SDBA Op-Ed: ‘We Stand on the Facts: HB 1193’

The 98^th legislative session is nearly in the books, as only “veto day” remains, Monday, March 27. At the end of session, to our surprise, Governor Noem vetoed HB 1193, “An Act to Amend Provisions of the Uniform Commercial Code (UCC)”. A few persons have cast a cloud of falsehoods claiming this measure does not advance and include certain digital assets and instead sets the stage for a central bank digital currency (CBDC). That simply isn’t true.

The 2022 UCC Amendments were drafted for adoption nationwide, over a three-year period with significant input from cryptocurrency advocates. They provide the commercial law reforms that owners of cryptocurrency have desired, allowing them to do more with these assets to unlock value and create wealth. With these updates, the law gives transactions in digital assets legal certainty. This will allow the cryptocurrency industry an opportunity to thrive in South Dakota and across the United States.

SDBA Op-Ed: ‘Bank on’ the facts: HB 1193

As the 98^th session of the South Dakota Legislature winds down, the team at the South Dakota Bankers Association (SDBA) is busy preparing for our final week of work with our state legislators. It is also during this time that we reflect on the significant role SDBA member banks and the broader business community play in helping us navigate the legislative process. We are grateful for our motivated, engaged and informed banking and business community. Before we wrap up this session, I find it imperative to set the record straight and correct the false claims being made regarding HB 1193, “An Act to Amend Provisions of the Uniform Commercial Code (UCC).”

To understand what the bill aims to do, it is important to understand the UCC and its purpose. The UCC is the product of law commissioners from each state who serve together on the Uniform Law Commission (ULC) to develop uniform, model acts, or state laws, for adoption by state legislatures. It is not federal law, nor is it developed by the federal government. Let me be clear, these 2022 amendments to the UCC are drafted by the ULC for adoption in states across the nation, and by doing so, it keeps Congress from imposing federal laws into areas where states should be sovereign.

Schaefer Honored by American Bankers Association with Inaugural Emerging Leader Award

PIERRE, SD – Sept. 28, 2022 – Kristina M. Schaefer, executive vice president, chief risk officer & chief administrative officer, general counsel, First Bank & Trust, Sioux Falls, S.D., was honored by the American Bankers Association as a recipient of its inaugural ABA Emerging Leader Award. This new award recognizes the next generation of bank leaders who are committed to the highest standards of achievement and service to both their industry and their local communities. Schaefer and 10 other winners will be recognized together during next week’s ABA Annual Convention.

Agricultural lending by U.S. farm banks increased 5.5% in 2021 to $99.6 billion, according to the American Bankers Association’s Farm Bank Performance Report. The change is based on a 7.5% increase in outstanding loans secured by farmland and a 2.9% increase in agricultural production loans.

The annual report examines the performance of the 1,553 banks specializing in agricultural lending. In 2021, farm banks provided access to Paycheck Protection Program funds, originating 538,154 PPP loans worth $14.6 billion, distributed by more than 7,500 branches in rural America. Farm banks continue to be a major source of credit to small farmers, holding more than $43.8 billion in small farm loans ($500,000 or less), including $9.9 billion in micro farm loans ($100,000 or less) at the end of 2021.

Summer is a popular time to travel whether it be for a relaxing overnight trip or a week away exploring a new destination. You are likely taking along that smartphone or other device to assist with getting directions, locating or identifying points of interest, and capturing that special photo. Practicing good cyber hygiene before, during, and after your trip will help secure your devices and allow you to connect with confidence when you’re away from home.

Quick note if you are traveling with business equipment: It’s best that you leave your work devices behind; however, if you can’t leave home without them, ensure that you are following your organization’s policies and procedures for protecting the devices and the information they contain while traveling.

The Division is providing this guidance to assist bank management with defining remote work conditions and corresponding security protocols. South Dakota bank staff may conduct banking activities provided the remote work location is physically located in South Dakota and adequate security protocols are implemented. With respect to remote work in other states, it is permitted to the extent it follows this guidance and allowed by the host state regulatory authority. Banks that allow remote work by their employees must draft and implement comprehensive policies and procedures to ensure remote work is conducted in a secure and professional manner. A comprehensive remote work program should implement, at minimum, the following requirements and limitations:

confidentiality.

As banks look to earn the business, trust and loyalty of more people, bank executives should consider ways to differentiate from the increasingly crowded market of banks, financial institutions and fintech providers. Enhancing customer service options are important ways to stand out from competitors while truly serving clients.

According to a previous Microsoft State of Global Customer Service Report, nearly 70 percent of respondents favorably view brands that engage in proactive customer service. Customer service, which can be hard to come by for other financial entities, can be a cornerstone of bankers’ sales and marketing plans.

How many of these are present in your organization?  

1.No cybersecurity training for employees

While uncertainty surrounds the U.S. economy at present, America’s banks remain healthy and prepared to support the communities they serve, said American Bankers Association President and CEO Rob Nichols today during an online forum discussing recent economic conditions and longer-term outcomes.

“It’s a challenging moment for the U.S. economy, with inflation running at its highest level in a generation, hitting every American in their wallet. We continue to suffer supply disruptions due to the lingering effects of the pandemic and the Russian aggression in Ukraine,” Nichols said, adding that the Federal Reserve has been working to slow demand by raising interest rates and plans to do so until inflation is under control.

