Greetings from Guy
By Guy Sims
The past four weeks have been busy at the OBA. The Bankers’ Night Out series was held at six locations across the state, more than 70 Oklahoma bankers traveled to Washington for the annual congressional visit and several Oklahoma bankers attended the ABA convention in Chicago. This week will include GRC (Government Relations Council) and OBA board meetings.
Earlier this month, the CFPB finalized the small-dollar loan rule. The community banking industry came out unharmed by this rule for the most part. I believe this is a good example of how our advocacy efforts can and do help shape policy.
Meeting with our regulators and having an honest and respectful dialogue does have an impact. I believe this will be increasingly important as new leadership is installed at the regulatory agencies. Regardless of what congress does or doesn’t do regarding regulatory reform the change in leadership of the regulators could have a meaningful positive impact for community banks.
I want to thank all of the Oklahoma bankers who took the time to travel to Washington to have a dialogue with our congressional delegation and regulators. Our advocacy efforts are making a difference.
In news over the weekend, there is said to be a provision in the Republican tax reform draft that will severely reduce the amount an individual can contribute to his or her 401(k) retirement account on a tax-free basis. The reasons behind this proposal are a bit complicated and the results are dependent on individuals’ tax situations as well as the growth rate of their retirement accounts.
What it apparently boils down to is 401(k) plans put the tax benefit up front by enabling taxpayers to reduce their current tax rates. But when the funds are withdrawn, they are fully taxable at the taxpayer’s then-existing tax rate. This “future” tax exemption is felt by some to be preferable because most taxpayers will be in a lower tax bracket then than they are today.
The proposal reportedly being considered by the Republican leadership in the House would limit the amount 401(k) retirement account holders can contribute on a tax-free basis. The limit is said to be $2,400. Current law allows these retirement account holders to contribute up to $18,000 if you’re under 50. If you’re over 50, you can make an additional catch-up contribution of as much as $6,000, for a total of up to $24,000.
President Trump tweeted Monday morning that “there will be no change in the current 401(k) rules on the tax-favored treatment of 401(k) retirement accounts.”
Sounds like an argument may be in our collective future.
Tax deductions for 401(k) contributions cost the Treasury about $115 billion a year.
Last week the ABA and 51 state bankers associations sent a joint letter to the Senate Banking Committee asking it to continue working in a bipartisan manner on banking regulatory reform legislation. The OBA did not sign on to that letter.
“The question was raised as to whether the group would support a regulatory relief proposal that was not based on business operating model and risk profile,” OBA President and CEO Roger Beverage said. “A cap or ceiling of some sort is not the OBA’s preference, and we’ve lobbied hard for the business model/risk profile standard.
“But – if the compromise proposal comes back with a ceiling of some amount, rather than the business model formula. The OBA Board has not yet directed what our position should be. Both the GRC and the OBA Board meet this week and they may decide that OBA supports such a proposal if that’s all we can get. They may also decide to fight to the death on the business model formula.
“We didn’t think (the letter) made that position clear enough,” Beverage said. “That’s why we didn’t sign on.”
Beverage pointed out the letter highlights the OBA’s key legislative priorities:
- asking all Senators and members of the House to support the TAILOR Bill (S. 366), which directs federal banking regulators to “tailor” their rules based on banks’ business operating model and its risk profile;
- treat all mortgage loans originated and retained by any bank as a “Qualified Mortgage” and is able to have access to the “safe harbor” associated with QM loans; and
- revise capital and liquidity requirements for banks (including the Basel III requirements).
“Sen. Lankford has been working on a compromise in case the compromise includes a dollar cap of some sort,” Beverage said. “No one is certain when or if this proposal will see the light of day, but we are very, very hopeful.”
At the recent ABA Convention in Chicago, one of the keynote speakers was General Michael Hayden (Ret.), former director of the Central Intelligence Agency and the National Security Agency. His creds are beyond reproach.
Here are some of the highlights from his speech:
To begin, General Hayden made it clear that the current state of global affairs is something with which every American must be familiar. His quote was:
“I have seen it more dangerous (than it is now); I have never seen it more complicated; but I have never seen it more immediate.”
