Tennessee Bankers

This Week Newsletter

February 27, 2017 - Issue No. 1708

House Finance Committee Holds DFI Budget Hearing

Last week, the House Finance Ways and Means Committee began state department budget hearings, which Chairman Charles Sargent estimated would total 50 hours before concluding in mid-March. Commissioner Greg Gonzales was first on the list, presenting their FY2018 budget on Wednesday. Fully funded by the more than 15,000 institutions that they regulate, Commissioner Gonzales highlighted their mission, quest for regulatory balance, and a budget totaling $23 million. Gonzales stated a focus in the FY would be efforts to retain experienced bank examiners and make technological improvements.


The budget requests $184,500 to be used toward salaries to build the experience and therefore judgement capability of bank examiners. In response to questions by members of the committee, the Commissioner highlighted the significant decrease in problem institutions stating that "on capital and earnings, the numbers are as good as we've seen in over 10 years." Gonzales also spoke on the CFPB's proposed small dollar lending rule and what impact that might have on consumers, institutions, and the department structure in Tennessee. View the full hearing here.

Senator Introduces CFPB Accountability Bill

Legislation to subject the Consumer Financial Protection Bureau to the congressional appropriations process has been introduced in the Senate by Sen. David Perdue (R-Ga.). Under the CFPB Accountability Act (S. 387), the agency would no longer receive its funding directly from the Federal Reserve.


This is consistent with TBA and the national associations' longstanding view that the CFPB should be governed by a bipartisan commission rather than a single director. Similar legislation passed the House Financial Services Committee last year and was included in Chairman Jeb Hensarling's (R-Texas) Financial CHOICE Act, which will be reintroduced soon.

House Version of TAILOR Act Introduced

As was reported in the previous edition of This Week, the Senate version of the TAILOR Act was introduced and now the matching House version has been reintroduced for the 115th Congress by Rep. Scott Tipton (R-Colo.). The TAILOR Act of 2017 (S. 366 and H.R. 1116) would require financial services agencies to tailor regulatory actions based on the business model and risk profile of regulated institutions. The legislation would be retroactive to 2010 and would require regulators to provide an annual report to Congress outlining the steps they have taken to tailor their regulations.

Tennessee Makes Strides in Political Clout

TBA's EVP and General Counsel, Tim Amos, highlighted the influence wielded by Tennessee's congressional delegation during his presentation at the 2017 Credit Conference. And we aren't the only ones who've noticed. A Feb. 23, 2017 article in Roll Call featuring the results of the Roll Call Clout Index begins by noting that "No state in this decade has seen a more meaningful boost than Tennessee in institutionalized congressional influence." Reasons for this are as Amos noted in his remarks—Tennessee's delegation has become senior in a time of legislative turnover, with all but one—Rep. David Kustoff—having served over six years, and several members of the delegation have achieved prominent committee roles for the 115th Congress.

Compliance Alliance Question of the Week

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Q. If there are joint borrowers, does a bank comply with Regulation B if they deliver the appraisal to one of the borrowers versus both three days prior to closing?


A. It is a best practice to send to both of the borrowers, but it is not necessarily required under Reg. B. As long as one (the primary) applicant is sent the appraisal three days prior to closing you will meet the requirements under the Reg. The official interpretations to 12 CFR §1002.14(a) provide guidance:


"14(a) Providing appraisals and other valuations.

1. Multiple applicants. If there is more than one applicant, the written disclosure about written appraisals, and the copies of appraisals and other written valuations, need only be given to one applicant. However, these materials must be given to the primary applicant where one is readily apparent. Similarly, if there is more than one applicant for credit in the transaction, one applicant may provide a waiver under §1002.14(a)(1), but it must be the primary applicant where one is readily apparent."

Join Us for Two Credit Programs

The community banking industry continues to experience changing environments. Moreover, the changes in the political landscape and regulation enhancements persist to challenge previous community banking models. As a result loan portfolios may be stressed, leaving loan officers and bank management with a loss for strategic direction. The typical response by most financial institutions is a heightened awareness of the credit granting process to avoid excessive problem loans in the future. In addition, management may strengthen efforts to identify a positive credit culture. These two seminars, Credit Risk Rating Process and Credit Culture: What Is Your Bank's Culture?, are designed for lenders with all levels of experience. 


Day 1: Credit Risk Rating Process

Credit Risk Rating and nonaccrual recognition

Problem Loan Administration

Contemporary Issues for Loan and Lease Losses


Day 2: Credit Culture: What Is Your Bank's Culture?

Credit Culture profile – Why it matters

Commercial lending—the fundamentals


Credit Risk Rating Process is a full-day seminar on March 14 at the TBA Barrett Training Center in Nashville. Credit Culture: What Is Your Bank's Culture? is a half-day seminar on March 15 that also takes place at the TBA Training Center.

FinancialPSI This Week: Tax Season Prompts Phishing Expeditions

As the April 15 tax filing deadline approaches, there has been an uptick in phishing scams targeting consumers along with HR managers. This corporate angle features emails supposedly from company executives soliciting employee W2s along with other sensitive payroll information. While there have been numerous articles on this topic, we've unfortunately seen some claims activity arising from successful phishing attempts.


Please remind individuals working with this data in your bank about this aggressive email campaign, and refer them to the IRS tips as a potential resource. Any such email requests should be considered suspicious and followed-up with an email or phone call to verify the sender's identity.


Feel free to contact FinancialPSI's Ted Frizen and Jon Goodson if you have any questions on this matter. Thank you for the opportunity to service your banking insurance needs.

TBA On the Road

  • The latest Senior Compliance Officer Forum takes place in Nashville.

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