SDBA eNews

September 17, 2020

Registration Open for NEXT STEP: SDBA Emerging Leaders Summit

Photo of emerging leaders. NEXT STEP: Emerging Leaders Summit is designed to help cultivate, connect, engage and empower South Dakota’s future bank leaders. This event will encourage emerging bank leaders to find and express their voices within their organizations, communities and the banking industry and provide opportunities to network and exchange ideas with other industry professionals. It will also increase emerging bank leaders’ knowledge of topics of interest to the banking industry and promote involvement and advocacy.

The SDBA is offering two registration options for this year’s NEXT STEP: Emerging Leaders Summit on Oct. 27-28. Join us live at the Hilton Garden Inn Sioux Falls Downtown or join virtually via Zoom from the comfort of your home or office. All sessions will be recorded for viewing at your leisure.

For those choosing to join live in Sioux Falls, social distancing will be practiced and the use of masks is strongly encouraged. We will continue to closely monitor the COVID situation to ensure the safety and well-being of our members. Should the need arise to hold this event only via Zoom, your registration will automatically convert to the virtual option.

Register early to receive a goodie box, which will be mailed to each virtual participant or available at your seat if attending live. See the agenda and register to attend

Bankers: Urge Congress to Pass a Standalone PPP Forgiveness Bill

With Congress deadlocked on the next coronavirus relief bill—and with Congress only expected to be in session for three more weeks—the ABA is asking bankers to contact their lawmakers and urge them to pass a standalone bill that would streamline the forgiveness process for borrowers that received loans from the Small Business Administration’s Paycheck Protection Program.

Bankers can log on to the ABA’s Secure American Opportunity grassroots platform and send a personalized message to their lawmaker asking them to pass S. 4117 and its House companion, H.R. 7777. The bipartisan bills would provide a streamlined forgiveness process for borrowers that received loans of $150,000 or less. Contact your lawmakers now.

FHFA's Calabria: GSEs Need a Way to Recover Costs for COVID-19 Relief Programs

Fannie Mae and Freddie Mac may be facing insolvency if they are not able to recoup some of the costs associated with their COVID-19 mortgage relief programs, Federal Housing Finance Agency Director Mark Calabria told House lawmakers yesterday. The GSEs are attempting to recover some of those costs through an “adverse market fee” of 50 basis points that would apply to certain refinance transactions. The fee was originally set to take effect in early September but was delayed after advocacy by ABA and other industry stakeholders until Dec. 1.

“The CARES Act imposed unfunded mandates on Fannie and Freddie as well as much of the mortgage market. We are required by statute to recoup those fees via income,” Calabria said in testimony before the House Financial Services Committee. The GSEs currently have a net worth of around $30 billion—of which $15 billion is due to accrued interest on mortgages in forbearance. “That’s money they haven’t received—they can’t absorb those losses,” Calabria explained. “Were Fannie and Freddie to take the entire potential $15 billion loss from COVID, they would hit zero. And if they become insolvent, there’s a real risk that would disrupt the mortgage market.”

When asked to ballpark how much financial support the GSEs would require from Congress to cover their costs for COVID-19 relief without having to impose the adverse market fee, Calabria estimated that it “would have to be in the neighborhood of $10 billion,” though he emphasized that “I’m not requesting any funding—we think we can make it work on our own.”

ABA continues to urge FHFA to carefully assess the effect the fee would have on struggling homeowners and the broader economy and to engage in more direct communication with the industry and consumer groups about how to recover costs related to the pandemic, especially before imposing unexpected fees. Read Calabria’s testimony.

FinCEN Considering BSA Changes to Improve Effectiveness of AML Programs

The Financial Crimes Enforcement Network is seeking public feedback on potential changes to the Bank Secrecy Act that would enhance the overall effectiveness of banks’ anti-money laundering programs. The changes—which were outlined in an advance notice of proposed rulemaking—are the result of a months-long effort by members of FinCEN’s Bank Secrecy Act Advisory Group, including the ABA.

The proposal would provide banks greater flexibility with respect to the allocation of resources and greater alignment of AML priorities across industries and government. Specifically, the amendments would clarify that for an AML program to be considered “effective and reasonably designed,” it should assess and manage risk according to the institution’s own risk assessment process, provide for compliance with BSA requirements and provide for the reporting of information with a high degree of usefulness to government authorities. The proposal would also create a mechanism to establish a set of national law enforcement priorities to help guide banks with their risk assessments and resource allocation.

FinCEN is also seeking input on whether to impose an explicit requirement for a risk assessment process and whether FinCEN’s director should issue a list of national AML priorities every two years. Comments are due Nov. 16. Read the advance notice of proposed rulemaking. For more information, or to provide feedback for ABA’s comment letter, contact ABA’s Rob Rowe.

