SDBA eNews

June 13, 2019

OCC Official: Expect CRA Reform Proposal by End of Summer

The federal banking agencies expect to issue a notice of proposed rulemaking to revise their Community Reinvestment Act regulations by the end of summer, Senior Deputy Comptroller of the Currency for Bank Supervision Policy Grovetta Gardineer said yesterday at ABA’s Regulatory Compliance Conference. She also provided some additional detail on what the agencies are focusing on in their conversations.

Specifically, the agencies are responding to concerns reflected in the comments the OCC received on its CRA advance notice of proposed rulemaking. Ninety-one percent of commenters said the current CRA rules lack objectivity, transparency and fairness, Gardineer said, adding that 98% think they are applied inconsistently and 88% say they have become harder to understand. To address these, she said the agencies are considering how they can clarify CRA-qualifying activities, refine the assessment area definition and implement “an objective set of measures that you can apply—not a single metric.”

Suzanne Killian, senior associate director for consumer and community affairs at the Federal Reserve Board, added that the Fed wants to ensure that the CRA reform process results in “no reduction” in banks’ investments in low- and moderate-income communities and clients. Gardineer agreed. “If there’s greater clarity, transparency and predictability around what counts, where it counts, and where it’s going to be counted, we believe that banks will actually do more, not less,” she said. “If they’re not sure, then it may not result in them doing that investment or engaging in that type of loan, which is counter to the entire purpose of the statute.”


House Financial Services Committee Advances Several ABA-Backed Bills

By unanimous vote last night, the House Financial Services Committee advanced the NFIP Reauthorization Act of 2019, a compromise bill between Chairwoman Maxine Waters (D-Calif.) and Ranking Member Patrick McHenry (R-N.C.) to extend the National Flood Insurance Program through Sept. 30, 2024, and make several additional reforms to the program. The committee also unanimously passed H.R. 3111—a bill by Rep. Nydia Velasquez (D-N.Y.) that would make changes to the NFIP claims process.

ABA President and CEO Rob Nichols applauded the vote. “Today’s action is an important step in ensuring that the program is reliably available for borrowers seeking to purchase homes in special flood hazard areas where purchasing flood insurance is mandatory,” Nichols said. “It would also modernize the NFIP, including the introduction of a ‘continuous coverage’ provision that allows borrowers leaving the program to purchase private flood insurance to return to the NFIP without penalty. We also appreciate that the bill would address affordability issues, improve the flood mapping program and improve floodplain management and mitigation.”

Another ABA-supported measure by Rep. Carolyn Maloney (D-N.Y.) to establish a national database of beneficial ownership information passed by a vote of 43 to 16. ABA has long supported the creation of such a database, and noted earlier this week that the bill strikes a good balance between imposing minimal requirements on small businesses while providing critical information to law enforcement and financial institutions performing due diligence. 


Senators Introduce Draft of Bipartisan AML Reform Bill

A bipartisan group of senators on Monday released draft legislation aimed at reforming several existing anti-money laundering rules. The lawmakers—Sens. Mark Warner (D-Va.), Tom Cotton (R-Ark.), Doug Jones (D-Ala.) and Mike Rounds (R-S.D.)—are seeking public feedback on the bill by July 19.

Among other things, the bill would facilitate the use of transaction monitoring software, encourage information sharing and ensure that current and future payment systems are included in the AML/CFT supervisory regime. In addition, it directs the Financial Crimes Enforcement Network to establish a beneficial ownership database—something for which ABA has previously advocated.

The Senate bill is the latest development in an ongoing effort to modernize and strengthen the current AML/CFT framework in the U.S. On the House side, ABA is currently supporting a beneficial ownership database bill introduced by Rep. Carolyn Maloney (D-N.Y.) that is expected to be considered by the Financial Services Committee this week. Read a summary of the Senate bill.


House Lawmakers Introduce Bill to Stop and Study CECL

A bipartisan group of House lawmakers—led by Reps. Ted Budd (R-N.C.) and Vicente Gonzalez (D-Texas)—this week introduced H.R. 3182, a bill calling for a halt to the implementation of the current expected credit loss standard until a quantitative impact study can be completed. A companion bill was previously introduced in the Senate by Sen. Thom Tillis (R-N.C.).

ABA has long raised concerns about the procyclical effects of the CECL standard, and ABA President and CEO Rob Nichols welcomed the bill’s introduction. “A rigorous study conducted by regulators is needed to assess the effect this new standard will have on the ability of financial institutions to serve their customers and support the broader economy, particularly when the economy is under stress,” Nichols said. “We urge Congress to quickly consider this bill.” Read more.


