SDBA eNews

September 26, 2019

In Landmark Vote, House Passes ABA-Backed SAFE Banking Act

By a bipartisan vote of 321 to 103 last night, the House passed the SAFE Banking Act, the ABA-supported bill that would provide clarity to financial institutions seeking to serve legitimate cannabis businesses. With cannabis now legal in some form in 33 states, the bill would allow banks to serve cannabis-related businesses in those states and prohibit federal regulators from taking action against a bank solely because cannabis is involved.

ABA President and CEO Rob Nichols welcomed the vote. “By helping to provide clarity for the financial sector in those states where cannabis is legal, this bill will help banks meet the needs of their communities while reducing cash-motivated crimes, increasing the efficiency of tax collections and improving the cannabis industry’s financial accountability,” Nichols said. “It will also ensure that businesses with indirect ties to the cannabis industry—including vendors, utility companies and law firms—won’t be needlessly forced out of the financial system."

With the bill’s passage, the conversation around cannabis now shifts to the Senate, where Banking Committee Chairman Mike Crapo (R-Idaho) has signaled a willingness in recent days to advance a cannabis banking bill. “We urge the Senate to follow the House’s lead by quickly passing legislation to resolve the current conflict between state and federal law when it comes to banking cannabis,” Nichols added. “We stand ready to work with lawmakers in both parties to move this important process forward.”

ABA: Fed Must Prioritize Interoperability in Development of FedNow

As the Federal Reserve develops its own faster payments system, it must focus on ensuring interoperability between the existing RTP network, ABA said in a statement for the record submitted ahead of a Senate Banking Committee hearing yesterday.

“FedNow must be interoperable with RTP on day one,” ABA emphasized. “Otherwise banks would be forced to operate duplicative real-time payment systems in order to service all of their customers. FedNow and RTP should start working today to enable interoperability.”

The association added that as the Fed moves ahead with FedNow—which is not expected to be operational until 2023 or 2024—it should ensure that the system remains accessible only to chartered financial institutions; develop a liquidity management tool to help financial institutions manage fund balances in a real-time environment; ensure equitable pricing with no volume discounts; work closely with core service providers to facilitate rapid implementation; and strive to get FedNow operational and interoperable on an accelerated timeline. Read the statement. For more information, contact ABA’s Steve Kenneally.

ABA Core Committee Meets with Core Providers to Find Areas of Alignment

ABA President and CEO Rob Nichols last Friday provided an update to ABA member bank CEOs on the work of the ABA Core Platforms Committee, a group of 18 bank leaders representing community and midsize banks. Since May, the committee has convened several times in person and has met with executives of the four core providers with the largest representation among ABA membership: Finastra, FIS, Fiserv and Jack Henry and Associates.

The core representatives presented their responses to the committee’s questions. “Through energetic, candid and open dialogue with the committee members, we are continuing with conversations around our three priority issues” of data access, API deployment and contract fairness, Nichols said. He added that he will provide an update on the committee’s recommendations and action steps at the ABA Annual Convention in Seattle next month.

Nichols convened the Core Platforms Committee earlier this year to evaluate how community and midsize banks’ current relationships with their core processors may be inhibiting innovation and provide recommendations that can help banks and cores move forward together. For more information, contact ABA's Lisa Gold Schier.

Second South Dakota Disaster Request Approved

Gov. Kristi Noem on Tuesday announced that President Trump has approved South Dakota's request for a second Presidential Disaster Declaration, allowing federal money to be used to help local governmental entities recover from property damage sustained during severe storms and flooding that occurred statewide in late May and early June.

“South Dakota continues to be battered by heavy rainfall and persistent flooding, and this additional funding will continue to move impacted communities towards recovery,” said Noem. “I appreciate that FEMA and the President recognize the compounding effects of these storms and heavy rain.”

A preliminary damage assessment conducted in June documented about $8 million in damage to public infrastructure in 25 counties and on two reservations. Public property damage assistance has been approved for the counties of: Aurora, Bennett, Brule, Butte, Campbell, Custer, Deuel, Fall River, Gregory, Haakon, Hamlin, Hanson, Jackson, Jones, Lyman, Meade, Mellette, Pennington, Sanborn, Todd, Tripp, Turner, Union, Walworth, and Ziebach, and the Cheyenne River Sioux Reservation and the Rosebud Reservation.

South Dakota last received a federal disaster declaration in June for severe winter storms and flooding that affected 58 counties. That flooding left local roads, culverts and bridges damaged. Ongoing rain and flooding in May and June hampered recovery efforts and caused additional damage. The state has two more federal disaster declaration requests pending for storm damage that occurred later this summer.

