Tennessee Bankers

This Week Newsletter

February 29, 2016 - Issue No. 1609

CFPB Considering 'Ability to Repay' Rules for Small Dollar Loans

The CFPB is continuing to consider applying "ability-to-repay" standards to small dollar loans, which would require lenders to verify a prospective borrower's income, major financial obligations, and borrowing history before making a loan, director Richard Cordray said last Tuesday, Feb. 23. The standards echo those required by the CARD Act for credit card issues. Cordray added that the bureau is also continuing to consider exceptions for loans that meet certain screening requirements and include certain consumer protections.

For loans of 45 days or less, the proposal would allow a lender to avoid the "ability-to-repay" standards if they abided by a 60-day "cooling off" period between loans or rollovers unless the borrower's financial condition could be documented to have changed, with a two-rollover cap. The loan could not exceed $500, carry more than one finance charge, or require the customer to offer his car as collateral. Lenders would be prohibited from debiting a customer's deposit account without a three-business-day notice and would be required to stop attempting after two unsuccessful debits.

For loans of more than 45 days, the lender would be required to determine the borrower's ability to repay the loan; to limit the loan's amount to $1,000, impose a maximum 28 percent interest rate and $20 application fee; or to limit repayment to 5 percent of the borrower's gross monthly income.

Cordray's remarks suggest that the proposal has not undergone significant changes since the initial draft was released, despite a review by a panel of small business entities. The bureau is expected to propose the guidelines formally in March. 

Fed Proposes Rule Transferring HMDA Regs to CFPB

As part of its transfer of certain rulemaking authority to the CFPB, the Federal Reserve last week issued a proposed rule repealing Regulation C, which implements the Home Mortgage Disclosure Act and has now been superseded by the bureau's Reg C. To read the proposed rule, click here.

Fannie Mae Profits Rose in the Fourth Quarter

Fannie Mae on Feb. 19 reported a $2.5 billion profit for the fourth quarter of 2015, following a $2 billion gain in the previous quarter. The increase in profit was largely attributed to fair value gains as a result of increased longer-term interest rates, offset by a slight decline in home prices and higher mortgage interest rates.

Fannie made a total profit of $11 billion in 2015, down from $14.2 billion the year prior. The overall decline was primarily driven by lower settlement income and less tax breaks in 2015. To read more, click here.

FS-ISAC: New Ransomware Spreading Quickly

FS-ISAC's latest community institution risk summary spotlights new ransomware that is spreading quickly. The "Locky" malware is distributed via a Microsoft Word document containing malicious macros that has resulted in as many as 90,000 infections since the start of last week. FS-ISAC encourages firms to implement mitigation plans, such as user education and awareness, and ensure daily backups are functioning properly.

Through our partnership with ABA and FS-ISAC, TBA electronically distributes the Community Institution & Association Risk Summary weekly to members at no charge. To be added to this list, please email Steve Curtis.

House Subcommittee to Hear TBA-Opposed Legislation on Tuesday

The House Agricultural and Natural Resources Subcommittee on Tuesday will vote on TBA opposed legislation that would authorize counties to enact PACE (Property Assessed Clean Energy) loan programs. Under a PACE program, local governments would use their bonding authority to provide financing for a for-profit company to administer and make loans to personal and commercial property owners for energy efficient improvements. 
The loans would run with the land and collected by the county once-a-year with the property tax payment. In the event of a default on the PACE assessment and subsequent foreclosure, the loan would be assumed by the person acquiring the property at the foreclosure sale.  
TBA's government relations team has expressed their concerns with this legislation to all members on the House subcommittee and believes there will not be enough support to advance the bill. 

TBA's Day on the Hill is March 8

There is still time to register for Day on the Hill, an annual advocacy event hosted by the TBA Young Bankers Division. Participants will spend the day at the State Capitol in Nashville and hear from members of the General Assembly and the TBA government relations team about current issues before the legislature and Tennessee's legislative process. Attendees will have the opportunity to observe committee meetings and participate in group or individual visits with individual lawmakers. 
Breakfast and lunch is provided for participants, with the luncheon panel sponsored and hosted by, Bone McAllester Norton PLLC.  To register click here.

Build Customer Loyalty with EverFi Financial Literacy Platforms

In addition to the flagship K-12 financial literacy programs, TBA endorsed partner EverFi also provides EverFi@Work, an adult financial education program for companies to empower their customers and employees with the skills to manage finances and plan for the future.
By private-labeling the platform, Tennessee banks are able to maximize visibility, differentiate their brand, build trust, and strengthen relationships within their communities. Institutions that provide EverFi's financial education programs not only champion financial wellness in their communities, but also increase their brand awareness and leverage the programs to meet regulatory objectives.
To see how banks are using EverFi technology to build customer loyalty watch this video or visit EverFi.com. Contact Ryan Swift at ryan@everfi.com to learn more.

Introduction to Banking Scheduled for March 24

Introduction to Banking will cover a general overview of banking, along with a review of day-to-day operations and the interrelations of banking to the world around us. The seminar will show how the daily banking operations, the financial services industry, and the economy are linked together and impact one another. Attendees will go away with a fundamental understanding of basic banking concepts and principles, along with a general concept of the world of finance.

This course will take place March 24 at the TBA Barrett Training Center in Nashville. The early registration deadline is March 17. Click here to sign up. 

Welcome New Associate Members

TBA welcomes new associate members Slater Appraisal Group, Knoxville, in the category of appraisals and BrandPoint Design, Brookfield, WI, in the category of facility planning. Please thank these companies for their support of the Tennessee banking industry through membership and learn more about all of TBA's associate members in our online directory.

Submit Your Bank's Community Involvement, News, and Promotions to TBA

We want to know the latest news about your bank for possible inclusion in The Tennessee Banker magazine. Please submit text and photos to Tyler Nelson about the following items: 

  • Job promotion announcements
  • Bank celebrates milestone or receives an award
  • Opening a new branch
  • Community involvement

TBA On the Road

  • Tennesseans head to the polls Tuesday for the SEC presidential preference primary.
  • Colin Barrett and Stacey Langford visit members in East Tennessee.
  • Banker students travel to Nashville for The Southeastern School of Consumer Credit, which begins on March 6.

See where TBA goes while "on the road" by following

@TNBankers or  #TBAontheroad

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