Register for the 2024 National School for Beginning Ag Bankers

Registration is now open for the SDBA's 2024 National School for Beginning Ag Bankers set for June 24-27, 2024, at Black Hills State University in Spearfish.

Fundamentals of Ag Lending: National School for Beginning Ag Lenders is an intensive school designed to train in all facets of agricultural lending with emphasis on credit analysis, credit scoring, risk rating, problem loans and group case study. Attendees will receive personalized instruction and continual peer interaction fostered through a limited class size, case study and group exercises.

Set in beautiful Spearfish, S.D., right in the center of the United States, students will have ample time to enjoy the scenic Black Hills of South Dakota. Whether you enjoy hiking in Spearfish Canyon, rock climbing in the Black Hills National Forest, viewing monuments such as Mount Rushmore and Crazy Horse, or just testing your luck at the tables in historic Deadwood, S.D., Spearfish has you covered!

For more information or to register, visit www.sdba.com/ag-school.

Senators Concerned about Possible Economic Fallout from Capital Requirements

Senators from both parties today expressed concern that the proposed Basel III endgame capital requirements would hurt small businesses, curb affordable housing efforts and drive banking activity to the nonbank sector. During a Senate Banking Committee oversight hearing of banking regulators, Federal Reserve Vice Chairman for Supervision Michael Barr was repeatedly asked about the justification for the proposed requirements and what analysis the Fed has conducted about its potential economic effects. Several committee members were skeptical about the need for the proposal, given its possible drawbacks.

The proposed standards would apply to banks with at least $100 billion in consolidated assets, which means they would apply to less than 40 of the nation’s more than 4,000 banks, Barr said. However, some committee Democrats said they have heard from constituents about its potential negative effects on housing and businesses. “From a small-business standpoint, if this rule doesn’t work, it’s going to raise hell with the economy in my state,” Sen. Jon Tester (D-Mont.) said.

Republicans were also critical, with Sen. Mike Rounds (R-S.D.) noting the rulemaking comes amid a slew of other proposed banking regulations on issues ranging from the Community Reinvestment Act to climate change. “We find it concerning you have failed to consider how these rules will impact banks and businesses of all sizes, ultimately harming the American people,” Rounds said. “As a direct result of these regulations and proposals, banks will now spend more time complying with Washington bureaucratic red tape instead of investing that time or resources into their local communities.”

Barr was pressed about the timing of a holistic review of the bank capital standards used to justify the proposal, noting that the review was released as part of the proposal. Barr also said that he is seeking “broad” consensus on from the Fed board in approving the standards rather than unanimous consent. “I want to reiterate that we are interested in public input,” he said. “We have recently announced an extension of the comment period [to Jan. 16, 2024]. With this extension, we are providing the public nearly six months to review the proposal, so they can provide meaningful comments.”

CFPB Proposes to Supervise Nonbank Payment Providers

The CFPB today took steps to regulate large nonbank firms that provide digital payments services, including P2P payments, mobile wallets and other payment apps. The bureau proposed a new rule that would establish its supervisory authority over certain nonbank covered persons participating in a market for “general-use digital consumer payment applications.”

The proposed rule would allow the bureau to examine nonbank payment providers to ensure compliance with applicable federal consumer financial protection laws, and would provide a more consistent regulatory framework between non-depository and depository institutions, the CFPB said. ABA has long held that companies providing bank-like services to consumers should be subject to the same rigorous regulatory standards as banks.

The proposed rule also has implications for an ongoing CFPB proposal to implement Section 1033 of the Dodd-Frank Act, which relates to personal financial data rights, as it would create a regulatory lever for the privacy and security requirements envisioned for the Section 1033 ecosystem, at least among some participants. Comments on the proposal are due by the later of either Jan. 8, 2024, or 30 days after publication in the Federal Register.

