2022 National School for Beginning Ag Bankers Registration Open

Ag School Lending Photo The National School for Beginning Ag Bankers is an intensive school designed to train in all facets of agricultural lending with emphasis on credit analysis, credit scoring, risk rating, problem loans and group case study. Sponsored by the SDBA, the school will be held June 20-23, 2022, on the campus of Black Hills State University in Spearfish, S.D.

The purpose of the National School for Beginning Ag Bankers is to prepare ag bankers to make better loan decisions. Ag bankers with zero to three years of experience should attend this school. Attendees will receive personalized instruction and continual peer interaction fostered through a limited class size, case study and group exercises.

Topics such as the ag economy, balance sheet and working capital analysis, earnings analysis, futures and options, and cash flow analysis will be covered. You will also learn about loan servicing and risk management and management assessment and customer profiling.

The school is limited to 72 students, so register early. Learn more and register.

OCC's Hsu Pushes Envelope with Call for 'No-Cost Overdrafts'

The OCC has identified principles for banks to implement what it calls “responsible overdraft programs that benefit financially vulnerable consumers,” while continuing to encourage banks to offer other options for short-term, small-dollar credit, Acting Comptroller of the Currency Michael Hsu said in a speech yesterday. With policymakers increasingly scrutinizing bank overdraft programs—and with several banks recently announcing changes to their overdraft offerings—Hsu noted that his agency has conducted its own review of bank overdraft programs and identified “several features . . . that could be modified or recalibrated to support financial health.”

Among these features are: requiring consumers to opt-in to overdraft programs; providing a grace period before charging an overdraft fee; allowing negative balances without triggering an overdraft fee; offering consumers balance-related alerts; providing consumers with access to real-time balance information; linking a consumer’s checking account to another account for overdraft protection; collecting overdraft or non-sufficient funds fees from a consumer’s next deposit only after other items have been posted or cleared; not charging separate and multiple overdraft fees for multiple items in a single day; and not charging additional fees when an item is re-presented.

Although Hsu stated that a “race to the top for the most pro-consumer overdraft program” could effectively reform banks’ practices, he also said that “[n]ew rules and the credible threat of enforcement actions” are needed to bring about the reform the OCC is seeking. In his remarks, Hsu appeared to express a preference for offering free overdrafts, rather than overdraft-free account options, such as Bank On-certified accounts, which can “limit financial capacity,” he claimed. “For those living paycheck to paycheck, the flexibility offered by low- to no-cost overdrafts can empower them to pay their bills on time, avoid high-cost alternatives, and improve their credit profile,” Hsu added.

“Banks across the country provide overdraft-free account options, including Bank On-certified accounts available at institutions making up more than 50% of the U.S. deposit market share,” said ABA President and CEO Rob Nichols. “We agree with Acting Comptroller Hsu that banks should consider offering Bank On-certified accounts. At the same time, surveys show a strong majority of consumers appreciate and value overdraft protection and many are choosing banking products that provide overdraft coverage. Further, competition in the marketplace is leading banks’ overdraft programs to evolve, as the acting comptroller noted. We believe banks should have the flexibility to charge an appropriate fee for valuable services that otherwise leave banks on the hook to pay funds a customer may not have.” Read the speech.

House Advances ABA-Supported Libor Legislation

By an overwhelming bipartisan vote of 415-9 yesterday, the House passed H.R. 4616, the Adjustable Interest Rate (Libor) Act, an ABA-advocated bill that would address “tough legacy” contracts that currently reference Libor, which will cease to be published by June 2023.

The legislation would provide a solution for these tough legacy contracts that lack sufficient fallback language and cannot be amended, the groups wrote. It also offers uniform treatment for all U.S. contracts that fall under federal legislation, creates a safe harbor from litigation “and prevents otherwise inevitable litigation costs and gridlock.”

ABA President and CEO Rob Nichols applauded the passage of the bill and urged the Senate to pass it quickly. “Without federal legislation to address these contracts, investors, consumers and issuers of securities may face years of uncertainty and unexpected economic losses from Libor’s cessation,” Nichols said. “ABA joins with consumer groups, investors, financial regulators and industry participants in supporting this important step towards smoothing the transition from Libor and preventing disruption and harm to America’s economy and financial markets.” Read ABA’s letter of support.

ABA Calls for Consistent Regulation as Crypto CEOs Visit Capitol Hill

Ahead of a House Financial Services Committee hearing on digital assets yesterday—at which the heads of several cryptocurrency firms testified—ABA submitted a statement for the record emphasizing the need for bank-like regulations for companies offering digital assets to consumers.

ABA noted that “customers who choose to access digital asset markets will be best served when they can do so through fully regulated banks where they are afforded robust consumer protection.” The Association pointed out that banks are subject to robust regulations to ensure safety and soundness, consumer protection and prevent money laundering, and also carry deposit insurance for the FDIC.

In addition, ABA pointed out that banks are already working to offer digital assets safely to customers through their existing banking relationships. “As non-bank technology firms begin offering banking products and services through digital channels, Congress should ensure that these activities are appropriately monitored, emerging risks adequately captured and all applicable legal requirements met,” ABA said. “Ultimately, a level regulatory playing field in digital assets means a simple proposition: offer bank-like services, receive bank-like oversight.” Read ABA’s statement. For more information, contact ABA’s Rob Morgan or Matt Daigler.

FinCEN Proposes Beneficial Ownership Reporting Requirements

The Financial Crimes Enforcement Network on Tuesday proposed regulations to implement the Corporate Transparency Act—a bipartisan, ABA-supported bill that was included in the Anti-Money Laundering Act of 2020. The proposal would require corporations, limited liability companies and similar entities to report certain information about their beneficial owners, as FinCEN looks to ultimately create a beneficial ownership registry.

