Tuesday, December 1, 2020

Week of Jan. 22

In This Issue…

Greetings from Guy
GRC reviews bills introduced in Second Session
OBA supports FASB proposal to address reporting implications of tax reform
Congress approves government funding bill through Feb. 8
OBA Bankers’ Night Out programs ready for spring
Register for OBA 2018 Contact Banker Program
OBA education corner …

Greetings from Guy

By Guy Sims
OBA Chairman

From a political perspective, we are starting 2018 much like we ended 2017 with gridlock, partisan bickering and a general sense that not much will get done in Washington. The latest government shutdown confirms the above.

After watching most of the Sunday “talking heads” shows, I heard little encouraging information. Both sides are dug in and believe they are scoring political points with their base. Only time will tell who the political winners and losers are on this issue. Ultimately, the budget impasse will be resolved and Washington will move on to other highly partisan issues such as D.A.C.A, immigration reform and border security.

While all of the above issues are unrelated to the banking industry, they are having an effect on banking legislation. The bipartisan regulatory reform bill, S. 2155, is ready for a vote on the Senate floor.

While the bill is not all that we had hoped for, it is an important first step to meaningful regulatory reform.  However, the budget issue and others are taking up all of the oxygen in Washington at this time and, ultimately, crowding out banking legislation.

The community banking industry has worked for many years to get to this point. This is our opportunity to get meaningful regulatory reform. We need to get S. 2155 to a vote on the Senate floor. I encourage you to write both Sens. Inhofe and Lankford asking them to co-sponsor S. 2155.  Our time is now. Let’s not miss this opportunity.

Respectfully,
Guy

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GRC reviews bills introduced in Second Session

The Second Session of the 56th Oklahoma Legislature convenes on Feb. 5, and there are several bills that have some importance to banks and bankers. OBA staff has reviewed more than 2,000 bills (carried over and introduced) and the OBA Government Relations Council is making its initial examination of those that may impact the industry.

A number of separate bills would limit the salary of the various state agency heads (including the State Banking Department, which is not funded by the taxpayers). Other bills extend various tax credits (bank privilege, EFT, affordable housing, SBA Sec. 7(a) guarantees), and all of these measures will be considered by the Council.

S. 2155 in Washington continues to “hang fire” in the wake of the political battle over immigration reform and the nation’s operating budget, which led to the shutdown of the government over the weekend.

A new issue – embodied in H.R. 4058 – has been brought to our attention by the Livestock Marketing Association. The bill establishes a “dealer statutory trust” for livestock dealers who default on payments to livestock sellers. The proposal is an effort to eliminate the risk of non-payment borne by a seller of livestock.

The problem is the bill gives an unpaid cash seller of livestock a priority over secured creditors in all proceeds, accounts receivable and livestock sales, in the event of a dealer’s bankruptcy. In other words, this trust stands ahead of a previously perfected security interest a lender has in livestock sold by the rancher.

The question is whether banks and other lenders should support such legislation.  Rep. Frank Lucas is a co-sponsor of this measure. 

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OBA supports FASB proposal to address reporting implications of tax reform

The OBA has joined with the other state bankers associations across the country and the ABA in a comment letter to the Financial Accounting Standards Board supporting a proposal to adjust regulatory capital balances unexpectedly affected by the new tax reform law. The Association recommended the proposal be approved immediately and early adoption be permitted so companies may apply the new standard to their 2017 reporting results.

Here’s the problem or issue: Under current tax accounting rules, any reduction of deferred tax assets and liabilities is recorded entirely within net income. The rule includes those applying to items in accumulated other comprehensive income such as unrealized gains and losses on available-for-sale securities.

The rules distort both net income and regulatory capital.  Moreover, this treatment also creates unnecessary and costly requirements for banks to track the related amounts in the future. Those costs are ultimately borne by the consumer.

The FASB proposal will not change the impact of these rules on net income. But the proposed adjustment between AOCI and retained earnings will allow ending regulatory capital to be appropriately stated. It will, in addition, remove the costly and unnecessary requirements imposed on banks to keep track of the amounts that would have been “stranded” within AOCI.

Reclassification of the stranded tax effects from AOCI to retained earnings represents “a good operational solution and provides a truer economic picture than the current guidance,” the letter said. ABA also encouraged FASB to explore “backwards tracing” as a long-term solution.

Comments on the proposal are being accepted through Feb. 2, and bankers are encouraged to submit their own comments in support of the proposal. ABA has created a template for member bankers to use when submitting their letters to FASB.  You can see the joint letter by clicking here.

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Congress approves government funding bill through Feb. 8

In case you missed it, Congress voted Monday to fund the federal government through the next two weeks (Feb. 8). Both Sens Inhofe and Lankford voted for the proposal.

The final vote on passage was 81 to 18, ending the government shutdown that began last Saturday morning.  Sen. Rand Paul (R-Ky) was the only Republican to vote against the measure. Many of the other “no” votes were from senators who are rumored to have an interest in running for president in 2020.

Following the Senate vote, the measure went back to the House where the vote was 266-150 in support of the measure. Four members of our delegation voted to approve the measure to send the measure to President Trump, who signed it. (Rep. Bridenstine did not vote)

The vote also renewed authorization for the National Flood Insurance Program. The bill did not address healthcare spending and immigration issues, both of which had precipitated the lapse in government funding.

