Week of March 19

In This Issue…

Greetings from Guy
Snatching defeat from the jaws of victory?
House passes TAILOR, Exam Appeals bills
Bankers invited to participate in ABA’s ADA website accessibility survey
Fiduciary Rule to Federal Appeals Court
OBA Bankers’ Night Out programs continue next week
OBA education corner …

Greetings from Guy

After the celebration and euphoria following the Senate’s passage of S. 2155 last week, I have now been slapped back into reality. We are not past the finish line as of yet and there are numerous potential road blocks before we get there.

If the bill is amended in the House it will require the bill to go back to the Senate for another vote. While I can think of numerous areas where the bill could be improved, I am fearful those “improvements” would result in a loss of support from Democrats in the Senate. It is my understanding the Democrats have already signaled this would be the case.

In my view the wild card is the House Banking Committee Chairman Jeb Hensarling. In watching the Chairman over the last five years it appears he has the propensity to throw everything at the wall and see what sticks.

This method has resulted in some excellent banking reform bills being passed in the House, like the TAILOR Bill (H.R. 1116) and the Financial Institutions Examination Fairness and Reform Act, (H.R. 4545) dealing with creating a process for appeals from the results of an examination. However, none of these bills have been or will be heard in the Senate as there are not enough votes for passage.

This past Thursday Hensarling told reporters the House is insisting on negotiations in an effort to add roughly 30 measures (amendments) to the bill the Senate passed. Those comments immediately ended my euphoria!

I remain optimistic we will get a regulatory reform passed but time is getting short and we still have a lot of work to do.


Guy Sims, OBA chairman

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Snatching defeat from the jaws of victory?

As noted by Chairman Sims, S. 2155 is now in the hands of House Financial Services Committee Chairman Jeb Hensarling (R-TX). The way it works is that unless the votes are available to suspend the rules, the bill must come back to the floor through the House Financial Services Committee (HFSC).

“Chairman Hensarling wants to add a number of amendments to the bill,” OBA President Roger Beverage said. “He’s telling people that Speaker Ryan supports his approach, even though a number of his friends have suggested otherwise. He wants to ‘negotiate’ with the Senate so he can leave some sort of legacy as he leaves Congress.

“The problem seems to be that the 16 moderate Democrats and one independent have moved as far as they’re going to move,” Beverage said. “It’s a game of Russian Roulette at this point – are those Senators serious, or can more relief be obtained? I have talked with every member of the delegation and encouraged them to take the Senate bill as is and put some points on the board. We will live to fight another day.”

Sims and Beverage noted that there is a possibility that the House Leadership team understands the importance of passing S. 2155 as it is.

“There is a procedure as well as recent precedent for Leadership to go around Hensarling and get the bill to the floor for a final vote,” Beverage said. “It’s called a ‘discharge petition’ and it was used to advance the flood insurance program a few years ago, and it was used again on the vote to reauthorize the (Export Import) Bank. Congressman (Frank) Lucas is well-aware of this process, and I find that somewhat reassuring. I trust him completely to follow through and help get this bill over the finish line.”

Sims highlighted some of the Senate bill’s specific and helpful provisions:

  • It establishes a “safe harbor” for mortgages originated and retained by banks under $10 billion in assets and treats such mortgage loans as “qualified mortgages.”
  • Well-managed and well-capitalized banks up to $3 billion (up from $1 billion) are now eligible for the 18-month exam cycle.
  • The Systemically Important Financial Institution (SIFI) threshold was increased from $50 to $250 billion in assets.
  • Smaller community banks that make less than 500 mortgages or 500 open-end lines of credit for each of the two preceding years will not be subjected to the new HMDA disclosure requirements, but they must still comply with the existing HMDA requirements.
  • Smaller banks (<$10 billion) that originate < 1,000 mortgage loans will be exempt from TILA escrow requirements.
  • Company-run stress tests are eliminated for banks with under $100 billion in assets.
  • It simplifies the Basel III capital calculation requirements for community banks.
  • It eliminates the three-day waiting period requirement in TILA/RESPA mortgage disclosures if the consumer receives a second offer of credit from the same lender with a lower rate.
  • Credit reporting agencies are required to provide credit-freeze alerts and it contains provisions that are intended to extend protections for senior citizens, minors and veterans.
  • The bill provides charter flexibility for federal thrifts that have less than $20 billion in assets.

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House passes TAILOR, Exam Appeals bills

Last week the House of Representatives passed two significant bills on which the OBA has been working for some time. All five members of the Oklahoma delegation voted to support these two bills.

H.R. 1116 (the TAILOR Act) passed on a vote of 247 – 169, which included 16 Democrats. Only one Republican (Walter Jones [R-NC]) voted against this bill.

This bill requires federal banking agencies to “tailor” regulations to a bank based on its business operating model and risk profile. The agencies will also be required to report to Congress on specific actions taken to do so. The bill’s tailoring requirement applies to regulations adopted within the last seven years.