FDIC Approves Plan to Restore DIF to Statutory Minimum

FDIC Chair Jelena McWilliams on Tuesday signaled that an increase in the deposit insurance assessment rate schedule will likely not be necessary to restore the Deposit Insurance Fund (DIF) to its statutorily required minimum reserve ratio of 1.35%. The reserve ratio was 1.3% as of June 30—down from a peak of 1.41% at the end of 2019—due in large part to extraordinary deposit growth during the first half of 2020 that was connected to the coronavirus pandemic and response.

The FDIC on Wednesday approved a plan that is expected to restore the DIF to at least 1.35% within eight years, as required by the Federal Deposit Insurance Act. Under the plan, the FDIC will maintain the current schedules of assessment rates for all banks; monitor deposit balance trends, potential losses and other factors that affect the reserve ratio; and provide updates to its loss and income projections at least twice a year.

"We project the reserve ratio would return to a level above 1.35% without any increase to the deposit insurance assessment rate schedule,” McWilliams said. “Of course, we are living in highly uncertain times, and these estimates are not predictions.” She added that the banking industry has been a “source of strength” throughout the pandemic and that “that FDIC will continue to support the ability of banks to meet customer needs while also taking actions to promote financial stability, including maintaining a strong DIF and reserve ratio.” Moreover, she added, “building the fund during good times [to allow] steady assessment rates is a critical aspect of responsible fund management,” she said.

ABA President and CEO Rob Nichols welcomed this move by the FDIC. “We commend the FDIC for its commitment to safety and soundness and its strong stewardship of the Deposit Insurance Fund, which protects customer deposits and is at its highest level on record,” Nichols said. “By maintaining the current assessment schedules, the FDIC recognizes that the recent unprecedented surge in deposits has been due to the extraordinary federal assistance in response to the global pandemic and customers seeking the safest place to keep their money. We agree with the FDIC that the decline in the fund’s reserve ratio is likely transitory and support its plan to continue to closely monitor the fund’s progress going forward." Read more. For more information contact Rob Strand.

FDIC to Move Ahead with Assessment Credits

In separate action, the FDIC elected to disburse the residual assessment credits that banks under $10 billion in assets accrued for their contributions to recapitalization of the DIF from 2016 to 2018. In total, $5.8 million will be paid out to 190 banks at the end of the month.

While the FDIC adopted a plan last year to pay out the remaining credit balances, it has the authority to withhold payments with the fund’s reserve ratio now below 1.35%. However, the FDIC board decided to proceed with remittances because “remaining assessment credits are immaterial relative to the DIF balance.” Read more.

Federal Reserve to Hold Virtual Forum for Minorities in Banking

The Federal Reserve System is bringing together mid to senior-level minority leaders in the financial services industry from across the country for the fifth annual Banking and the Economy: A Virtual Forum for Minorities in Banking on Sept. 21-25. Join other professionals in this digital conference for unique experiences and content around leadership, diversity and inclusion, economic updates and more.

Learn and engage with national speakers, industry experts and influencers and connect with other attendees through virtual networking events. The conference will be held in brief sessions throughout the week at a variety of times to accommodate busy schedules.

This year's featured speaker is Laura Huang, a professor at Harvard Business School. Huang has spent her academic career studying interpersonal relationships and implicit bias in entrepreneurship and in the workplace. 

There is no cost to attend, but advance registration is required. Registrations will be taken through the end of today. Learn more and register

How to Best Serve Your Employees and the Bank in a Pandemic Environment

COVID-19 has necessitated numerous new policies for executive management and HR managers to implement and oversee. Today, we are well into the pandemic environment, where community banks have successfully supported their customers and communities by facilitating PPP loans and by maintaining office operations despite challenging conditions. But how, as leaders, can you balance serving your employees' best interests with those of the bank in an unprecedented time such as this?

The Graduate School of Banking at Colorado will hold the panel discussion "How to Best Serve Your Employees & the Bank in a Pandemic Environment" at 2 p.m. CDT on Thursday, Sept. 24. Panelists are: Donna de St. Aubin, a consultant with St. Aubin, Haggerty & Associates, Inc. in Glenview, Ill.; Natalie Bartholomew, chief administrative officer/VP with Grand Savings Bank in Bentonville, Ark.; and Katie Wahlquist, chief administrative officer with Star Bank in Eden Prairie, Minn.

Learn more and register.

 Compliance Alliance

Question of the Week

Question: We have a joint account owned by three people. When filling out a SAR, do we include a Part I on an all account holder even if one had no transactions or involvement?

Answer: While a CTR has an assumption that all joint accountholders benefit from a deposit into a joint account, a SAR does not have that assumption. If a joint owner is not the transactor, and if the bank has no information that the transactions are on behalf of that particular joint owner, there is no need to specifically list them on the SAR as a subject.

For Reference:
Part I Subject Information: Complete a Part I section on each known subject involved in the suspicious activity. Persons who are victims of the suspicious activity are not subjects and should not be recorded in a Part I section 
FinCEN, Electronic Filing Requirements for the FinCEN Suspicious Activity Report, p. 88:

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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 and ask for our Membership Team.

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Contact Alisa Bousa, SDBA, at 605.224.1653 or via email.