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OBA Bankers’ Night Out programs ready for spring

The dates for the OBA Bankers’ Night Out programs have been finalized. Mark your calendar for the date of the program that’s in your area of the state and plan to attend. Bring your coworkers with you so that everyone can be up to speed on the most recent developments affecting their job.

As in the past, the schedule for each of these meetings is:

5:30 p.m. – Drinks
6:15 p.m. – Program
7 p.m. – Dinner

PRE-REGISTRATION IS REQUIRED. The cost is $40 per person. Click here for a registration form.

Locations and dates for this year’s events are:

  • Krebs, March 13.
  • Lawton, March 15.
  • Enid, March 27.
  • Oklahoma City, March 28.
  • Tulsa, April 3.
  • Guymon, April 19.

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Register for OBA’s 2018 Contact Banker Program

We have set the dates for the 2018 Contact Banker Program. Many of you are seasoned veterans of the program and we look forward to seeing you again this upcoming year.

Click here to find a sign-up form that has all the dates listed for this year’s program. We ask that you look and see what dates work best for you and send it back to me. Once we have the groups finalized, we will send you an email confirmation of your date.

On the date you have selected, we will meet at the Capitol around 8:30 a.m., with groups usually consisting of 10-15 bankers. Once the group has arrived, we will have a short briefing about the issues we are tracking and what our plan is for the morning. Please know, we will stay together as a group the entire morning. We will go and meet with your individual senator and representative and you will have a few minutes to chat with them about anything you want. Depending on what week you select, the group will sit in on a committee meeting or we will sit in the gallery of both chambers and watch action on the floor. We try to finish our business about 11:30 a.m. – afterward, the OBA will take everyone to lunch to discuss the events of the morning. There is no charge to attend; the only cost is your time.

This is our 18th year to have this program and it gets more popular every year. All legislators know that on Tuesday’s there will be bankers at the Capitol and we always have legislators asking when their bankers are going to visit. The fact legislators know bankers are involved in the process and watching what they do is very valuable to your industry.

Many of you are probably thinking you haven’t been to the Capitol since you were in elementary school. This is the perfect opportunity to come back and see all the changes. We encourage you to sign up and bring as many employees as you would like.

Please fill out this form and send it back. Should you have any questions, please don’t hesitate to contact Adrian Beverage at the OBA.

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OBA education corner …

The calendar has flipped over to a new year – make your resolution to further your banking education during the next 11-plus months! You can start with the following:

  • Basic Business Entities & Other Commercial Borrowers, Jan. 31, webinar — Key issues for business entities include who, if anyone, has personal liability for the debts of the business and what is the impact of federal, state and local taxes on the business and its owners.
  • Dealing With Subpoenas, Jan. 31, webinar — On a daily basis, a financial institution is faced with having to comply with a multitude of legal documents that are served on it.
  • What To Do When A Customer Dies, Feb. 1, webinar — We’ll walk you through the complicated process of dealing with a customer’s death — both on the deposit side and the loan side.
  • Developing and Organizing an Effective Remote Deposit Capture Program, Feb. 1, webinar — We’ll outline the detailed information you should add to your documents and processes to support a thorough due diligence, risk assessment, and annual oversight of your customers.
  • Excel Explained: Building Error-Proof Spreadsheets, Feb. 2, webinar — In this comprehensive session, Excel expert David Ringstrom shares a variety of tricks and techniques you can use to improve the accuracy of your Excel spreadsheets.
  • CRE Appraisals: Regulations and the Review Process, Feb. 5, webinar — This session will cover the key issues from the 2010 Interagency Appraisal and Evaluation Guidelines, tips for integrating them into your existing policies and how CRE appraisals differ from residential reports.
  • Train Smarter and More Effectively, Feb. 6, webinar — During this program, you will discover how to design training that promotes learner involvement.
  • Loan Doc: Top 10 Mistakes & How To Avoid Them, Feb. 7, webinar — Learn the “right thing to do” and avoid frequent exceptions and mistakes.
  • FFIEC Information Security Handbook Review, Feb. 8, webinar — The FFIEC has completely re-written and significantly changed the Information Security Handbook.
  • 2018 CFO & Financial Officers Conference, Feb. 15, Oklahoma City — This conference is specifically designed to provide strategic insights and critical industry updates you need to lead your bank to success. Our impressive line-up of national experts will provide presentations on regulatory changes, interest rate risk, capital planning, and other relevant topics.
  • Implementing the Updated TRID RulesFeb. 27 – TulsaFeb. 28 – Oklahoma City — This one-day program reviews the 2017 amendments and explains how the amendments impact the existing rule.

Also, several scholarships are now available to bankers from OBA-member banks for various graduate schools of banking. Applications should be submitted to the OBA’s Janis Reeser by email (janis@oba.com), regular mail (643 N.E. 41st St., OKC, 73105) or fax (405-424-4518). The scholarship recipients will be selected and announced no later than April 20.

Click on each link for more specific information about each scholarship (Note: the deadline for the GSB-Madison HR School is quickly approaching!):

GSB-Madison is also offering a webinar on Jan. 29 concerning Meltdown and Spectre 101 vulnerabilities.

Speaking of GSB programs, take note of their springs programs. Click here for more information.

One final quick note: Save the date for this year’s OBA Women in Banking Conference, set for Oct. 24 at the Embassy Suites in Norman. More information, along with registration materials, will be available in the coming months!

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