FEMA officials are now in South Dakota working on the first federal disaster declaration and will continue to work on the second. More details on the process for the second disaster declaration will be announced at a later date.

Labor Department Releases Final Overtime Rule

The U.S. Department of Labor on Tuesday released its final overtime rule—a rewrite of the 2016 rule issued under the Obama administration that never took effect due to a federal judge’s ruling later that year. The final rule adopted many of the recommendations that ABA made in prior comment letters and that bankers advocated for during listening sessions held by DOL last fall. It will take effect Jan. 1, 2020.

As recommended by ABA, DOL set the salary level at which an employee could be exempted from federal overtime and minimum wage requirements at $684 per week, or $35,568 per year. These figures reflect the methodology adopted by the George W. Bush administration in 2004—which set the salary level at the 20th percentile of earnings of full-time salaried workers in the lowest-wage census and in the retail sector.

DOL’s salary level reflects a significant reduction from the salary level adopted by the Obama administration, under which far more employees would have been treated as hourly earners had the 2016 rule gone into effect. DOL reaffirmed its intent to update the salary level more regularly in the future through notice-and-comment rulemaking, which ABA encouraged in previous comments.

DOL also updated the compensation threshold for an employee to be classified as a “highly compensated employee” to the 80th percentile of full-time salaried workers nationally. DOL did not propose any changes to the “duties test,” another ABA recommendation.

Podcast: The Risks of Delaying CECL for Some Banks but Not Others

Since the ABA Banking Journal Podcast last checked in on the Current Expected Credit Loss standard—which is coming into effect for many banks and the vast majority of bank assets on Jan. 1, 2020—there have been several key developments: the proposal of a three-year delay for private and smaller public companies, the introduction of bipartisan bills that would require the Financial Accounting Standards Board to pause CECL implementation pending a quantitative impact study and questions over the readiness of the audit sector for CECL.

In this episode—sponsored by RIVIO Clearinghouse, the future of financial information exchange—ABA accounting experts Michael Gullette and Joshua Stein discuss the potential competitive effects of an extended period where some banks are on CECL and others are not; concerns about the lack of readiness among auditors on CECL, which are heightened because the effective date is less than three months away; the risk of CECL’s reliance on lagging indicators that amplify the standard’s procyclicality; the chances of a CECL delay for all institutions, as ABA has urged.  Listen to the episode.

AARP to Hold BankSafe Webinar

AARP has developed and launched a new training program to help banks detect and report financial exploitation of older customers. BankSafe is a free online platform designed to empower financial institution employees with the knowledge, skills and confidence they need to better understand and interact with older customers, identify signs of financial exploitation and take the right steps to protect the assets of older Americans. 

AARP will hold a live national webinar on Thursday, Oct. 3, at noon CDT for banks to learn about the BankSafe training. Participants will get a sneak peek of the training’s interactive learning modules and tools, including games, interactive videos, real-life scenarios and state-specific resources. Sign up for the webinar. Learn more about BankSafe.

ABA to Host Free Webinar on Change Management

With the financial industry in a constant state of change, new technologies are driving customer expectations, while shifts in demographics are affecting workplace culture and the employer-employee relationship. ABA will host a free webinar on Thursday, Oct. 3, at 2 p.m. CDT to discuss the top trends affecting the banking industry and examine strategies bankers can employ at their institution to manage these changes. Register for the webinar.

Compliance Alliance

Question of the Week


I’m being told we can opt people in for overdraft protection. Is that true?

Answer: Reg. E sets out the requirements for providing customers with overdraft services for paying an ATM or a one-time debit card transaction. Under the Reg. E requirements, before the bank can assess an overdraft fee for paying an ATM or one-time debit card transaction, the customer must affirmatively consent to such coverage. This does not mean that the bank cannot pay the overdraft item, it merely means that without the customer’s affirmative consent, the bank may not assess an overdraft fee for paying those items.

(b) Opt-in requirement

(1) General. Except as provided under paragraph (c) of this section, a financial institution holding a consumer's account shall not assess a fee or charge on a consumer's account for paying an ATM or one-time debit card transaction pursuant to the institution's overdraft service, unless the institution:

(iii) Obtains the consumer's affirmative consent, or opt-in, to the institution's payment of ATM or one-time debit card transactions; and

§ 1005.17(b)(1)(iii):

(2) Conditioning payment of other overdrafts on consumer's affirmative consent. A financial institution shall not:

(i) Condition the payment of any overdrafts for checks, ACH transactions, and other types of transactions on the consumer affirmatively consenting to the institution's payment of ATM and one-time debit card transactions pursuant to the institution's overdraft service….

§ 1005.17(b)(2)(i):

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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.