SDBA eNews: April 14, 2016

In This Issue

Rural Jobs Creation Strategies Webinar


Dakota Resources is sponsoring the webinar "Rural Jobs Creation Strategies: Collisions, Serendipity and the Hybrid Vigor of Ideas" with Becky McCray and Deb Brown. The webinar will be held on Wednesday, April 20, 6 p.m. CDT.

Learn ways small towns are connecting their small businesses and would-be entrepreneurs with the support and network they need to be successful and create jobs.

Learn about business resource nights, networking events, backroom tours, and online courses you can take together. You’ll hear about actual small towns who are using these techniques right now.

There is a $20 registration fee. Learn more and register.


Training Ag Leaders in Rangeland and Natural Resource Management


South Dakota Professionals Range Camp will be held June 8-10, 2016, at the Lamphere Campground near Sturgis (East Hwy 34). 

“This camp had its origins with the Ag Lender’s Range Camp and has expanded its educational content to meet continuing education credit requirements for appraisers, assessors, realtors as well as undergraduate/graduate credits for agriculture educators and agriculture industry related professionals,” explained David Ollila, SDSU Extension sheep field specialist and co-coordinator for the camp.

The Professionals Range Camp seeks to educate attendees about the productive potential of the rangeland based on the ecological range site, the similarity index of the range plant composition and the management practices that will support sustainable multiple uses. Participants will be able to better determine the economic value of the rangelands as well as the production and conservation practices that will improve or sustain this precious resource.

Learn more and register.


Question of the Week

If we run a background check on a potential MLO that we may employ, what would "trigger" us to NOT employ them--in other words, are there specified infractions that would trigger us to not employ them? The SAFE Act seems to be silent on this.

Click here for the answer.

Not a Compliance Alliance member? Learn more about membership with Compliance Alliance by attending one of our live demos:

Compliance rules and regulations change quickly. For timely compliance updates, subscribe to Compliance Alliance’s email newsletters.

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.


Upcoming Events

View all SDBA events

Sponsorship Opportunity

Learn more about sponsoring the SDBA eNews.


Questions/Comments

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

Washington Post Article Spotlights ABA Efforts to Rein in Farm Credit

 
A lengthy Washington Post article on Monday focuses on the extensive non-farm lending of the Farm Credit System and highlighted efforts by ABA and bankers on its Agricultural Credit Task Force to rein in the government-sponsored enterprise that has long exceeded its intended purpose.

The reporter features FCS excesses, such as its financing of "vacation homes, restaurants, car washes and even casinos," and he mentions now-famous FCS deals for big companies like Verizon and Cracker Barrel. "Does anybody really think when Congress set up Farm Credit, it was to make loans to Cracker Barrel?" task force member Steve Daggett--president of Midwest Bank in Detroit Lakes, Minn.--told the newspaper.

Meanwhile, Leonard Wolfe--another ABA task force member and the chairman, president and CEO of United Bank & Trust of Marysville, Kan.--highlighted the disparity that results from the FCS' preferential tax treatment. "We work through the first week of July just to pay our tax bill," he said. "That is a huge advantage for them." The disparity is heightened when one considers that community banks like Wolfe's make farm loans as small as $20,000, whereas the FCS focuses on larger, seven-figure-plus credits, Wolfe added.

"Farm Credit needs to focus on farmers, and its regulators need to make sure Farm Credit is doing its job," commented ABA VP Ed Elfmann. The article highlighted ABA's grassroots and government relations strategy to refocus the FCS on farmers and limit its ability to leverage its favorable tax treatment to compete in non-agricultural lending. Read more.


Agencies Find Certain Bank Living Wills 'Not Credible'


In the latest round of public feedback on the “living wills” or resolution plans that the largest banks file to demonstrate they can be wound down in an orderly way, the Federal Reserve and FDIC yesterday deemed the plans filed by Bank of America, the Bank of New York Mellon, J.P. Morgan Chase, State Street and Wells Fargo “not credible” or inadequate to facilitate an orderly resolution under the Bankruptcy Code.

Each of these five firms “must remediate its deficiencies” by Oct. 1, 2016, the agencies said. Meanwhile, the living wills submitted by Goldman Sachs and Morgan Stanley were deemed not credible by one of the two agencies. Neither agency found Citigroup’s plan to be not credible or inadequate to facilitate an orderly resolution, although they did identify issues that Citi must address.

Commonly identified weaknesses in the resolution plans included governance mechanisms, operations, liquidity modeling and the rationalization of the firms’ legal entity structure.

“Today’s results show that both banks and regulators continue to learn from the living wills process,” said ABA President and CEO Rob Nichols. “Banks have made tremendous strides in adding hundreds of billions of dollars in additional capital, improving liquidity and better managing risk since the financial crisis. These efforts ensure the industry is well equipped to handle any economic circumstance that could arise.”

