SDBA eNews: October 22, 2015

In This Issue

Lessons from the Financial Crisis: Prospects for Banking Reform: Nov. 2


Francis Creighton, executive vice president of government affairs at the Financial Services Roundtable, will present “Lessons from the Financial Crisis: Prospects for Banking Reform” on Nov. 2, 7 p.m., at South Dakota State University, Brookings.

Creighton is a long-time veteran of Capitol Hill, previously serving as chief of staff to U.S. Sen. Chris Murphy (D-CT). Prior to joining Sen. Murphy, Creighton was vice president and chief lobbyist at the Mortgage Bankers Association, where he worked on affordable housing and other issues important to the real estate finance industry.

This event is co-sponsored by the Dacotah Bank Scholar Program in Agricultural Economics and Agribusiness and the Dykhouse Scholar Program in Money, Banking, and Regulation. It will be held in the Performing Arts Center. Learn more.


National Conference for Community Bankers: Feb. 14-17, 2016


Tech entrepreneur and author Josh Linkner and Harvard professor Shawn Achor will keynote ABA's 2016 National Conference for Community Bankers. The conference -- to be held Feb. 14-17 in Palm Desert, Calif., -- will explore "Breaking Boundaries" to achieve greater profitability in a high-risk environment.

Linkner will talk about creativity and innovation from his perspective as a four-time entrepreneur and venture capitalist. Achor will close out the conference with a talk on positive psychology and the connection between happiness and success.

Other sessions will cover topics such as product niches, cybersecurity, legislative and regulatory updates, negotiating key contracts, prioritizing technology needs, the economy and more. Read more. Register.


Question of the Week

Appraisal disclosure is now on the Loan Estimate. Would there ever be any need for the separate appraisal disclosure?

Read the answer.

Learn more by attending one of our live demos:

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.


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Questions/Comments

Contact Alisa DeMers, SDBA, at 800. 726.7322 or via email.

Curry Comments on Auto Credit Risk, Basel IRR Proposal


Comptroller of the Currency Tom Curry in a speech yesterday expressed concern about growing credit risk in auto loans, noting relaxed underwriting standards and the fact that 30 percent of new vehicle loans now have maturities of more than six years.

“What is happening in this space today reminds me of what happened in mortgage-backed securities in the run up to the crisis,” he said, “Although delinquency and losses are currently low, it doesn’t require great foresight to see that this may not last.”

Curry also commented on the Basel Committee on Banking Supervision’s proposal on interest rate risk in the banking book. He said that like ABA, the federal banking agencies are opposed to a regulatory approach to interest rate risk capital, instead preferring that IRR be managed through supervisory oversight. Curry’s comments were provided in a response to a question by ABA’s Wayne Abernathy following the speech.

The Basel proposal put forth two approaches to a capital requirement, both of which relied on a flawed measurement of interest rate risk. In a September comment letter, ABA urged the committee to consider the United States’ history of effective interest rate risk management -- achieved in part through a flexible supervisory approach that considers factors such as the size of the bank and the complexity of its activities.


150 Lawmakers Oppose Action on Fed Dividend Proposal


One hundred and fifty members of the House sent a bipartisan letter to the chamber’s leaders on Tuesday urging them to withhold consideration of any proposal to reduce dividend payments on Federal Reserve stock until the Government Accountability Office has completed a study on the plan’s long-term implications.

The letter comes as the House prepares to take up a highway spending bill and considers ways to pay for it. The Senate approved a bill in August that pays for itself in part by significantly reducing the dividends paid to Fed member banks with more than $1 billion in assets.

ABA and the state associations have vigorously opposed the dividend proposal and helped persuade members to sign onto yesterday’s letter, which was spearheaded by Rep. Bill Huizenga (R-Mich.) and Rep. Bill Foster (D-Ill.). Read the letter.


ABA, Groups Urge Congress to Raise Debt Limit


ABA and a handful of national trade groups representing financial institutions and businesses last night urged congressional leaders to raise the federal debt limit, warning that a failure to do so would undermine international confidence in the creditworthiness of the United States.

“We cannot afford to jeopardize the on-going, but not fully established economic recovery of our nation,” the groups wrote. “A failure to increase the debt ceiling will result in a massive increase in borrowing costs and create tremendous uncertainty about the willingness and ability of our government to meet its financial obligations.”

The groups also stressed their concerns about the federal debt level and large annual budget deficits. “The U.S. government must spend less and more wisely to restore balance to our fiscal position.” Read the letter.


ABA Launches Paid Media Campaign for Reg Relief

 
ABA on Monday launched an aggressive paid media campaign in support of regulatory relief with a sponsorship on the Washington, D.C.-based public radio affiliate WAMU. The 15-second spot reads, “Support for WAMU 88.5 comes from the American Bankers Association. Supporting regulatory relief for America’s hometown banks, their customers and their communities. Learn more at www.aba.com/RegRelief.”

The website will be updated with information and ads as they run in additional media outlets over the next several weeks. The efforts are part of ABA’s overall campaign to Pass Reg Relief Now.


ABA Weighs In on CISA Amendments


ABA, the Financial Services Roundtable and SIFMA sent a joint letter to Senate leaders on Tuesday urging passage of the Cybersecurity Information Sharing Act and defeat of any amendments that would undermine the legislation’s goals.

The groups specifically flagged as problematic amendments that would remove protections from public disclosure for information shared under CISA, create ambiguities in the definition of what constitutes a cyber threat and sunset authorizations and incentives for threat information sharing after only six years.

“The threat of cyber-attacks is a real and omnipresent danger to the financial services sector, our members’ customers and clients and to critical infrastructure providers upon which we and the nation as a whole rely,” the groups said in urging the leaders to enact CISA. Read the letter.


CFPB Issues Final HMDA Expansion Rule


The Consumer Financial Protection Bureau last week finalized a rule required by the Dodd-Frank Act that expands the data lenders are required to collect and report under the Home Mortgage Disclosure Act (HMDA). The new required information includes the property value, loan term and the duration of any introductory interest rates, as well as underwriting and pricing details, such as an applicant’s debt-to-income ratio and the loan’s interest rate and discount points.

The rule also requires that covered lenders report information, with some exceptions, about all applications and loans secured by dwellings, including reverse mortgages and open-end lines of credit. One important exception -- which ABA and the state associations advocated vigorously for -- is for dwelling-secured transactions made for commercial purposes. Lenders do not need to report data for such loans.

In response to feedback, the CFPB eliminated several data points, such as the “risk-adjusted, pre-discounted interest rate,” that it had included in its original proposal. In addition, the bureau responded to ABA and state association requests to provide sufficient transition time. Lenders do not need to begin collecting the new information until 2018 and will report the data in 2019.

Small depository institutions that are located outside a metropolitan statistical area remain excluded from coverage. In addition, the CFPB adopted a uniform loan volume threshold that exempts institutions that made fewer than 25 closed-end mortgage loans or fewer than 100 open-end lines of credit in each of the two preceding calendar years. This threshold will reduce the number of institutions required to report HMDA data by an estimated 22 percent, the bureau said.

“We appreciate the time and attention the Bureau has applied in considering industry comments to prepare the final HMDA rule,” ABA President and CEO Frank Keating said in a statement. “We are pleased that the Bureau has extended the compliance date and excluded the collection of data on most commercial transactions, as ABA advocated.” He added, however, that ABA continues to be concerned about the privacy of bank customers’ data and the significant expansion of data collection requirements.