Tennessee Bankers

This Week Newsletter

September 11, 2017 - Issue No. 1736

First Horizon's Charles Tuggle Testifies before House Financial Services Committee

Last Thursday, Charles Tuggle, EVP and general counsel at First Horizon National Corporation, Memphis, testified before the House Financial Services Committee. Tuggle's testimony focused on legislative proposals for regulatory reform, including Rep. Luetkmeyer's bill that would remove arbitrary asset thresholds that impose limits on growth for institutions designated as systemically important. The legislation, H.R. 3312, would end automatic designation of systemically important financial institutions based on asset levels and replace it with a formal process that recognizes a variety of systemic risk factors.

Tuggle pointed out that the current threshold of $50 billion is an onerous tax on growth that requires midsize banks to strategically limit organic growth in order to avoid triggering the threshold. "If we don't continue to grow organically, then we're not going to be able to extend the levels of credit that our communities need," he said. He pointed out that the threshold is driving large merger deals that allow banks hovering below the $50 billion asset threshold to absorb the cost of SIFI compliance.
The one-time cost of growing above the SIFI threshold for a bank may be as large as $80 million, according to a study that Tuggle cited, along with added ongoing annual compliance costs of up to $60 million.
Tuggle also expressed the industry's support for two pieces of draft legislation under consideration. One, to be introduced by Rep. Claudia Tenney (R-N.Y.), would provide relief to smaller mortgage lenders from escrow requirements for higher-priced mortgage loans. The other, championed by Rep. French Hill (R-Ark.), would begin to provide much-needed clarity on the TILA-RESPA integrated disclosures, Tuggle said.

Equifax Discloses Massive Consumer Data Breach

Consumer credit reporting bureau Equifax last week announced a major data breach affecting approximately 143 million Americans, after criminals exploited an Equifax website vulnerability from mid-May through the end of July. Equifax has set up a website to help consumers determine if their information was breached and, if so, to sign up for credit monitoring and identity theft protection offered by TrustedID, an Equifax subsidiary. Equifax will also mail notices to consumers whose credit card numbers or dispute documents were breached.

Because the Equifax breach was not a breach of financial institutions, the financial institutions may not be required by regulation to take action (i.e., notify customers).  The Interagency Guidelines Establishing Information Security Standards state that "[w]here an incident of unauthorized access to customer information involves customer information systems maintained by an institution's service providers, it is the responsibility of the financial institution to notify the institution's customers and regulator. However, an institution may authorize or contract with its service provider to notify the institution's customers or regulator on its behalf."
TBA endorsed partner Ncontracts advises that banks will want to: be prepared to direct concerned customers to ID theft resources through the government or Equifax; update the bank's Information Security Risk Assessment and potentially activate additional controls to protect the bank customers; review the bank's agreement with Equifax regarding incident response. For more information please contact Ncontracts' Walt Wasyliw at 615-500-5009 or TBA general counsel Amy Heaslet at 615-244-4871.

September Congressional Priorities

Congress returned last Tuesday from its August recess with a long list of priority issues it must tackle by month's end. Those included the need to raise the U.S. debt limit, pass a government budget, provide relief for hurricane victims, extend the national flood insurance program, and begin discussions on tax reform.  
The House last Friday approved legislation that ties emergency funding for hurricane relief with measures that would raise the debt ceiling and keep the government open for three months. The bill, which passed 316-90 and was part of a deal struck between President Donald Trump and Democratic leaders, then went to the President for his signature. The 90 lawmakers who opposed the bill were all Republicans, who had just come out of a meeting with top administration officials urging them to support the package. The Senate passed the legislation on Thursday, with 17 Republicans voting against it. Republicans in the Senate and House opposed the measure because they wanted to raise the debt ceiling for longer than three months.  Tennessee's Sen. Alexander and Reps. Fleischmann, Roe, Cohen and Cooper voted for the legislation, with Sen. Corker and Reps. Black, Blackburn, DesJarlais, Duncan and Kustoff voting against it.
The recent hurricanes also highlight the need to extend the NFIP, which is set to expire on Sept. 30, but so far the House and Senate have taken different approaches to flood insurance reform. The House is seeking development of a private market alternative to the federal program while proposals in the Senate would just extend the current program.  Congress will likely pass a temporary extension to allow time to focus on other priorities.   
Additionally, President Trump and Republican leaders are pushing for action on tax reform. Although only a simple majority in the Senate is needed for this, tax reform will still be a difficult road to navigate.
Aside from these priority issues, regulatory reform for the banking industry remains a top priority of TBA. TBA and other banking trade groups will continue advocating for common sense reform and relief in September and the following months.

