SDBA eNews

December 27, 2018

Bank Regulators to Stay Open While Other Agencies Partially Close

With the federal government shut down since Saturday morning, several agencies are closing all but essential operations. Federal banking regulators--the Consumer Financial Protection Bureau, FDIC, Federal Reserve and OCC--will remain open as their funding does not come from congressional spending. However, federal lending programs, including the Small Business Administration, Federal Housing Administration and USDA programs, will be curtailed.

The Securities and Exchange Commission said that it will prioritize investor protection and market integrity functions starting on Dec. 27 should the shutdown persist; the Commodity Futures Trading Commission will likewise shut down all but essential market support functions. The Financial Crimes Enforcement Network will continue to process industry anti-money laundering filings. For more information, visit individual agency and department websites.

Banks of all sizes have already begun working with affected customers--principally federal employees and contractors, who will not be paid during a protracted shutdown--to waive fees or provide other accommodations. 

FEMA Halts National Flood Insurance Program

“On December 26, the Federal Emergency Management Agency announced its intention to halt regular operations for the National Flood Insurance Program. This decision comes even as Congress passed and the President signed legislation last week that was specifically intended to keep the program operating during the government shutdown," said ABA President and CEO Rob Nichols in an ABA statement today.

“FEMA’s unexpected decision will complicate and delay loan closings for borrowers who are required to carry flood insurance and seek NFIP coverage for as long as the government shutdown continues. This result is in direct conflict with what Congress and the President intended when legislation was passed and signed into law last week to extend the NFIP’s authorization for six months. FEMA’s failure to inform Congress and the public earlier that such action would be taken despite the passage of the extension is distressing. We hope that FEMA will reconsider this unfortunate action immediately."

“We commend the leadership shown by Congress to ensure continued access to flood insurance for Americans in flood-prone areas. We will continue to work with Congress and the administration towards long-term reforms that increase the availability and affordability of coverage for all at-risk properties.”

Luetkemeyer Introduces Bill Codifying 'Guidance as Guidance'

Rep. Blaine Luetkemeyer (R-Mo.) last Thursday introduced a bill that would require federal regulatory agencies when issuing guidance documents to clearly state that those documents are not legally binding. “Our government prides itself on a transparent system of checks and balances, yet many agencies have used guidance in lieu of following the established rulemaking process to regulate industries,” Luetkemeyer said. “My bill will address the vast uncertainty surrounding the unique role of guidance in all federal agencies, ensuring small businesses and other regulated entities fully understand the rules they are subject to.” 

Luetkemeyer’s bill came after financial regulators earlier this year issued a joint statement clarifying that supervisory guidance in bank supervision “does not have the force and effect of law.” ABA has long noted the need for additional clarity around the role of guidance and submitted a rare joint petition with the Bank Policy Institute calling on each of the bank agencies to codify their statement in a formal rulemaking. View the bill text

Regulators Propose Update to Management Interlock Rules

The financial regulatory agencies last Thursday issued a joint proposal to raise the threshold at which bank directors or other management officials are prohibited from serving at more than one depository institution or holding company. Currently, directors or management officials working at an institution with more than $2.5 billion in total assets may not simultaneously serve at an unaffiliated depository organization with more than $1.5 billion in total assets. The proposal would raise both of those thresholds to $10 billion in total assets. 

The proposal is intended to account for changes in the United States banking market since the current thresholds were established in 1996 and comes in response to feedback received during the recent decennial Economic Growth and Regulatory Paperwork Reduction Act review. Comments on the proposal will be due 60 days after publication in the Federal Register. Read the proposal. For more information, contact ABA's Shaun Kern

FSOC Flags Brexit, Federal Government Debt as Potential Financial Stability Risks

Risks to the U.S. financial system remain moderate, though factors outside the U.S.--including Brexit--could potentially threaten financial stability in the months ahead, the Financial Stability Oversight Council said last week in its annual report. The council also noted that an increasing federal government debt burden could negatively affect financial stability in the long-term. 

The council added, however, that as a result of post-crisis financial reforms, the U.S. financial system is “clearly stronger and much better positioned to withstand a shock or an economic downturn than it was before the financial crisis.” Additionally, the passage of S. 2155 earlier this year should provide further opportunities to appropriately tailor financial regulations, the report said. 

Created by the Dodd-Frank Act, FSOC is chaired by the Treasury secretary and includes the heads of almost all federal financial regulatory agencies, as well as an independent insurance expert. The council noted that it also continues to focus on cybersecurity, effective regulation of central counterparties and the transition away from Libor, among other things. Read the report

Scholarship Available for GSB's Human Resource Management School 

The Graduate School of Banking at the University of Wisconsin's Human Resource Management School is designed specifically for HR professionals in the financial industry and addresses today’s most critical HR issues. This school provides the foundation for new or veteran human resource professionals to tie together the important issues in human resource management with a bottom-line understanding about the business of banking.

The GSB Human Resource Management School is a great way to expand your knowledge of the banking industry and human resource management, improve employee performance, and establish a network of colleagues with whom to interact and exchange ideas. To give attendees the best learning experience possible, this week is packed with HR management material and ideas that you can implement immediately upon return to the bank. The school has been divided into two core areas of study--the business of banking and human resource management.

This year's school will be held April 7-12, 2019, in Madison, Wis. A scholarship is available for one SDBA banker to attend the GSB Human Resource Management School. The scholarship pays $1,050 toward tuition for the one-week school. The deadline to apply for the scholarship is Feb. 18, 2019. Apply for the scholarship. Learn more about and apply for the school.

Early Enrollment Discounts for Two GSBC Programs Expire December 31

Early enrollment discounts expire on Dec. 31 for two programs at the Graduate School of Banking at Colorado: the Executive Development Institute for Community Bankers and the Community Bank Investments School. 

The Executive Development Institute for Community Bankers is a 19-month program designed specifically for rising C-level executives who have great influence on the direction of their banks. Students receive personalized leadership training by an executive coach and are paired with CEO mentors from compatible but non-competing community banks. The training will be held April 14-17, 2019, in Denver. Learn more

In just four-and-a-half days at the Community Bank Investments School, financial managers of community banks are equipped with strategies to effectively and independently manage an investment portfolio. Students will receive hands-on instruction at Bloomberg terminals. The school will be held May 19-23, 2019, in Denver. Learn more.

Happy New Year's from the SDBA

The team at the SDBA wishes you peace, joy and prosperity throughout the coming year. As we close out 2018, the SDBA thanks you for your continued support and partnership.

The SDBA Office will be closed on Monday, Dec. 31, and Tuesday, Jan. 1. We will reopen on Wednesday, Jan. 2. 

As another year comes to an end, we wish you a great 2019!

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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 Bousa, SDBA, at 800.726.7322 or via email.