Banking Agencies Announce 2024 Regulatory Thresholds

The Consumer Financial Protection Bureau, Federal Reserve and Office of the Comptroller of the Currency today announced that the 2024 threshold for whether higher-priced mortgage loans are subject to special appraisal requirements will increase from $31,000 to $32,400. At the same time, the Fed and CFPB announced an increase in the dollar thresholds used to determine whether certain consumer credit and lease transactions in 2024 are subject to certain Regulation Z (truth in lending) and Regulation M (consumer leasing) requirements.

The Dodd-Frank Act added special appraisal requirements for higher-priced mortgage loans, including that creditors obtain a written appraisal based on a physical visit to the interior of the home before making a higher-priced mortgage loan, according to the Fed. The rules implementing these requirements contain an exemption for loans of $25,000 or less, adjusted annually to reflect CPI-W increases. The new threshold amount will be effective January 1, 2024.

The 2024 thresholds for Regulation Z and Regulation M both will apply to consumer credit transactions and consumer leases of $69,500 or less, up from the current threshold of $66,400. However, private education loans and loans secured by real property, such as mortgages, are subject to Regulation Z regardless of the amount of the loan.

In related news, the CFPB announced it is amending Regulation V, which implements the Fair Credit Reporting Act, to establish the maximum allowable charge for disclosures by a consumer reporting agency to a consumer for 2024. The maximum allowable charge will be $15.50 next year.

Basel Committee Paper Seeks Discussion on Digital Fraud

The Basel Committee on Banking Supervision today released a discussion paper for comment on digital fraud and banking. The paper explores the supervisory and financial stability implications of digital fraud, including existing data availability and risk mitigation measures.

According to the BCBS, the discussion paper provides “a high-level assessment of the supervisory and financial stability implications” of digital fraud in the global banking system. The paper explores the defining features of digital fraud, how it affects banks and how policymakers should think about it. It also addresses how supervision and financial stability are affected by digital fraud in addition to what currently is being done to mitigate digital fraud risks within the banking sector at local, regional and global levels. Comments are due by Feb. 16, 2024.

Happy Thanksgiving from the SDBA!

The SDBA will be closed for Thanksgiving on Thursday, November 23 and Friday, November 24, so that we may spend time with family and friends. We'll re-open at 8 a.m. CT on Monday, November 27. Many thanks to our members for your investment, partnership and most importantly, your friendship, to the SDBA. 'Tis the season to give extra thanks for each and every one of our members. From your friends at the SDBA, we hope you have a blessed and happy Thanksgiving!

CISA News: Cyber Insurance Trends

A compilation of good articles talking about the coming trends in cyber insurance: Cyber Insurance Roundup: What’s Happening Now? (govtech.com)

QUESTION OF THE WEEK

Q. I read that the FDIC recently proposed rules that would remove restrictions on hiring candidates with criminal histories. What should we be considering regarding these new proposed changes?

A. As you mention, the FDIC did recently propose amendments to its regulations concerning section 19 of the Federal Deposit Insurance Act (FDIA) in light of another law that was enacted at the end of 2022—the Fair Hiring in Banking Act (FHBA). In part, the FHBA lifted some of the restrictions on banks hiring candidates with criminal histories. Specifically, it excluded or exempted certain categories of criminal offenses, including certain older offenses, offenses by individuals aged 21 or younger, and “certain lesser offenses.”

However, these proposed revisions are at least in part just the “FDIC’s interpretation of section 19 in light of the FHBA.” In other words, while the FDIC is able to propose revisions to its own regulations, only the U.S. Congress is able to amend the actual law outlined in Section 19 of the FDIA.

Further, it’s imperative that the Bank also review its insurance policies and with its insurance provider as necessary. While changes to the regulations may grant the Bank more flexibility in its hiring, these same practices may still be excluded from coverage by insurance companies as a matter on agreement. In other words, an insurance company could likely deny a claim or even refuse to issue a bond, even if the law or regulations would otherwise allow it.

As always, if you have any additional questions about these proposed amendments, feel free to contact us on the Hotline.

Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call (888) 353-3933 or email [email protected] and ask for our Membership Team.

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