On Friday of last week, the House passed H.R. 4545 – the Financial Institutions Examination Fairness and Reform Act. It creates an independent appeal process to enable banks to challenge the results of an examination that will be considered by an independent administrative law judge. The vote was 283 – 133 and included 52 Democrats. All five members of the Oklahoma Delegation voted in favor of this bill.

Once again Walter Jones of North Carolina was the only Republican “NAY” vote.

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Bankers invited to participate in ABA’s ADA website accessibility survey

ABA has launched a survey to collect data on the Americans with Disabilities Act website accessibility demand letters that many banks have received over the past several years. The survey will help ABA in its cross-sector effort with other trade associations to highlight the extent of the problem to Congress and urge lawmakers to weigh in on the issue.

The survey consists of six short questions and should take no more than 10 minutes to complete. The survey closes on March 30, and all responses will be kept confidential. Electronic invitations to complete the survey were sent to more than 5,000 ABA member and non-member bank CEOs. If your institution did not receive an invitation, contact ABA’s Toni Cannady at tcannady@aba.com.

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Fiduciary Rule to Federal Appeals Court

A three-judge federal appeals court panel voted 2-1 to vacate the Department of Labor’s (DOL) fiduciary rule last week. The case was brought by a coalition of financial and business trade groups in 2016, shortly after the Obama administration finalized the rule.

The rule was upheld at the trial court level. This decision was the subject of an editorial in the Wall Street Journal yesterday (Monday, March 19).

The rule expanded the definition of “fiduciary” under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. It required banks and other financial institutions to reassess whether and how they will continue to market and sell their retirement products and services to employee benefit plans and to individual retirement accounts.

The Court of Appeals ruled that the rule’s new definition of fiduciary conflicts with ERISA. The Court also ruled that DOL did not meet the “reasonableness” test that’s required to enable a court to defer to reasonable agency interpretations of statutes and rule-making under the Administrative Procedures Act.

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OBA Bankers’ Night Out programs continue next week

The OBA Bankers’ Night Out programs continue next week. 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 drinks at 5:30 p.m., program at 6:15 p.m. and dinner at 7 p.m.

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

Remaining locations and dates for this year’s events are:

  • Enid, March 27.
  • Oklahoma City, March 28.
  • Tulsa, April 3.
  • Guymon, April 19.

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OBA education corner …

Remember to stay current with everything that’s coming up on the Events Calendar at OBA.com, but also take note of the following:

  • Legal Liabilities When Check Fraud Occurs, March 27, webinar — If you’re confused about what your financial institution’s legal responsibility might be in various check fraud situations, this seminar is for you.
  • Records Management and Retention, March 28, webinar — To manage an effective program in a cost-effective manner, compliance professionals must rely on information from a broad range of resources within the organization. Records management is the point of convergence of these resources, which is why effective and reliable records management must be part of your compliance program.
  • Annual Regulation Training for the Branch, March 29, webinar — This regulatory review completes your financial institution’s annual training requirements. It also helps the front line understand that we can be fined and sued if we do not follow our regulatory responsibility.
  • Right of Rescission Review and Update, April 3, webinar — This two-hour program explains all of the rescission rules. It provides easy to understand answers to questions. and it provides a system to assure compliance.
  • BSA/AML Compliance Management, April 3 – Tulsa; April 4 – Oklahoma City — This is our flagship BSA/AML training event. The program incorporates a review of all of your institution’s BSA’s technical compliance responsibilities; it is the annual review everyone needs to remember their critical duties. It also reviews the required elements of your AML program from CIP to enhanced due diligence.
  • Role of the Information Security Officer, April 4, webinar — This webinar will cover regulatory expectations, role of the ISO, typical job description, independence mitigation suggestions and vISO.
  • Letters of Credit, April 4, webinar — This webinar provides an essential understanding of letters of credit, including letter of credit terminology, structure and function.
  • Regulatory Pressure on Third Party Management, April 5, webinar — We will explore best practices for vendor management, third party risk management and customer risk management.
  • Vital Check and Deposit Issues – Part II, April 5, webinar — In this webinar, we will continue to delve into common questions and answers that your frontline has about checks and deposits.
  • 2018 OBA Rural Bankers/Ag Conference, April 5, Oklahoma City — Bankers in agricultural and rural markets should plan to attend this year’s conference.
  • Essential Teller Issues SeminarApril 16 – Oklahoma CityApril 17 – ClintonApril 18 – Tulsa. — The program zeroes in on six modules that remind your tellers of the importance of what they do, how they do it, what they say and how they deliver customer service.
  • BKD-OBA CECL Workshop, April 18 – Oklahoma City; April 19 – Tulsa — The workshop will provide examples and group discussions to assist bankers in developing or refining processes to develop process to implement the CECL standards.

Finally, it’s always a good idea to see what the graduate schools of banking across the country have on their schedule. Click here to see GSB-Madison online seminars for April and May, and click here for information on upcoming events from GSB-Colorado.

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