Gen. Hayden identified what he referred to as five tectonic shifts in global security. He referred to these shifts as fundamental to global stability and individual safety. These shifts include:
- The very nature of power and the power of “nation-states.”
- Things that seemed permanent no longer are.
- Nuclear power is available to a number of players that have a brittle relationship with the U.S.
- The rise of China.
- Who is “America” now?
“Gen. Hayden outlined realities that most of us have likely not thought about,” OBA President and CEO Roger Beverage said. “One of the things he said in regard to the change in the very nature of power and who controls it today. Nation-states play much less of a role on the world stage than in the past; instead, he said that ‘sub-state actors and even individuals can now have a great impact on what happens in the world and to the United States and its interests.’ That’s frightening in several respects.
“I understood him to say that throughout the history of nation-states, there has been a constant pull of ‘power’ to the center of the entity. The structure of that entity was not relevant; whatever that structure might be, the ‘power’ was with the state. That’s no longer the case.”
Hayden said in today’s world, the very nature of “power” as we know it has been disbursed down and out to the edges. In this new age of globalization, the reality is similar to the 15th Century discoveries of the west when individual sailboats discovered what was, at the time, the rest of the world.
In today’s global reality, we face growing threats from individuals who have access to “power” that used to be accessible only to a nation-state, Hayden told the group.
“Today, products of empowerment are available through our connectivity that’s based on use of the Internet,” he said.
The web, he said, is the largest ungoverned space in history. Moreover, no one is coming to the rescue. Not nation-states. Not individuals. No one
“The cavalry is not coming to save us or to fix the problems,” he told us. “We will all have to do more to protect ourselves and our families.”
You can read more about his speech by looking at this website for Georgetown University.
Thursday, the Acting Comptroller of the Currency (Keith Noreika) repeated his view that companies providing financial products and services should be subject to the same regulations and examinations as traditional banks.
“Providing a path for these companies to become national banks is pro-growth, can reduce regulatory burden for those companies, and can bring enhanced services to millions of people served by the federal banking system,” Noreika said. “(N)ational charters … will never be compulsory and should be just one choice for companies interested in banking.”
Noreika warned that any “FinTech” firm seeking a charter of any kind, including a national bank charter, must be able to demonstrate they know what they’re doing, and that they understand what holding a national charter means in terms of regulatory responsibility.
“When we were in Washington recently, we met with (Noreika) and I must say it was the first time I’ve ever heard a federal banking regulator talk like a banking cheerleader rather than a banking nemesis,” OBA President and CEO Roger Beverage said. “Some critics of FinTech firms being granted bank charters have said that by doing so, regulatory agencies would inappropriately blur the line between banking and commerce.
“ … we should not let fear prevent a constructive discussion of where commerce and banking coexist successfully today and where else it may make sense in the future.”
Click here to read his speech.
Federal banking regulatory agencies have identified 110 designated key data fields examiners will use to test and validate the accuracy of data collected under the new Home Mortgage Disclosure Act requirements. These new requirements take effect in 2018.
“Bankers associations across the country, led by the action taken by the ABA, identified a large number of banker concerns about what collection of these expanded data fields means to their customers,” OBA President and CEO Roger Beverage said. “Fortunately, the agencies designated only 37 of 110 data fields as ‘key fields’ examiners in the field will use to evaluate bank compliance.
“The regulators say that by identifying these new fields they will be more efficient in evaluating whether banks and other entities are in compliance. They also warn they may review some additional fields (beyond the 37) if necessary. What a surprise!”
Click here to review the FDIC’s publication.
We need you! Did your bank undergo an exam in 2017?
We are rapidly approaching the end of another year. If your bank had an exam, or is scheduled to have one before Dec. 31, 2017, we’re asking that someone on your staff complete the Coalition of Bankers Association’s POST EXAM SURVEY.
The survey is 100 percent anonymous, so there is no way for us or for anyone else to know which bank has completed which survey. The information we collect will help us collectively hold federal regulatory agencies accountable.
This is particularly important given all the new regulations being enforced. We need the good, the bad and even the ugly. Even if you were happy with your exam, we’re asking you to fill out the survey – more so, if there was something you disagreed with as part of your exam.
