Tennessee Bankers

This Week Newsletter

December 19, 2016 - Issue No. 1650

Fed Raises Rates for Second Time Since 2006

The Federal Open Market Committee voted unanimously on Wednesday, Dec. 14, to raise the target range for the federal funds rate by 25 basis points to 0.5-0.75 percent. This marks only the second rate hike since the financial crisis. Committee members attribute the increase to consistent economic growth, in particular strong job gains, throughout 2016.

Projections released by the committee include accelerated growth over the next few years, which suggest a series of additional rate hikes across 2017. The committee continued to stress that future rate hikes will "depend on the economic outlook as informed by incoming data." 

Fannie, Freddie Announce HAMP Successor

Fannie Mae and Freddie Mac announced last Wednesday, Dec. 14, new foreclosure prevention programs designed to replace the Home Affordable Mortgage Program, which expires at the end of this year.
The GSEs will offer a Flex Modification, which will provide a 20 percent payment reduction to eligible borrowers. Most borrowers who are at least 60 days delinquent would be eligible. The new modification programs must be implemented by Oct. 1, 2017, when they replace Fannie and Freddie's existing standard and streamlined modifications; until then, servicers must evaluate borrowers for modifications using the existing protocols. Read about Fannie's program. Read about Freddie's program.

Agencies Finalize Extended Exam Cycle for Small Banks

The federal banking agencies last Monday, Dec. 12, issued final rules extending the on-site exam cycle for banks with up to $1 billion in assets from 12 months to 18 months, effective immediately. The rules are identical to interim final rules issued earlier this year.

This regulatory change was included in a spending bill at the end of 2015.  The measure will qualify an estimated 611 institutions for the extended exam cycle. Previously, the 18-month exam cycle was only available to institutions with asset sizes less than $500 million. Read the final rules.

Fed Proposes Bank Holding Co. Rating System for S&Ls

The Federal Reserve Board on Dec. 9 issued a proposed rule to apply the same supervisory rating system it currently uses for bank holding companies to savings and loan holding companies. The rule would not apply to savings and loan holding companies engaged in significant insurance or commercial activities.

Under the rule, SLHCs would be evaluated by the same criteria currently used to rate bank holding companies. Such criteria include risk management, financial condition, and the potential impact of the parent company and nondepository subsidiaries on subsidiary depository institutions. SLHCs would be assigned a rating on a scale of 1 to 5, with 5 indicating the highest degree of supervisory concern. Comments on the proposal are due Feb. 13. Read the proposed rule.

Request for Examples of CU Expansion

On Dec. 7, ABA filed a lawsuit against the NCUA to set aside the recently finalized rule expanding federal credit unions' field of membership. ABA anticipates that the first move of the NCUA will be to file a motion to dismiss our lawsuit. In anticipation of that legal maneuver, ABA is asking bankers to help identify instances of federal credit unions doing the following things:

  • Taking advantage of the new FOM rule by expanding to cover a Combined Statistical Area ("CSA") or a large part of a CSA;
  • Expanding to cover a large "rural" district;
  • Expanding into a new "adjacent area" outside of its existing local community;
  • Ceasing to serve (closing branches or other actions) the core urban area in a Core-Based Statistical Area.

ABA is looking for press releases, news articles, website postings, or anything that is generally public that we can include as an exhibit. 
We are also looking for information on the likely impact of those expansions on banks from bankers who might be willing to sign an affidavit of competitive harm. 
Please forward your public examples and names of likely harmed banks to Tom Pinder, SVP, Litigation at tpinder@aba.com or Dawn Causey, General Counsel at dcausey@aba.com.

Luetkemeyer Calls for End to OCC's 'Choke Point' Involvement

In a letter to the OCC last week, Rep. Blaine Luetkemeyer (R-Mo.) called out the agency for its continued involvement in the Department of Justice's Operation Choke Point, which seeks to curtail disfavored businesses by working through regulators to pressure financial institutions to end customer relationships. Luetkemeyer called on the OCC to issue formal standards to ensure that regulators do not unduly pressure banks into making de-risking decisions.

The House in February passed the Financial Institution Customer Protection Act of 2016, a bipartisan bill intended to require greater transparency from regulators when requesting account terminations. Luetkemeyer pointed out that the FDIC has already taken steps to institute such standards. Read Luetkemeyer's letter.

Bankers Urged to Submit Post-Exam Surveys

Through the Regulatory Feedback Initiative, TBA has joined forces with State Bankers Associations across the country and the American Bankers Association to implement this uniform, anonymous survey so that we can identify inconsistencies and hold the regulatory agencies accountable.   Watch this video to learn about the initiative. Even if your exam went well, we need to collect feedback on every exam to compare against what might be happening with other agencies or in other regions of the country.  Complete the survey through this link.

Credit Conference, Legislative Reception Registrations Now Open

TBA's Credit Conference, the largest gathering of bankers in Tennessee each year, will take place February 7-8, 2017 at the Omni Nashville Hotel. You can make your hotel reservations at the Omni Nashville Hotel by calling 800-THE OMNI (800-843-6664) and requesting the Tennessee Bankers Association Credit Conference block of rooms to take advantage of the special group rate of $229 single/double per night. 
Also, plan to attend the annual Legislative Reception on Wednesday, February 6, the evening before Credit Conference. This reception will take place at the War Memorial Building. Take this opportunity to meet with your state senator and representative while networking with fellow bankers, and enjoying delicious food and good music. A separate registration of $50 per person is required for the Legislative Reception if you sign up by January 23. After January 23, the fee increases to $60 per person.

Join Us for TBA's Annual Meeting

Last week, sponsorship and exhibit hall information was sent to TBA associate members. Plan now to ensure that your company is represented at the flagship event of the Association. The 127th Annual Meeting will take place June 4-6, 2017 at The Ritz-Carlton, Naples. The room block and registration is currently open. For the most up-to-date Annual Meeting details visit www.TNBankers.org/Annual.

TBA On the Road

  • We wish you and yours safe travels over the holiday break!

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