In This Issue

• 2016 South Dakota Legislature to Open Next Tuesday
• FASB Formally Closes Door on Mark to Market Standard
• ABA Questions FinCEN Analysis of Due Diligence Rule
• Politico Columnist Ben White Added to GR Summit Lineup
• GAO: Compliance Burden Increasing for Community Banks
• ABA Makes Changes to Principles of Banking

2016 South Dakota Legislature to Open Tuesday

 
The 2016 South Dakota Legislature will open on Tuesday, Jan. 12, at noon, with Gov. Daugaard giving his State of the State address shortly thereafter.

Bankers can stay current on legislative issues of importance to the banking industry by reading the SDBA’s Legislative Update and Legislative Bill Watch. The Legislative Update is a recap of weekly key legislative action. The Legislative Bill Watch tracks the status of bills the SDBA is monitoring.

Publications will be distributed electronically each Friday during session and posted online. To receive the publications electronically, create a profile or log in to the SDBA’s website and select which publications you would like to receive.

Questions, contact SDBA Communications Coordinator Alisa DeMers via email or call 800.726.7322.

FASB Formally Closes Door on Mark to Market Standard

 
In a huge win for the industry, the Financial Accounting Standards Board on Tuesday issued its final “Recognition and Measurement” accounting standard with few changes made to bank accounting. The new standard comes five and a half years after the initial proposal required marking all financial assets and liabilities to market on the balance sheet.

Under the new standard, only changes in the fair value of equity investments will be required to be recorded through income. The standard will also eliminate instances in which gains are recorded merely because a company’s credit rating was downgraded. Banks that do not qualify as “public business entities” may also eliminate their current disclosures of fair value, through PBEs must comply with a more stringent disclosure requirement.

The standard will take effect in 2018, though early adoption will be allowed. ABA is aware of various banks that hold significant equity investment and is already in the process of talking with bank regulators on the possibility of excluding market value changes from regulatory capital. These talks are expected to continue throughout the transition period. Read more. For more information, contact ABA's Mike Gullette.

ABA Questions FinCEN Analysis of Due Diligence Rule

The Financial Crimes Enforcement Network’s evaluations of the regulatory impact of its proposal to enhance customer due diligence requirements fail to consider the true costs and effects -- and overstate the benefits -- the rule would impose on banks of all sizes, ABA said in a members-only staff analysis issued on Monday.

For example, ABA said, FinCEN’s analysis of the cost of technology upgrades does not consider the time and expense for a bank of testing, adjusting and implementing third-party software after it is delivered. It also dismisses the cost of changing internal controls.

Cost estimates for the regulatory impact analysis were based on phone conversations with an unspecified number of and unstated types of financial institutions, calling into question whether the analysis has a sufficiently broad base. For the initial regulatory flexibility analysis of the impact on small entities -- conducted only after ABA and other groups urged FinCEN to do so -- FinCEN said it consulted with only three small financial institutions.

FinCEN’s proposal would make customer due diligence requirements under the Bank Secrecy Act explicit and add a requirement for banks to identify the beneficial owners of customers incorporated as a legal entity.

Under the proposal, banks must identify the natural person or persons that own or control a legal entity that is a customer, obtaining this information from the customer on a form when an account is opened. Comments on the FinCEN documents are due Jan. 25.

Read the staff analysis.
Read the regulatory impact assessment.
Read the regulatory flexibility analysis.
For more information, contact ABA’s Rob Rowe.

Politico Columnist Ben White Added to GR Summit Lineup

 
ABA announced recently that Ben White, chief economic correspondent and columnist for Politico, has been added to its lineup of keynote speakers for the upcoming Government Relations Summit, to be held March 14-16 in Washington, D.C. White will share nonpartisan, behind-the-scenes political intelligence on what’s going on at the intersection of Washington and Wall Street.

Other notable speakers at the summit include Charlie Cook, renowned political analyst and publisher of the Cook Political Report and Stuart Rothenberg, founding editor and publisher of the Rothenberg & Gonzales Political Report.

Bank employees and directors are encouraged to attend the largest gathering of banking industry leaders in the nation’s capital. As ABA seeks to increase the banking industry’s political muscularity in Washington, it is calling on all bankers to increase their advocacy efforts and help lawmakers and candidates for elected office understand the roles banks play in economic growth and job creation. Bankers who attend the Summit will gain fresh insights and valuable information that they can share with their institutions and use to encourage colleagues to participate in these efforts throughout the year.

While registration for the GR Summit is free, the SDBA offers a $250 stipend to help with the travel expenses of one individual from each SDBA member bank to attend. Register now.

GAO: Compliance Burden Increasing for Community Banks

Community banks continue to experience increases in compliance burdens associated with Dodd-Frank Act rules, the Government Accountability Office said last week in its annual report on Dodd-Frank regulations.

In a survey of several community banks and credit unions, the GAO found that a number of institutions have seen an overall increase in compliance costs, including the amount of staff, training and time allocated to meeting regulatory standards, and that in some cases banks have seen declines in specific business activities as a result of new rules.

Banks specifically noted increased costs related to the Consumer Financial Protection Bureau's TILA-RESPA integrated disclosures and regulations related to escrow accounts, appraisals for higher-priced loans and mortgage servicing. They also expressed concern that the Ability to Repay/Qualified Mortgage rule standards could restrict mortgage lending, with many stating they have already scaled back on making non-QM loans due to liability concerns. The report pointed out, however, that agency data thus far has not reflected this.

Commenting on the findings, ABA EVP Wayne Abernathy said that the GAO report is yet another confirmation of the toll excessive regulation is taking. “This report continues to add to growing evidence of the cost of regulation on bank customers, including customers of community banks,” Abernathy said. "The impact and the need for regulatory reform are becoming harder to ignore." Read the report.

ABA Makes Changes to Principles of Banking

The American Bankers Association (ABA) has been developing a new and improved modular version of its Principles of Banking (POB) that will be more flexible, mobile and engaging for learners in the 21st century.

This modular POB course will consist of three distinct modules that will last approximately four weeks each and include a virtual classroom for expert instruction, peer support and collaboration.

The traditional 16-week POB course will remain as is for now. Be watching for more details on the new modular POB course at www.sdba.com/online.

The ABA is eliminating the Principles of Banking accelerated version. In anticipation of modular POB, the 10-week accelerated POB course will be retired, and Feb. 8, 2016, will be the last POB accelerated session.

The new Succession Planning for Banks module has gotten off to a great start and has earned the distinction of hot seller. This module gives banks practical steps and resources for developing and implementing a customized bank succession plan. Learn more.