Tennessee Bankers

This Week Newsletter

July 05, 2016 - Issue No. 1627

House Committee Releases Full Text of Dodd-Frank Rollback

The House Financial Services Committee last week released the full text of the Financial Choice Act, a bill aimed at rolling back the Dodd-Frank Act's supervisory regime and providing regulatory relief for banks.

At the core of the proposed legislation is a regulatory "off-ramp" from the DFA and Basel III supervisory regimes for all banks that elect to maintain a 10 percent nonrisk weighted leverage ratio and have composite CAMELS ratings of 1 or 2. Qualifying banks would be exempt from certain rules and regulations that limit mergers, acquisitions, or other transactional activities whenever those limitations are based upon capital or liquidity standards. The regulatory relief provided by the bill would be contingent upon the bank maintaining the specified leverage ratio and ratings.

The bill also details plans for greater accountability from the various federal regulatory agencies, including the CFPB; impose more stringent penalties for Wall Street in cases of fraud or deception; and repeal sections of DFA that limit capital formation, including the Volcker Rule. It also seeks to reduce the regulatory burden on community institutions by incorporating more than two dozen proposed regulatory relief measures. Click here to read the full text of the bill. Click here for an executive summary of the bill.

House Republicans Unveil Tax Reform Plan

House Ways and Means Committee Chairman Kevin Brady (R-TX) on June 24 issued the House Republicans' proposal for tax reform, which includes substantial simplification of rates and brackets, as well as major reforms to the Internal Revenue Service.

Under the plan, individual tax brackets would consolidate to three at 12 percent, 25 percent and 33 percent, with a 50 percent exclusion for investment income. The plan would repeal estate tax and alternative minimum tax, plus all other deductions except those for mortgage interest and charitable giving. Profits of pass-through entities such as Subchapter S corporations would be taxed at a 25 percent rate.

Businesses would face a top corporate tax rate of 20 percent and allowed immediate expensing of investments in tangible and intangible assets. Generally speaking, interest expense would be deductible only against interest income; however, Brady said the Committee would develop special rules around interest expense for banks and other financial firms that take into account their unique role as financial intermediaries. Click here to read more.

TBA Sends Joint Letter for Durbin Amendment Repeal

TBA and the other state bankers associations last week wrote to Rep. Randy Neugebauer (R-TX) to express support for a bill he introduced earlier this month that would repeal Dodd-Frank's Durbin Amendment and eliminate the government-imposed price caps on debit card interchange. The letter highlights that the amendment has reduced banks' ability to offer affordable products and services to their customers, while failing to pass on any tangible savings to consumers, as originally intended. Click here to read the letter.

Supreme Court Declines to Hear Preemption Case

The U.S. Supreme Court declined to take under review an appeals court decision that state usury laws apply to debt purchased from a national bank. The decision is a setback in the financial services industry's push for clarity in the Madden v. Midland Funding case.

In the case, the U.S. Court of Appeals for the Second Circuit previously ruled that National Bank Act protections for Bank of America do not transfer to Midland Funding, which is seeking to collect on charged-off credit card debt purchased from BofA. A previous lower court decision held that the act does preempt the application of state usury laws to national bank loans once sold or assigned.

The Supreme Court decision follows an Obama administration brief last month arguing that the appeals court decision was "incorrect" but against the high court reviewing the case. In that brief, U.S. Solicitor General Donald Verrilli said national bank assignees should be able to charge the same rates as the bank that sold them loans. Verrilli said Midland could still prevail, however, if the case is remanded back to the district court.

The decision applies the appeals court ruling to the Second Circuit, which comprises Connecticut, New York, and Vermont. The issue could head back to the Supreme Court if another circuit rules differently, and Congress could take up legislation to address it.

TBA disagrees with the appeals court decision and is reviewing possible legislation for 2017 to prevent a similar court ruling in Tennessee. 

Compliance Alliance Hot Topic Question of the Week

Q. Is CIP required on an individual that is on a deed, but not the person on the loan?


A. Assuming this individual is not the person opening the account, it is not required by regulation (31 CFR §1020.200(a)(2)), but is recommended as a best practice.


Compliance rules and regulations change quickly! Compliance Alliance offers a comprehensive suite of compliance management solutions. Join us for a free one-hour webinar to review the benefits of Compliance Alliance. This virtual tour will provide an in-depth look at each of the tools and resource categories available to subscribers. Webinars are offered each Tuesday and Thursday. Please contact Stacey Langford with questions.

Save the Date for Women in Banking Conference

On September 8 in Nashville, TBA will host its inaugural Women in Banking Conference designed to bring together Tennessee's many successful female bankers for professional development and networking. It is designed for all levels of staff from any financial institution or financial services provider interested in the enhancement and career growth of women in Tennessee. This conference will give you the opportunity to network with other professional women and discuss similar challenges and solutions. Make plans now to attend, to find inspiration, and to embrace empowerment from other successful women. For more information, please contact Susan Taylor.

Deadline Approaching to Order Bankers Directory

The 2016/2017 Bankers Directory is a compact, handy reference that puts information about all of Tennessee's commercial banks and trust companies at your fingertips. The directory contains complete financial data for Tennessee institutions taken from the 2015 year-end FDIC Call Reports, including:

  • "Statement of Condition"
  • Main address and phone numbers
  • Officers and Directors
  • Branch locations
  • The directory also contains:
  • TBA officers, directors, and staff
  • National banking associations and regulatory agencies
  • Tennessee's state legislators and US congressional delegation
  • TBA–endorsed partners and associate members, complete with a brief description of their product or service.

CEOs, out-of-county main office branches, and associate members each receive one complimentary copy of the directory. Additional copies are available for purchase.
The deadline to order this valuable resource is July 15. Click here to order your copy of the 2016/2017 Bankers Directory online, or download the order form and send the completed form to T'Lanie Luu.

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

  • Stacey Langford will be on the road visiting members in West Tennessee.