Promote Elder Abuse Awareness on June 15

June 15 is Elder Abuse Awareness Day in South Dakota, which provides an opportunity for communities to promote a better understanding of abuse and neglect of the older population throughout the state.

“Our elders, along with all people, have the right to live their lives with dignity and respect, free from abuse of any kind," said  Yvette Thomas, director of the South Dakota Department of Human Services Division of Long-Term Services and Supports (LTSS). "The best way to protect elders from abusive situations is to focus on prevention--providing information, education and support.

“LTSS is dedicated to decreasing the incidence of elder abuse, neglect and exploitation by increasing education on warning signs, working with law enforcement to prevent and prosecute exploitation, and providing resources to help prevent caregiver burnout.”

Each year in the United States, an estimated 5 million older persons are abused, neglected and exploited. In addition, elders lose an estimated $2.6 billion or more annually due to elder financial abuse and exploitation, funds that could have been used to pay for basic needs such as housing, food and medical care.

This statewide observation coincides with World Elder Abuse Awareness Day.


Podcast: Bringing Real-Time Payments to Every Bank

The RTP network—the first new payment rail launched in the United States in four decades—is a bank-driven system for instant processing and settling of payments. Launched by the Clearing House and live since 2017, RTP is currently racing to connect as many U.S. depository institutions as possible. On the latest episode of the ABA Banking Journal Podcast, James Aramanda of the Clearing House and ABA President and CEO Rob Nichols discuss:

  • How RTP works, including its messaging function that allows for real-time invoicing and other advances.
  • RTP's commitment to serve all financial institutions with flat pricing and no volume discounts.
  • What RTP is doing to work with core processors —including underwriting banks' core implementation fees—to accelerate RTP adoption and achieve ubiquity by the end of 2020.
  • Why banks should consider joining RTP now, even if the Federal Reserve moves forward with its own 24/7/365 payments system.

Listen to the episode.


SDBA Seeking Photo Submissions for 2020 Scenes of South Dakota Calendar

If you are an amateur photographer and would like the opportunity to have your creativity displayed in homes and businesses across South Dakota, this is your chance.

Send the SDBA your photos of farms, barns, agricultural activities, historical South Dakota locations, county fairs, carnivals, parades or festivals, fall colors, winter snowfalls, spring flowers, summer fun, etc.. Any photo that shows the history and beauty of the great state of South Dakota qualifies. All photos submitted will be judged and the top photos will be featured throughout the 2020 Scenes of South Dakota calendar. The deadline to submit a photo is July 29, 2019. Photo submission form

The SDBA is also taking orders to purchase the 2020 Scenes of South Dakota Calendar. These calendars are a great opportunity to thank your customers for their business and promote your bank or business. Your bank, branch or business' logo and name can be printed on each calendar to display in homes and businesses all year long. Learn more and place an order.


ABA to Offer Free Webinar on Social Media in Banking in 2019

ABA will host a free webinar on Tuesday, June 18, at 1-2 p.m. CDT to discuss the latest ways banks are using social media to extend their brand, grow revenues and drive customer engagement. The webinar will cover results from this year’s survey of more than 430 banks of all asset sizes from across the United States, highlighting challenges, goals and best practices in the use of social media. Speakers include ABA VP Steve Chase, Gremlin Social CEO Doug Wilber, Commerce Trust Company CMO Paul Lewis and Rhinebeck Bank SVP Michelle Lepore. Register now.


Compliance Alliance

Question of the Week

Question: I have a quick question related to Regulation D and reserve requirements. If we offer commercial escrow services to hold funds for two or more parties, are these funds held in escrow generally subject to Reg. D?

Answer: Yes, escrow funds are specifically included in the definition of "deposits" for purposes of Regulation D: §204.2 Definitions.

For purposes of this part, the following definitions apply unless otherwise specified:

(a)(1) Deposit means: 

(ii) Money received or held by a depository institution, or the credit given for money or its equivalent received or held by the depository institution in the usual course of business for a special or specific purpose, regardless of the legal relationships established thereby, including escrow funds, funds held as security for securities loaned by the depository institution, funds deposited as advance payment on subscriptions to United States government securities, and funds held to meet its acceptances;
12 CFR § 204.2(a)(1)(ii) https://www.ecfr.gov/cgi-bin/text-idx?SID=8ddd88a51a067ba79f787e95219009c7&mc=true&node=se12.2.204_12&rgn=div8

Not a 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.


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Questions/Comments
Contact Alisa Bousa, SDBA, at 800.726.7322 or via email.