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Week of July 26 |
From the chairman
By Jan Miller
OBA Chairman
Last week I attended a major meeting of the ABA in Washington D. C. The Summer Leadership Meeting included bankers from across the country. The purpose of the meeting was to look at the future of our industry, discuss 2011 policy priorities and develop strategies on current key issues. The meeting was very informative.
We also made trips to the Hill to visit our Legislators. I want to publicly thank our Oklahoma delegation for their support and hard work representing our state and our industry. Our entire delegation voted against the massive financial reform bill that will affect our industry in more negative ways than we know. There were many states that went to the Hill to express their disappointment with their delegation because they voted against our industry. We on the other hand were able to go to our delegation and individually thank them for their good work. I can truly say we are blessed with great leadership by our Oklahoma delegation.
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Does the Dodd-Frank Act extend TAG program?
One of the questions we've had frequently in the wake of passage of the financial reform bill deals with the temporary account guarantee program. The following information was put together by Rob Strand of the American Bankers Association:
Introduction
The Dodd-Frank Act provides unlimited FDIC insurance for noninterest-bearing transaction accounts in all banks effective on December 31, 2010 and continuing through December 31, 2012. The current FDIC TAG Program, which continues to the end of this year, is not changed by this Act.
While the FDIC did give itself the option, if conditions warrant, to extend the TAG Program again into 2011, this new law would make such a decision moot. Thus, while this new two-year coverage picks up where the current TAG program leaves off, there are important changes to the coverage which are discussed below.
Does the Dodd-Frank Act provision mean any changes for banks currently in the TAG Program?
No. Banks that have remained in the TAG Program (i.e., did not opt out) will still have the same coverage under that program through the end of this year and will still pay for the extra coverage at the same rates as before through the end of this year. Those banks that opted out of the TAG Program will not have any coverage of noninterest-bearing transaction accounts (above the standard $250,000 level) until next year, when all banks will be subject to the new law.
Do banks need to opt into or out of the TAG Program for next year?
No. The Dodd-Frank Act provides FDIC coverage for all noninterest-bearing transaction accounts in all banks for 2011 and 2012. Banks do not have to opt into this program, nor can they opt out.
Is the extra coverage under the Dodd-Frank Act the same as under the TAG Program?
No. For banks that are in the current TAG Program, there is unlimited FDIC coverage for noninterest-bearing transaction accounts, as well as for NOW accounts (where the interest rate is contractually limited to no more than 25 basis points) and Interest on Lawyers Trust Accounts (IOLTAs). The extra coverage provided for in the Dodd-Frank Act in 2011 and 2012 includes only transaction accounts that pay no interest; it does not include any interest-bearing NOW accounts or IOLTAs.
What are the premiums for the coverage provided under Dodd-Frank Act?
The unlimited FDIC coverage of noninterest-bearing transaction accounts will no longer be a special program; rather, it will be part of the standard FDIC insurance coverage for 2011 and 2012. Therefore, based on preliminary discussions with the FDIC (which can change, of course), we expect that the coverage will be included as part of the regular quarterly risk-based premiums, i.e., there will not be any special “add-on” premiums or fees for this coverage as are currently being charged for the TAG Program. However, if bank failures cost more due to this coverage, the extra cost will be borne by all banks and will be paid through their regular quarterly risk-based premium assessments.
What disclosures will be required?
The FDIC will promulgate rules for disclosures related to this program. After the TAG Program expires at the end of 2010, banks will no longer be required to post notices in their lobbies or on their websites stating that they are or are not participating in the program and listing the accounts covered by it.
However, all banks will be required to amend their standard disclosures to make clear that FDIC coverage is provided up to $250,000 and, during 2011and 2012, unlimited for noninterest-bearing transaction accounts.
Importantly, the Dodd-Frank Act removes the prohibition on payments of interest on demand deposit accounts as of July 21, 2011 (i.e., one year after the date of enactment, July 21, 2010). (See Dodd-Frank Act §627.) Thus, should a depositor or a sweep account shift money (in excess of the permanent $250,000 limit) from a noninterest-bearing transaction account to an interest bearing demand deposit account, the over-$250,000 FDIC insurance coverage would cease to exist.
Disclosures notifying the customer of this change would be required (and we expect the FDIC to promulgate the rules and expectations for this).
Where can I find the latest TAG rule and wording in the Dodd-Frank Act?
The final rule on the TAG Program, as adopted by the FDIC Board on June 22, 2010, is posted here. In the Dodd-Frank Act, Section 343 provides full FDIC coverage of noninterest-bearing transactions accounts over 2011-2012. Click here to see pages 169-70.
Thanks again to Rob Strand, ABA for putting this information together. This information is not submitted or published as legal advice. You should seek advice from your bank's counsel before acting on any changes contained in the Dodd-Frank act on this or any other matter contained therein.
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Update on OBA annual Washington Visit
The early bird registration fee cutoff is quickly approaching. Fax or mail your registration form to arrive at the OBA by the close of business on Friday, July 30 to get the lower registration fee. Registrations are a little slower coming in this year. We have had such a great response from bankers the last two years with more than 60 bankers attending each year. We don't want to lose that momentum. It is so important for Washington to know we will be present even when we don't have such critical issues facing us. The financial reform bill has now been signed into law by the President, but we need to thank the entire Oklahoma delegation, face to face, for standing with our industry as they all cast their “No” vote on the bill. Please plan to attend and send in your registration form today.
Click here to go to the OBA event calendar to download the Washington Visit brochure and register today!
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OBA annual golf tourney date set
The 2010 OBA Golf Tournament is set for Monday, Aug. 16 at the Belmar Golf Club in Norman. This annual day of fun for OBA members is closing in fast, so don't forget to register today. The tourney will accommodate the first 120 players to register. Click here for more details and the brochure.
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OBA education corner ...
Keep in mind the upcoming seminars:
- FACT Act seminar, Aug. 16, Oklahoma City — This program is designed for management of the loan and operations departments, compliance officers, auditors and those with responsibility for assuring compliance with FCRA and FACTA. The program is presented at the intermediate level. A basic understanding of bank operations is assumed.
- Commercial Loan Officer Development Seminar, Aug. 17-18, Oklahoma City — Lending officers, including those newly appointed, along with credit and loan trainees having less than two years experience in commercial lending, and operations officers and bank examiners.
Also, remember the OBA Compliance School is set for Aug. 23-27, and will be held at the Harris Event Center at the OBA offices in Oklahoma City. Click here to find out more!
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