Federal Reserve Governor Michelle Bowman Visits South Dakota, Meets with Bankers

Photo of Federal Reserve Governor Michelle Bowman visiting SDBA. Federal Reserve Governor Michelle Bowman, a onetime Midwest community banker, spoke about her outlook for the U.S. economy and what the Federal Reserve has been doing to support economic activity during the COVID-19 pandemic recovery during a presentation at South Dakota State University in Brookings last evening. She also touched on what she has learned of the economic conditions in South Dakota from meeting with business and community leaders throughout the state this week.

Bowman made a pre-dawn visit to Mount Rushmore on Tuesday while en route to the Pine Ridge Indian Reservation. Later on Tuesday, she met with state, business and tribal leaders in Pierre, including a visit with SDBA President Karl Adam and area agribusiness leaders at the SDBA's office. She also met with a group of SDBA bankers in Brookings yesterday prior to speaking to the public Tuesday evening as part of the Dykhouse Scholar Program in Money, Banking and Regulation in the Ness School of Management and Economics at SDSU.

"Hearing directly about the successes and challenges from their perspective provides important context for understanding economic conditions that cannot be obtained from economic data," Bowman said. "These conversations help us see through the data from the eyes of the people, businesses and communities that make up the American economy. That information is very helpful to me and to us at the Federal Reserve as we make our policy decisions.

"As the member of the Board of Governors with experience in community banking, I often speak to local bankers, who are excellent sources to understand the important effects of monetary policy decisions on Main Street," Bowman went on to say. "With this perspective, and relying on my rural Kansas background, I also pay special attention to developments in rural communities and in the agriculture sector, monitoring the effect of Fed policy in those areas." Read Bowman's speech at SDSU.

Photo: SDBA President Karl Adam, Senior Economist Cortney Cowley with the Federal Reserve Bank of Kansas City, Federal Reserve Board Governor Michelle Bowman and South Dakota Division of Banking Director Bret Afdahl.

Pelosi: Budget Reconciliation Package to Include Tax Reporting Provision

House Speaker Nancy Pelosi (D-Calif.) told reporters on Tuesday that Democrats plan to include a controversial tax reporting provision in their budget reconciliation package that would require banks to report information to the Internal Revenue Service on gross inflows and outflows on customer accounts above a certain de minimis threshold.

Pelosi did not specify what the threshold would be, though Democrats have eyed a $10,000 threshold in recent days, up from the $600 threshold originally proposed by the Biden administration. Despite Pelosi’s remarks, House Democrats have not yet agreed on the details of a final reconciliation package, and no vote has been scheduled at this time. Any final version will have to also clear the U.S. Senate, where some Democrats are pushing for a smaller package.

ABA has aggressively opposed the tax reporting proposal at any dollar threshold, calling it “bad tax policy” and urging lawmakers to reject it from any future legislation. In a recent letter to lawmakers, ABA and other banking trade groups noted that “the impact on average Americans and the safety and privacy of their financial information would not be mitigated by raising the reporting threshold to $10,000 or even $100,000. . . . In the end, whether it is average workers or self-employed citizens virtually all Americans will be subject to this new reporting.”

The Association is continuing to urge banks and their customers to contact their representatives to let them know they firmly oppose this proposal. Bankers can find communications tools to help engage bank customers at SecureAmericanOpportunity.com.

Congress Clears Temporary Debt Ceiling Increase

The House Tuesday night approved—and President Biden is expected to quickly sign—a bill to temporarily raise the debt ceiling until at least Dec. 3. ABA and other financial trade associations have urged lawmakers to act promptly to raise the federal debt limit to ensure continued confidence in the creditworthiness of the U.S. and the functioning of Treasury markets.

Ag Banking: Tracking Trends in the Alternative Protein Market

To borrow liberally from the Bard of Avon, does a burger by any other name taste as juicy? There seem to be as many predictions about the future of the alternative protein as there are products in that market. Most everyone’s crystal ball predicts rapid growth, which would seem to make sense. Considering potential market size and current market share, there’s nowhere to go but up compared to traditionally sourced protein options. The bigger questions are what’s fueling the expansion, how steep will the growth curve continue to be and how do U.S. farmers and ranchers benefit, if at all? Is it an opportunity or obstacle for them?