More than 3,000 banks nationwide have participated in the Regulatory Feedback Initiative. There is no way to tie your answers back to your institution.
Please take 20 minutes to complete the survey, or assign a member of your staff to complete the survey, for each exam (compliance and safety and soundness) your bank has undergone before the end of this year.
Friday, the Federal Housing Finance Agency announced that, beginning in July 2019, its updated Universal Residential Loan Application will include a language preference question. The new form will be mandatory for loans made by Fannie Mae and Freddie Mac beginning in February 2020.
Based on this change, applicants will be able to specify whether they want to move forward and communicate in a language other than English. The applicants will be required to identify their preferred language.
The state associations joined the ABA and the ICBA in raising potential issues banks will face some new legal risks that will be created by adding this option to the process.
“The FHFA apparently agreed that the issues raised by the ABA were significant,” OBA President and CEO Roger Beverage said. “The notice I received says the lender may disclose to all applicants that their loan transaction is likely to be conducted in English, and that communications may not be available in their language of choice.
“The language designation is for information collection purposes only. As I understand it, this additional disclosure will cover lenders who cannot provide the transaction in any language other than English. Otherwise, it could generate significant legal problems for the lender.”
The notice clarifies that language services are available to borrowers includes instruction on how to access those resources.
“Fannie and Freddie will also make available an optional disclosure in several languages informing borrowers of language resources,” according to the FHFA announcement.
The American Bankers Association “expressed disappointment over FHFA’s decision to move forward with the question and remains concerned that the inclusion of the question will raise questions of liability under rules not promulgated by FHFA and for which FHFA cannot provide safe harbor or alleviate concerns through disclosures.”
The OBA is curious if your bank is open or closed on the day BEFORE Veterans Day, on Friday, Nov. 10, this year?
If you could send a quick response to firstname.lastname@example.org, we’d be much appreciative!
Fall has arrived and the weather is cooperating with that fact … to a degree. Well, as well as Oklahoma weather can ever cooperate! One thing that is always cooperative, at least with your personal calendar, is OBA education as there’s a seminar, webinar or school always coming up in the near future. Take note of the following:
- TRID for Construction Loans, Nov. 2, webinar — This program provides answers for the many questions bankers have regarding the proper disclosure of construction loans.
- Untangling the Web of Fee Disclosures, Nov. 6, webinar — This webinar will help you untangle the intricacies of numerous fee disclosure requirements.
- Information Security Program Basics: Create and Build Your Program, Nov. 7, webinar — Explore the fundamental building blocks of a repeatable framework for cybersecurity and information security issues.
- Lending 101, Nov. 7, webinar — Explore the fundamental building blocks of a repeatable framework for cybersecurity and information security issues.
- OBA 2017 Technology Summit, Nov. 8, Oklahoma City — Spend an informative, education-filled day with RSM’s technology consulting group. The group will share relevant, timely information and industry best practices for your technology risks and challenges.
- Violence In Your Workplace: Prevention and Response, Nov. 8, webinar — In this presentation, we will analyze recent cases to identify unheeded warnings, and then identify physical security measures and procedures that either were not in place or were ignored.
- Employment Record Retention, Nov. 9, webinar — This program provides information on what records you should keep, for how long, the issues of record creation, storage and the DON’Ts which create major liabilities.
- Loan Participations for Community Banks: Risks & Rewards, Nov. 9, webinar — Gain a thorough understanding of Participation Agreements.
- Problem Loan Workouts, Nov. 30, Oklahoma City — The seminar will begin with a review of the basics of how a commercial loan request “should be” processed in today’s market.
- HR Seminar, Dec. 5, Oklahoma City — Participants in this seminar will receive updated information about compliance with changes in federal and state regulations related to human resources management, review the results of a pre-seminar survey about salary information and have opportunities to discuss issues and concerns in roundtable discussions.
Also, the dates and locations for the 2018 Senior Management Conference and the 2018 OBA Convention have been set. The 2018 SMC will take place on April 8-10 at the Four Seasons Resort in Las Vegas. The convention will be held on May 21-23 at the Hard Rock in Tulsa. More details will be coming soon!