Tennessee Bankers

This Week Newsletter



September 19, 2016 - Issue No. 1638


Reg Relief, Durbin Repeal Bill Passes Committee

The House Financial Services Committee last Tuesday, Sept. 13, passed the Financial Choice Act, a major regulatory reform bill introduced by committee chairman Jeb Hensarling (R-TX). It passed by a vote of 30 to 26, with no Democrats voting in favor and one Republican also voting against it.  Rep. Stephen Fincher (R-TN), who serves on the committee, was not present for the vote.

The legislation includes several important measures, such as the TAILOR Act, which requires that regulations be tailored to fit an institution's business model and risk profile; repeal of the Durbin Amendment price controls on debit card interchange fees; and reforms to  rules on mortgage lending, call report, and data collection.

With limited time remaining before the November elections, the Financial Choice Act is not expected to be passed by Congress this year. However, it may serve as a template for regulatory relief legislation in the new Congress. Read a summary of the legislation.

TN Special Session Concludes after Three Days

The Tennessee General Assembly last Wednesday, Sept. 14, adjourned a three-day special session after voting to repeal a DUI law they passed in April because it jeopardized $60 million in federal highway funding in the state. 

The new law that caused the Governor to call a special session tried to strengthen the DUI penalty for underage drivers. However, it contained a provision that put the state in conflict with federal law, thereby putting at risk some of the state's federal highway funds.

During a contentious process in the special session, the House voted 70-2 to expel Representative Jeremy Durham (R-Franklin) for disorderly conduct. The vote came after the Attorney General's office released a 60-plus page report of an investigation into his behavior while a member of the House. Durham's expulsion is only the second one since the Civil War.

OCC Announces Supervision Priorities for 2017

The OCC last Wednesday, Sept. 14, released its bank supervision operating plan for fiscal year 2017, identifying what the agency will focus on for the new federal fiscal year beginning Oct. 1. Overall, the OCC will develop supervisory strategies for commercial and retail loan underwriting, business model sustainability and viability, operational resilience, anti-money laundering compliance management, and change management processes to address regulatory changes.

The OCC's midsize and community bank supervision team will focus on: credit underwriting, particularly risk layering, fair lending implications, and new products; strategic risk; operational risk, including third-party relationships and the Cybersecurity Assessment Tool; AML compliance; change management in consumer compliance; interest rate risk modeling; ALLL; and horizontal risk assessments.

For larger banks, the agency will look at responsiveness to matters requiring attention; ongoing operational risk management; avoiding AML compliance that limits financial inclusion; change management in consumer compliance; and complex credit underwriting, among others.
Read the report.

Bankers Voice Strong Support for Durbin Repeal

ABA, ICBA, and other trade associations representing nearly every bank and credit union in the U.S. wrote to members of the House Financial Services Committee last Monday, Sept. 12, expressing their strong support for a provision in the Financial Choice Act that would repeal the Durbin Amendment. Section 335 of the bill would roll back the amendment, which the associations said has led to the erosion of fee-free banking services, increased costs for banks to deliver products and services to their customers, and increased the number of unbanked consumers.

Echoing the groups' sentiments in an American Banker op-ed last Tuesday, Rep. Randy Neugebauer (R-TX) added that consumers have seen almost none of the price decreases promised by the retail lobby. "The very consumers the amendment was intended to help are losing at both ends of the transaction," he said. Read the trade groups' letter.

First Horizon's Jordan to Lead ABA Midsize Bank Group

Bryan Jordan, chairman, president, and CEO of First Horizon National Corp. in Memphis, will serve as chairman of ABA's American Bankers Council for 2016-17, ABA announced last week. Jordan also serves on the TBA board of directors. The American Bankers Council is ABA's peer group for CEOs of midsize banks in the $5-100 billion asset range. The council advises ABA leadership on policy matters and advocacy efforts related to its banks' unique priorities.

Secret Service Warns of New ATM Skimmers

The U.S. Secret Service is warning banks and ATM owners about "periscope skimming," in which a specialized skimming probe connects directly to an ATM's internal circuit board to steal card data. As reported by the KrebsOnSecurity blog, this is likely the first reported use of periscope skimming devices in the United States.

Opening New Business Accounts in TN, Evening Program

The Financial Crime Enforcement Network's (FinCEN's) final CDD regulation was published in the Federal Register on May 11, 2016, and it mandates big changes to bank policies and procedures related to account opening, specifically accounts for businesses. Compliance is required no later than May 11, 2018. Revising the bank's BSA and Anti-Money Laundering policies and procedures will take time and effort, but it is estimated the bank's most significant cost will be in the areas of IT and training. This program lays the groundwork for all of the in-bank training needed to implement the bank's specific policies, procedures, and processes. This evening, one-night program will be held September 26-29 in Jackson, Nashville, Kingsport, and Knoxville, respectively. Early registration has been extended through Monday, September 19.  Learn more or register today.

Lockhart to Retire from Atlanta Fed

Dennis Lockhart announced last week that he will be stepping down as president and CEO of the Federal Reserve Bank of Atlanta in February 2017. He has served at the top spot of the Atlanta Fed for nearly 10 years.  Read the release.

Welcome New Associate Member

TBA welcomes new Associate Member Burk I.T. Consulting, Kingsport, in the category of Information Technology. Please thank this company for their support of the Tennessee banking industry through membership and learn more about all of TBA's associate members in our online directory.

TBA On the Road

  • TBA cheers on the Vols Saturday when they take on Florida during the annual tailgate hosted by SouthEast Bank at spot 22 in Circle Park in Knoxville. All TBA members are welcome to stop by and join the festivities, click here to view the map. Contact Stacey Langford to learn more.
  • More than 65 bankers will be in Franklin on Tuesday and Wednesday for The Southeastern Institute for IRA Training, and more than 50 will travel to Nashville and Knoxville for the Compliance with Federal Lending Regulations programs.

See where TBA goes while "on the road" by following  @TNBankers.