SDBA Elects New SDBA Board of Directors

The SDBA recently held elections for four of the nine seats on its Board of Directors. Elected to serve on the SDBA Board of Directors were:

• David Bangasser, Southern Region President, Dacotah Bank, Sioux Falls
• Dylan Clarkson, President/CEO, Pioneer Bank & Trust, Belle Fourche
• Jeff Davis, President/CEO, Bryant State Bank, Bryant
• Brad Seaman, President, First State Bank of Warner, Aberdeen

This is Clarkson’s first term on the SDBA Board of Directors and Bangasser, Davis and Seaman’s second terms. They started their three-year terms on May 1, 2018.

Read more about the four directors. 

Court Rebuffs Efforts to Appeal Decision Vacating Fiduciary Rule

The Fifth Circuit Court of Appeals yesterday blocked third-party efforts to appeal its March ruling that vacated the Department of Labor’s fiduciary rule in its entirety. A group of state attorneys general and AARP had filed petitions to be granted standing to appeal the decision. DOL declined to appeal the ruling by the April 30 deadline, making it highly unlikely that the Fifth Circuit ruling will now be overturned.

The rule, which was finalized under the Obama administration, had greatly expanded the definition of “fiduciary” under the Employee Retirement Income Security Act and the Internal Revenue Code. The rule required banks and other financial institutions to reassess whether and how they will continue to market and sell their retirement products and services to employee benefit plans and to individual retirement accounts.

However, the Fifth Circuit panel found that the rule’s new definition of fiduciary conflicts with ERISA. It also ruled that DOL did not meet the “reasonableness” tests required under so-called Chevron deference, under which courts may defer to reasonable agency interpretations of statutes, and under the Administrative Procedures Act, which governs agency rulemaking. With the DOL rule now dead, the Securities and Exchange Commission has commenced its own rulemaking on standards for broker-dealers and investment advisers, and ABA is following that process closely. For more information, contact ABA's Tim Keehan. 

House Leadership Expects S. 2155 to Pass in May

House Majority Leader Kevin McCarthy (R-Calif.) said Monday that he expects the House to pass S. 2155, the bipartisan financial regulatory reform bill, sometime in May. “I think you are within a month of getting it . . . done,” McCarthy said at the Milken Institute’s Global Conference in California, according to news reports. “At the end of the day there will be a bill at the president’s desk.”

House Speaker Paul Ryan (R-Wis.) also expressed a similar view on Monday, saying at a Weekly Standard event in Milwaukee that "we're a few weeks away" from passing financial regulatory reform into law. The Senate passed the bill with a broad bipartisan majority in March. 

Conservative Policy Groups Urge Congress to Revisit Tax Exemption for Large CUs

The National Taxpayers Union and several other conservative public policy groups last week urged Senate Finance Committee Chairman Orrin Hatch (R-Utah) and the committee to revisit the tax exemption enjoyed by large credit unions. The letter came as the credit union tax advantage is getting more scrutiny on Capitol Hill.

Earlier this year, Hatch pressed the National Credit Union Administration for explanations of its actions that have substantially loosened strictures on credit unions, and this week, he asked the IRS to consider requiring large credit unions to file Form 990, which most tax-exempt organizations do and which would enhance transparency into credit unions’ activities.

“Even as the Tax Cuts and Jobs Act is implemented, many opportunities remain to not only simplify the Tax Code, but also reduce the economic distortions that have become evident through provisions in the law over time,” they said. “Our organizations are concerned that some large credit unions have strayed from their intended purpose, as defined by the Federal Credit Union Act of 1934.”

The groups noted that many credit unions remain focused on their core missions but that “some of the larger institutions more closely operate as regular banks than credit unions.” The policy organizations added that a “tax exemption gives these select few credit unions a distinct edge over taxpaying banks and creates an uneven playing field, particularly over smaller community banks, which compete for similar customers.” Read the letter. 

Fed Votes to Maintain Rates

As expected by analysts, the Federal Open Market Committee voted unanimously to hold the target federal funds rate at 1.5 to 1.75 percent at its meeting that concluded yesterday, according to a statement released by the committee. The decision came amid reports of strengthening labor market conditions, economic activity that has been rising at a moderate rate and inflation moving closer to the Fed’s 2 percent target.