“The surge in plant-based alternative proteins centers on several factors,” says Karol Aure-Flynn, a food and agribusiness industry adviser with Wells Fargo. “The momentum in health and wellness trends and the consumer focus on purpose-driven purchases is attracting attention to the growing market for substitutes for traditional animal protein. Alternative proteins, including plant-based and cellular, are positioned as an eco-friendly choice for consumers.”

As products continue to improve in taste and price, U.S. agribusiness increasingly will play a role in shaping the future of the market. A recent article in the forthcoming November/December issue of the ABA Banking Journal examines the topic in greater detail. Read more.

OSHA Sends Draft Vaccine Emergency Temporary Standard to OMB for Review

The Occupational Safety and Health Administration on Tuesday sent the Office of Management and Budget a draft emergency temporary standard that would implement part of President Biden’s vaccine mandates. In September, Biden directed OSHA to issue an emergency temporary standard that requires all employers with 100 or more employees to have all employees be fully vaccinated or be tested weekly for COVID-19.

Under a Clinton-era executive order, any regulatory action that is projected to have an annual effect on the economy of $100 million or more must be submitted to OMB for review prior to the agency issuing the action. The text of draft actions under OMB review, like the vaccine emergency temporary standard, are not made available to the public.

OMB is permitted 90 days to review the draft action. The review of high-priority agency actions often takes only one to two weeks, so the emergency temporary standard may be issued within the next few weeks or sooner. Read ABA’s staff analysis and FAQs on Biden’s vaccine mandates. For more information, contact ABA’s Paul Benda or Jonathan Thessin.

Fed Joins Network for Indigenous Inclusion

The Federal Reserve announced yesterday that it has joined the Central Bank Network for Indigenous Inclusion as a member. The network will foster ongoing dialogue, research and education to raise awareness of economic and financial issues and opportunities around Indigenous economies. The network is a collaboration with the central banks of Australia, Canada and New Zealand.

“The Federal Reserve Board is pleased to join the Central Bank Network for Indigenous Inclusion and I am personally looking forward to deepening our discussions with colleagues from around the world on economic issues that matter to Indigenous communities,” Federal Reserve Governor Michelle Bowman said. Read more.

SDBA to Hold IRA Update Seminar

The SDBA will hold the IRA Update Seminar on Nov. 4 at Hyatt Place, Sioux Falls South in Sioux Falls. This seminar builds on the attendees’ knowledge of IRA basics to address some of the more complex IRA issues their financial organizations may handle. The course will also include all changes that have occurred and discuss any pending legislation. This is a specialty session; previous IRA knowledge is assumed. The instructor uses real-world exercises to help participants apply information to job-related situations. Learn more and register.

USD to Hold Meet the Industry Networking Event for Employers

The University of South Dakota Beacom School of Business' Career Success Center is planning a Meet the Industry networking event on Nov. 18 for employers to come on campus and network with students. The event will be held 3-5 p.m.

A speed networking format will be used. Employers will have a table, and small groups of students will rotate around and visit with each table in 10 minute intervals for approximately one hour. The last 30 to 45 minutes of the event will be an open time for students to visit more in depth or make connections with companies.

Participants can share information about their company and any full-time, part-time or internship opportunities that are available now or in the near future. Companies can collect student contact information when visiting with them and share recruitment materials and promotional item.

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Question of the Week

Question: Our bank utilizes the exception notice for the Regulation V, risk-based pricing credit score disclosures. If a loan applicant withdraws the loan request, is the bank still required to deliver the credit score exception notice to the applicant?

Answer: Regulation V, § 1022.72, only requires providing the risk-based pricing notice for loans where the terms of credit are set in accordance with the applicant’s credit score. Therefore, there is no requirement to provide the notice for loans that are not approved.

Regulation V, § 1022.72 - https://www.consumerfinance.gov/rules-policy/regulations/1022/72/

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