As lawmakers attempt to reconcile the House and Senate versions of the America Competes Act, the Conference for State Bank Supervisors today advocated for the SAFE Banking Act to be included in the final version of the bill. The ABA-backed provision—which would enable banks to serve legitimate cannabis businesses in states where it is legal—was included in the House version of the Competes Act.

CSBS noted that allowing cannabis businesses to access banking services would help reduce risk, increase public safety and facilitate tax collection, among other things. “By granting a safe harbor for financial institutions, Congress can bring regulatory clarity to the financial services industry, address public safety concerns and ensure access to financial services for state-compliant marijuana and marijuana-related businesses,” said CSBS Acting President and CEO James Cooper.

Haley joined the SDBA on Monday, May 9. She grew up in Vivian, S.D., on a 4th generation farming and ranching operation. She always felt as though she was missing out on what the “town kids” got to do. But looking back now, she wouldn’t have it any other way because of the appreciation she gained over the years for the beautiful wide-open spaces and lessons learned on the family farm. “I found a love for all animals, but especially horses and had the typical love/hate relationship with my only comrades in the country, my brother and sister,” Haley said. “My grandparents only lived two miles down the road, so the closeness allowed for a special bond to be formed with them.”

Outside of work, Haley enjoys spending time with her family, friends, and her rescue dog, Dax, and enjoys travelling and exploring new places. She likes to be out in God’s creation and one of her favorite places to go is the Black Hills. In her free time, Haley also reads or listens to audiobooks and podcasts.

Last Friday, the Treasury Department issued its 2022 strategy for combating terrorist financing and other illicit funding.

Recent risk assessments highlighted threats posed by the abuse of legal entities, the complicity of professionals that misuse their positions or businesses, small-sum funding of domestic violent extremism networks, the effective use of front and shell companies in proliferation finance, and the exploitation of the digital economy. To combat these issues, the Treasury’s strategy identifies four priorities to address the most significant illicit finance threats to the U.S. financial system.

It is with great sadness that we announce that John W. Ryan, President and Chief Executive Officer of CSBS, died unexpectedly late Monday in Washington, D.C.

“On behalf of the CSBS Board of Directors, executive team, staff and membership, we extend our deepest sympathies to John’s family and everyone who knew and worked with John over his more than 30-year career. John was an inspirational and humble leader who brought incredible dedication, intellect and passion to CSBS, the state regulatory system and financial services more broadly,” said Melanie Hall, Chair of the CSBS Board of Directors.

The banking sector is among the most prepared industries to combat fraud, corruption and illicit activity, according to a recent report. According to the results of a recent survey of more than 1,330 senior risk-strategy decision-makers across multiple industries, 84% of respondents in the banking sector reported they had conducted an internal investigation in the last three years—more than any other sector surveyed. In addition, 89% of respondents in the banking sector reported their organization had been significantly affected by serious misconduct—the second highest behind travel and tourism.

The report, conducted by risk and compliance technology firm Kroll, noted that the costs associated with investigating fraud and illicit activity have increased, particularly for organizations with revenue of more than $15 billion. The survey also indicated that risk professionals believe that some investigative services firms fail to deliver value, suggesting that many external providers may not employ the most up-to-date technology to find relevant information in massive volumes of structured and unstructured data.

On Monday, American Bankers Association and a coalition of financial services groups called for extensive changes to a proposal by the Securities and Exchange Commission that would create new requirements for public companies regarding the disclosure of cybersecurity incidents. Among other things, the SEC would amend Form 8-K to require that registrants “disclose information about a material cybersecurity incident within four business days after the registrant determines that it has experienced a material cybersecurity incident.”

Among other things, the groups called for changes to the timing of disclosure to “four business days after the registrant has reasonably determined that the cybersecurity incident is no longer ongoing, and that public disclosure of the incident will not seriously jeopardize the security of the registrant,” emphasizing that the current proposal’s requirements lack “sufficient regard for the security risks and harms that such disclosures may pose in certain circumstances.”

In a significant move yesterday, the Federal Reserve announced that it will increase the target range for the federal funds rate to 0.75 to 1%, and signaled that “ongoing increases in the target range will be appropriate.”

“Assuming that economic and financial conditions evolve in line with expectations, there is a broad sense on the committee that additional 50 basis point increases should be on the table at the next couple of meetings,” Fed Chairman Jerome Powell said in a press conference following the announcement, though he noted that 75 basis point hikes were not currently being contemplated by the Fed. “We will make our decisions meeting by meeting, as we learn from incoming data and the evolving outlook for the economy.”

Bitcoin exchange Binance's move to participate in Elon Musk's $44 billion takeover of Twitter could boost digital currency evangelists' hopes for the development of a more "decentralized," crypto-friendly social media platform. 

Binance plans to invest $500 million in equity funding as part of a $7 billion financing pledge to support the Tesla CEO's bid to buy Twitter. Oracle co-founder Larry Ellison and venture capital firm Sequoia are among the other investors involved.

Join North and South Dakota bankers, June 14-15, for an incredible convention in Bismarck, as the community celebrates 150 years. We will be reminded in all of the best ways why we do what we do, why we do it together, and why we are grateful to make a difference in our hometowns throughout the Dakotas. A dynamic convention program awaits with many top-of-mind topics: leadership, employee retention, the economy, cryptocurrency and cybersecurity. The challenges of today create opportunities for tomorrow. As generations before us blazed trails, let’s gather together and continue to shape the future. Onward!

The full schedule and registration information can be found here.