SDBA eNews

December 10, 2020

ABA, State Bankers Associations Call on Congress to Extend TDR Provision

ABA and 51 state bankers associations yesterday called on lawmakers to extend the troubled debt restructuring provisions in the CARES Act that allow banks to suspend generally accepted accounting principles for COVID-19 related loan modifications.

Once a loan is classified as a TDR, the groups said, it often requires twice the regulatory capital of other loans, and is ineligible for consideration as collateral at the Federal Reserve, often requiring the bank to take remedial steps against a loan, including foreclosure. The associations wrote that "[i]t is critically important that the TDR relief in the CARES Act (Section 4013) be extended before the end of 2020 so that America’s banks can continue to fulfil their role as financial first responders in the communities they serve."

The letter follows a push Tuesday from a group of 35 Republican members of Congress to extend the TDR restrictions. In a letter to congressional leadership the lawmakers noted that allowing the provision to expire "would have a drastic and adverse impact on the ability of consumers and businesses to access credit now and a TDR classification would further hurt their ability to access credit in the future." Read the letter.

SBA: Banks Must File 1099/1098 for CARES Act Loan Subsidies

The Small Business Administration this week released a Q&A document addressing certain tax issues related to payments made on behalf of borrowers to lenders for existing SBA 7(a), 504 and microloans. Under the CARES Act, the SBA began making payments to cover for a six-month period the principal, interest and any associated fees small businesses may owe on these loans.

In general, SBA said that lending institutions must prepare and file Form 1099-MISC indicating the amount of principal, interest and any fees that were made by SBA to the lender on behalf of the borrower. In addition, where lenders received payment subsidies for loans for which a Form 1098, Mortgage Interest Statement is due, SBA said the form should be filed by the lender.

ABA is currently reviewing the guidance, but noted that it is not in line with many banks’ expectations or interpretation of information reporting requirements. The association is working with SBA and other authorities to address concerns. View the Q&A. For information, contact ABA’s John Kinsella.

ABA, Trade Groups Urge OCC to Postpone Review of Novel Bank Charter Application 

ABA and six other industry trade groups on Monday urged the OCC to postpone its consideration of a charter application submitted by Reno, Nevada-based Figure Bank. The groups raised significant concerns about the application, including the implications of granting a bank charter to an organization that only accepts uninsured deposits.

In a letter to the OCC, the groups asked for a postponement until further public comment has been solicited and other banking regulators and the Department of Justice are consulted. “The precedent-shattering approach of granting a national bank charter to an institution that accepts only uninsured deposits would violate the Federal law, the consistently expressed intent of Congress and public policy considerations essential to the functioning of the nation’s financial system,” the groups said. “Conversely, approving a national bank charter for such an institution would provide a new pathway to evade the comprehensive regulatory regime established by Congress for banks and their affiliates.”

The groups added that granting a national bank charter to an uninsured depository institution would represent a significant policy shift “requiring the need for congressional action.” The letter also raised concern that public information released by the OCC about the proposed charter only includes “a skeletal description of Figure Bank’s proposed activities” and does not provide the public with a sufficient factual basis to comment on the application. For more information, contact ABA’s Steve Kenneally. Read the letter.

FTC Consumer Alert Warns of Potential Fraud Related to COVID-19 Vaccines

With multiple promising COVID-19 vaccines on the horizon, a new consumer alert from the Federal Trade Commission this week warned consumers of potential fraud scams associated with the vaccines. The FTC outlined several facts that can help consumers steer clear of potential scams.

For example, the FTC said that consumers will likely not have to pay out of pocket to receive the vaccine; will not be able to pay to put their name on a list to receive the vaccine or receive early access; and will not be contacted by a representative from a vaccine distribution site or health care payer asking for their Social Security number or bank account information in order to sign up to receive the vaccine. The FTC also urged consumers to be wary of providers offering products, treatments or medicines to prevent the virus and to consult their health care provider before paying for or receiving any kind of COVID-19 treatment.

If a scam is suspected, the FTC directed consumers to report it by visiting or filing a complaint with their state or territory attorney general through

FBI Director: Cyber Criminals Targeting Banks' Third Parties

When asked about threats specifically targeting banks, Federal Bureau of Investigation Director Christopher Wray urged banks to be wary of “cyber criminals targeting the vulnerabilities in third-party services” as a way in to financial institution data, he said Tuesday at the ABA/ABA Financial Crimes Enforcement Conference. The “financial sector has the most robust cybersecurity of any industry,” he said, which is why cyber criminals try third party channels.

Banks can also be affected by ransomware targeting third parties, a threat that Wray said “may be somewhat underestimated by a lot of people.”

Wray also urged banks’ financial crimes staff to deepen their partnership with the FBI and other law enforcement agencies, including building a working relationship with the FBI special agents working in their markets. “We now have private sector coordinators in every FBI field office. If you haven’t met that person in your city, you should make the connection,” he added. “Early notification to law enforcement can limit your losses and those of your customers. The FBI reviews every SAR we get.” Watch the speech.

ABA Seeks Member Stories for Image Campaign

As part of its America’s Banks reputational image campaign, ABA is seeking stories from member banks highlighting the positive impact that banks have on their customers, communities and the economy. The association is currently looking for stories that demonstrate how bank innovation has improved the lives of customers, including how technology has eased payments and how security measures have helped protect customers from fraud.

Bankers are encouraged to submit other stories, including those about loans made to support individuals and small businesses, programs supporting veterans and active-duty military and ways the bank supports the community through volunteerism, philanthropy and leadership.

Submissions can be images or short video and can made through ABA's new online portal. For more information contact ABA's Amy WertliebVisit America’s BanksSubmit stories here

BHG to Host Webinar Featuring Risk Management Experts

Bankers Healthcare Group (BHG), a new SDBA associate member, is hosting a free webinar “Regulatory Risk Trends in Small Business Lending Today and Under the New Presidential Administration" on Thursday, Dec. 17, at 1 p.m. CST. The session will tackle some of the most relevant regulatory and compliance challenges banks are facing today, including fair lending, UDAAP and data collection rules that impact small business lending, among others.

Join BHG's panel of speakers including former senior examiners of the OCC, FDIC and CFPB and industry leading compliance experts for this informative session. The presentation will be followed by a live Q&A session with audience participation. Register for the webinar.

Beacom School of Business to Hold Virtual Networking Event

The University of South Dakota Beacom School of Business' Career Success Center is planning a Spring 2021 – Virtual Networking Event on Thursday, Jan. 21, at 3-5 p.m. CST. The event is an opportunity for employers to network, virtually, with students.

Businesses will be able to virtually chat with students individually or as a group. During businesses' time with students, they are welcome to share information about their company and any full-time, part-time or internship opportunities they may have available immediately or in the near future (e.g. spring 2021 or summer 2021). During the event, businesses may collect contact information when they visit with students to keep in touch with them moving forward.

Learn more and register a business

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