Collecting this information is intended to help prevent and combat money laundering, terrorist financing, tax fraud and other illicit activity, FinCEN said in its notice of proposed rulemaking. FinCEN defines a beneficial owner as an individual that exercises “substantial control over the reporting company,” or owns or controls at least 25% interest in the reporting company.

The proposed rule would require a reporting company to provide the name, birthdate, address and a unique identifying number from an acceptable identification document (along with an image of the document) for each beneficial owner and company applicant. Individuals would also have the option to provide beneficial ownership information to FinCEN and obtain a “FinCEN identifier,” which can then be provided in lieu of other required information.

Comments on the proposal will be due on Feb. 7. FinCEN is planning additional rulemakings to implement the CTA, including establishing rules for who may access beneficial ownership information through the database and what safeguards will be put in place to secure and protect the data, and revising the customer due diligence rule to reflect the new reporting requirements. FinCEN is also in the process of developing the database infrastructure. Read more. For more information, contact ABA’s Rob Rowe.

OCC Nominee Withdraws from Consideration

Saule Omarova—President Biden’s nominee to serve as the next comptroller of the currency—Wednesday announced that she would withdraw her name from consideration after several Democratic senators signaled their opposition to her nomination.

Omarova—who is currently a professor at Cornell Law School—was previously a banking attorney and served in the Treasury Department. Over the course of her career, she has advocated for a number of policy changes that would substantially transform the bank regulatory landscape, including reforms that would require community banks to “pass through” their deposits to the Federal Reserve and effectively make them utilities and end the dual banking system. In a statement Tuesday, President Biden said he will continue to work to find a new nominee for the position.

ABA, State Associations Call for Inclusion of Cannabis Banking Bill in NDAA

ABA and 51 state bankers associations last Thursday urged Senate leadership to include the SAFE Banking Act in the upcoming National Defense Authorization Act (NDAA). The provision already was included in the House version of NDAA, which passed in September by a vote of 316-113.

The associations said the SAFE Banking Act provides a narrowly-tailored solution designed to bring the growing cannabis industry into the regulated banking system and provide much-needed visibility into its financial activity.

Current federal law prevents banks from banking cannabis businesses resulting in an industry that is operating primarily in cash creating significant public safety concerns, the groups wrote, adding that unbanked cannabis businesses undermine the ability of regulators, tax collectors, law enforcement and national security organizations to monitor the industry effectively.

“With state-licensed cannabis businesses currently operating in 36 states and more states weighing legalization, we urge you to include the SAFE Banking Act in NDAA to address these critical issues as quickly as possible,” the associations said. Read the letter.

Learn About Supporting Native American Small Business CDFIs in South Dakota

The Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) will host a webinar highlighting Native American Community Development Financial Institutions (CDFIs) on Wednesday, Dec. 15, at 10-11 a.m. CST.

This webinar will provide information and education on the strengths and challenges of Native American CDFIs that support small businesses and entrepreneurs in South Dakota and discuss how financial institutions can strengthen their Community Reinvestment Act (CRA) programs through partnerships.

Pete Upton, executive director of the Native CDFI Network; Onna LeBeau, executive director of the Black Hills Community Loan Fund; and Lakota Vogel of Four Bands Community Fund will discuss how financial institutions can collaborate with Native CDFIs to serve small businesses in Native American Communities. Register for the webinar.

Compliance Alliance logo

Question of the Week

Question: Must the bank follow the E-Sign Act requirements if providing a notice of nonpayment to a customer electronically?

Answer: The commentary to § 229.33(h), clarifies that a notice can be provided by email or fax. However, only Regulation CC, Subpart B, requires conforming with the E-Sign Act requirements for any disclosures or notices provided to consumers (not commercial customers) in accordance with Subpart B. The notice of nonpayment under § 229.33(h), is set forth under Subpart C, which does not address electronic consent. However, in light of the Subpart B requirements and a general best practice, conforming with E-Sign requirements will protect the bank by creating a presumption that notice was provided. Therefore, we advise meeting E-Sign requirements for any Regulation CC notice or disclosures, to consumer and non-consumer customers.

This paragraph requires a depositary bank to notify its customer of nonpayment upon receipt of a returned check or notice of nonpayment. Notice also must be given if a depositary bank receives a notice of recovery under §229.35(b). A bank that chooses to provide the notice required by §229.33(h) in writing may send the notice by email or facsimile if the bank sends the notice to the email address or facsimile number specified by the customer for that purpose. The notice to the customer required under this paragraph also may satisfy the notice requirement of §229.13(g) if the depositary bank invokes the reasonable-cause exception of §229.13(e) due to the receipt of a notice of nonpayment, provided the notice meets all the requirements of §229.13(g). Commentary to § 229.33(h), https://www.ecfr.gov/cgi-bin/text-idx?SID=35b0b61237b153e41051d2fd905844bb&mc=true&node=ap12.3.229.0000_0nbspnbspnbsp.e&rgn=div9

For a customer who is a consumer, a depositary bank satisfies the written-notice requirement by sending an electronic notice in compliance with the requirements of the Electronic Signatures in Global and National Commerce Act (12 U.S.C. 7001 et seq.), which include obtaining the consumer's affirmative consent to such means of notice. Commentary to § 229.15(a), https://www.ecfr.gov/cgi-bin/text -idx?SID=35b0b61237b153e41051d2fd905844bb&mc=true&node=ap12.3.229.0000_0nbspnbspnbsp.e&rgn=div9

Not a member? Learn more about membership with Compliance Alliance by attending one of our live demos:

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.

For timely compliance updates, subscribe to Bankers Alliance’s email newsletters.