ABA continues to work with regulators to clarify expectations and procedures related to living wills as bankers and regulators alike seek to make the living wills requirement an effective and successful regulatory tool. “Each iteration brings more value for both the regulators and the institutions they supervise and provides an important roadmap for further work that needs to be done,” Nichols said. “We will continue to maintain an open line of communication to ensure the living wills process keeps improving for both banks and regulators.”

The next deadline for resolution plan submissions is July 1, 2017. Most institutions had shortcomings in their 2015 plans that the agencies said must be addressed in next year’s filing.


House Committee Approves CFPB Budget Reform Bill


The House Financial Services Committee voted by a 33-20 margin to advance ABA-backed legislation that would stop direct funding of the CFPB by the Federal Reserve and instead subject the bureau to the regular congressional appropriations process. Doing so is intended to make the CFPB more accountable to taxpayers.

“Oversight by Congress would allow the very consumers who the bureau was designed to protect to hold it accountable through their elected officials,” ABA said in a memo on Tuesday. “ABA strongly supports the principle of accountability and balance and commends the sponsor of this measure for working to improve the accountability of the bureau.” Read ABA's memo.


ABA Offers Banking Tips for Millennials


With recent data suggesting that more than 40 percent of millennials are “chronically stressed” about money, ABA on Tuesday issued a press release with tips to help millennials use tools they already access to secure a strong financial footing.

“Millennials are digital natives who understand the importance of staying connected socially, but staying connected with their bank can help their finances as they encounter life’s many milestones,” said ABA President and CEO Rob Nichols. “From enhanced mobile resources to free budgeting tools, banks offer a variety of products to complement millennials’ unique lifestyles and ease their worries as they prepare to make some of life’s biggest financial decisions.”

ABA recommended that millennials shop around for a bank that fits their style and needs, and take advantage of tools and technologies like automatic payroll deductions, account alerts, mobile banking and personal finance tools to better manage money and build their savings. The association also encouraged millennials to ask their banker to help them get a head start for major life events by establishing credit or starting a retirement account, and to stay connected with their bank through social media. Read more.


ABA Responds to Congressional Inquiries About TRID

 
ABA on Friday responded to inquiries from House Financial Services Committee members about the effects of the TILA-RESPA Integrated Disclosure rule on the financial services industry. In a letter to committee members Blaine Luetkemeyer (R-Mo.) and Randy Neugebauer (R-Texas), ABA highlighted the significant burdens the rule has placed upon banks of all sizes to upgrade systems, retrain staff, conduct testing and notify vendors and customers, and outlined its efforts on behalf of bankers struggling to comply.

As TRID was developed and implemented, the association has engaged bankers, legal and regulatory experts to thoroughly review the rule and pinpoint significant compliance risks. ABA has worked to elevate those issues to the CFPB through letters and meetings with bureau staff, including Director Richard Cordray. Recently, ABA and other financial stakeholders provided the bureau with a list of priority issues, and received a verbal commitment from Cordray to provide clarification in a number of key areas.

ABA has also gathered quantitative and qualitative data from bankers across the country on how TRID has affected their operational processes and product offerings. A survey conducted in February revealed that consumers are seeing the greatest impact from TRID due to increased loan costs, fewer choices and delayed closings. In addition, a quarter of banks reported eliminating certain mortgage products due to a lack of clarity in the rule, and many said they were struggling to comply with the rule because of incomplete or inaccurate systems provided by third-party vendors.

The association stressed that further clarification from the bureau is needed to help bankers and vendors address problems with systems and other issues and reiterated its commitment to work with Cordray and the CFPB to address the ambiguities and unanswered questions TRID presents. Read the letter.


ABA, Groups Seek Clarifications on Military Lending Rules


ABA and several other bank and credit union trade groups are urging the Department of Defense to issue clarifications of and changes to the new Military Lending Act regulations taking effect in October. The regulations tighten restrictions on lending to service members and their families and incorporate a “military APR,” an all-in APR capped at 36 percent that differs from the definition of APR under Regulation Z.

The problems ABA and the other groups identified include the apparent prohibition on borrowers making payments by checks or ACH debits and on security interests in deposited funds; the possibility of requiring multiple credit agreements; the timing of written disclosures; the need for individualized oral disclosures; the timing of military status database inquiries; safe harbors for assignees; the lack of an exemption for credit secured by real estate with no dwelling on it; and elements of the MAPR calculation.

“Providing guidance on the issues discussed below will help ensure that military personnel and their spouses and dependents continue to have access to a wide range of credit products,” the groups said.