Committee members noted that they expect inflation on a 12-month basis “to run near the Committee’s symmetric 2 percent objective over the medium term,” and continue to anticipate further gradual rate increases as economic conditions improve. They added that the federal funds rate “is likely to remain, for some time, below levels that are expected to prevail in the longer run.” Read the FOMC statement. 

FHFA Extends Comment Period on FHLB Affordable Housing Program Proposal

The Federal Housing Finance Agency on Monday extended the comment period on a proposed rule intended to provide the Federal Home Loan Banks greater flexibility in how they manage their affordable housing programs. Comments are now due by June 12.

The FHFA also issued a correction to the text of the proposed rule. The new language corrects a calculation that would have prevented affordable housing program funds awarded to the Homeownership Set-Aside Program from being counted toward fulfillment of a proposed regulatory outcome requirement.

ABA has serious concerns about the proposed rule and welcomed the additional time to properly review the rule and comment. Read more. For more information, or to contribute feedback for ABA's comments, contact ABA's Joe Pigg. 

JM Consultants Offers HSA Beyond the Basics Webinar 

Health savings accounts (HSAs) are exploding right now. More and more people are becoming eligible to contribute to them. The HSA presents a unique opportunity to save money like no other savings program. The HSA allows the participant to get a deduction when he/she contributes, allows the money to grow tax deferred, and then still allows him/her to take the money out of the HSA tax free when used for qualified medical expenses.

Because of the increased popularity of HSAs, JM Consultants and the SDBA is offering the webinar “Health Savings Accounts—Beyond the Basics” on Tuesday, May 8, at 9:30 a.m. CDT. The webinar will explore the areas of high-deductible health plan coverage, employee eligibility, investment diversification and product expansion, including how HSAs are being touted as a retirement savings vehicle in addition to a health care coverage option.  

The cost for the webinar is $180, with additional bank branch connections only $60 per connection. The presenter will be Michael O’Brien with JM Consultants.  More information and register.

Newest Compliance Column Addresses Changes to Model Form for Beneficial Ownership

In the latest issue of the ABA Banking Journal, the Compliance Center Inbox column--authored by ABA's Compliance Hotline experts--answers a question about whether a bank can make changes to the Financial Crimes Enforcement Network's model form to collect beneficial ownership information. The response: a bank can use its own form provided the person opening the account and providing information certifies it is accurate.

"We’ve heard that some banks plan to use the model form as it is, since it is straightforward and will do just what is needed," write the columnists. "Whether the bank includes additional questions is a business decision, but if it does, it should be prepared to explain to the examiner how the changes to the form are consistent with the bank’s overall customer due diligence efforts."

Other questions in this column address the presumption of privacy between co-applicants in adverse action notices, whether reasons are needed for stop payment orders and whether reminders after marketing letters count as pre-screened solicitations that require an opt-out notice. Read the column. 

Question of the Week

Question: When is the new TRID amendment regarding the black hole issue effective? And can we follow it before the rule is in effect?                                                   

Answer: The new rule is effective 30 days after publication in the Federal Register which still hasn't happened (as of writing on April 30, 2018). Unfortunately, there’s not an allowance for optional early adoption as there was with the general 2017 TRID amendments which were issued last year:

"The amendments in the final rule will become effective 30 days after publication in the Federal Register. The Bureau believes the changes should enable industry to implement the provisions set forth in the TILA-RESPA Rule more cost-effectively and that industry should be able to implement these changes relatively quickly. Regarding some commenters’ requests for a later effective date, an optional early compliance period, or an effective date that distinguishes among transactions based on when a loan application was received, the Bureau declines to adopt such approaches because the final rule does not impose any new burdens on creditors. Once the final rule becomes effective, the ability to reset tolerances prior to consummation for a given transaction will not be limited by when the application was received. The Bureau declines to make this final rule retroactive, as retroactive rulemaking is disfavored by the courts and the commenter has not established why it would be appropriate here." https://files.consumerfinance.gov/f/documents/cfpb_tila-respa_final-rule_amendments-to-federal-mortgage-disclosure-requirements.pdf

• Tuesday, May 8, 2018, 10-11 a.m. CDT
• Thursday, May 10, 2018, 1-2 p.m. CDT

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.

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Contact Alisa DeMers, SDBA, at 800.726.7322 or via email.