerge.

To read the full article, visit:

FDIC to Increase Commercial Real Estate Supervision in Exams

The FDIC has released its Summer 2022 Supervisory Insights which notes its intention to increase supervision over commercial real estate portfolios. 

“Over the 2021 examination cycle, FDIC examiners observed a notable level of loan policy exceptions as well as opportunities for improvements in tracking and monitoring policy exceptions. Additionally, examiners noted some areas of underwriting weaknesses.”

“Some banks with significant CRE portfolios have not performed sufficient risk analysis, despite elevated risk profiles. Others have not addressed the board of directors’ expectations with respect to such testing and analysis in their policies. In addition, examiners observed that the design and complexity of some testing or analysis methods were inconsistent with the nature of the CRE portfolios and lending environments."

Due to these observations and other uncertainties in the market including, but not limited to, inflation, interest rate risk and supply chain challenges, the FDIC will increase their focus on commercial real estate loan concentrations in the upcoming exam cycle.  

“As a continuance of the FDIC’s longstanding risk-focused and forward-looking supervision principle, FDIC examiners prioritize resources toward areas presenting the highest risk at an individual bank, which often includes significant CRE lending concentrations.”

To view Supervisory Insights, visit:

For an overview of FDIC Examinations, visit:

Senate Democrats Pass Reconciliation Package – Bank Reporting Omitted

After months of negotiating, the Senate passed legislation to address selected portions of the Biden administration’s agenda for climate change, healthcare and tax policy.

Following negotiations with Sen. Kyrsten Sinema (D-Ariz.) and a weekend of voting on various amendments, several changes were made to the bill. Among other things, tweaks were made to a provision regarding the book minimum tax (which affects corporations with income more than $1 billion)—including additional favorable adjustments for depreciation, selected amortization and controlled groups. Changes originally proposed to the taxation of “carried interest” were dropped and not included in the final bill. To offset the revenue effects of these changes, a 1% stock buyback excise tax on public companies and an extension of the excess business loss limitations were added to the bill.

Importantly, while the legislation adds $80 billion to the IRS budget to improve tax compliance, enforcement and service, a controversial reporting provision—that would have required banks to report information on gross inflows and outflows on customer accounts above a certain de minimis level—was omitted from the reconciliation package.

The bill now moves to the House for consideration, where a vote is expected as early as Friday. ABA continues to evaluate the bill’s provisions as additional details become available.

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Q.  We have a loan secured by a dwelling where the borrower used the funds to purchase a house and he is making improvements on it. The payments are interest only for 12 months. After the 12 months, he is getting a permanent takeout loan to replace it. Would this be a HMDA reportable loan or does the fact that it is short-term financing take precedence over the purchase and home improvements? 

A.  If the loans are separate and the first is intended to be replaced by separate financing later, the first loan would be considered temporary financing and is exempt from HMDA reporting for that reason. If the facts were the same but the house were going to be resold to pay off the 12-month loan, then it would not be exempt, but that does not appear to be the case in this situation. “…1. Temporary financing. Section 1003.3(c)(3) provides that closed-end mortgage loans or open-end lines of credit obtained for temporary financing are excluded transactions. A loan or line of credit is considered temporary financing and excluded under § 1003.3(c)(3) if the loan or line of credit is designed to be replaced by separate permanent financing extended by any financial institution to the same borrower at a later time. … v. Lender A originates a loan with a nine-month term to enable an investor to purchase a home, renovate it, and re-sell it before the term expires. Under § 1003.3(c)(3), the loan is not designed to be replaced by separate permanent financing extended to the same borrower, and therefore the temporary financing exclusion does not apply. Such a transaction is not temporary financing under § 1003.3(c)(3) merely because its term is short. …” Comment 3(c)(3)-1: 

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Contact Haley Juhnke, SDBA, at 605.224.1653 or via email.

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