Senate Banking Committee Confirms OCC and Fed Nominees

Last Thursday, the Senate Banking Committee approved the nominations of Joseph Otting to serve as comptroller of the currency and Randal Quarles to serve as vice chairman for supervision at the Federal Reserve. The bipartisan votes send the nominations to the full Senate for consideration, which is expected in the coming weeks.

TBA Announces New Webinar Partnership

The Tennessee Bankers Association has partnered exclusively with Total Training Solutions (TTS) to provide you with the industry's best webinars (TBA is no longer affiliated with CBFE Webinars or any other webinar vendor). This will enable us to offer webinars to your financial institution on topics most important to the success and compliance of your bank.  
Click here to see a list of upcoming webinars.  
Choose from more than 300 training webinars annually, including soft skills.
Take part in the webinars when it's convenient for you and your staff. From watching live to purchasing a CD-ROM for your training library, learn at your own pace. Miss a webinar? No problem—buy a recorded version to watch.
Hear from the industry's best presenters, including Carl Pry, Jack Holzknecht, and Honey Shelton.
Less emails! By bringing marketing in-house through TBA, you'll notice a decrease in webinar emails.
NOTE: Please notify your IT staff of the switch to TTS so you can accept communications from them and visit their website.  
Whitelist the following emails:
BankWebinars@ttsRegistrations.com (Webinar Confirmations)
Accounting@ttsTrain.com (Invoices)
Allow for the following websites:

Tennessee-specific CDD Training for Your Loan Officers and Lending Staff

What comes first, BSA/AML or banking? If you answered "BSA/AML," you would be right! It is a big adjustment for many bankers. Of course, banking is our business, but before we get down to it, the bank's CIP and CDD program is applied to every new borrower, and effective May 11, 2018, every time a new or current legal entity customer borrows money, including a renewing an existing loan, beneficial ownership information and certification is required. Plus, the bank's CDD program is officially the 5th pillar of your BSA/AML program.
A lot is riding on your loan officers and loan staff's effective implementation of your NEW CDD program, particularly as it applies to commercial borrowers. To help prepare your staff for these upcoming changes, TBA is offering a new program—Onboarding Commercial Borrowers—in four locations across the state. Click here to register.
Every employee responsible for "onboarding" new commercial borrowers, and making loans to new or existing business customers should receive this training. There is a lot to digest before compliance with the NEW CDD regulation is mandatory in May 2018. The presentation and materials provide information your staff will use now, and lay the foundation for implementing your bank's beneficial ownership information and certification procedures.

Fed Vice Chairman Fischer to Step Down

Federal Reserve Vice Chairman Stanley Fischer last Wednesday announced that he is stepping down as a member of the board on or around October 13. Fischer was appointed to the board by President Obama in 2014 for a term as vice chairman that was set to expire in 2018. During his tenure at the Federal Reserve, he served as chairman of the Fed's committee on financial stability and the committee on economic and financial monitoring and research, and represented the Fed at international regulatory gatherings.

Fischer's departure leaves another open seat on the Federal Reserve board, which already has three current vacancies.

CRA Partnership Opportunities

If you're looking to build partnerships with nonprofits who serve Tennessee families who are struggling to find or keep a roof over their heads, the 2017 Governor's Housing Conference will provide an excellent opportunity this month in Nashville.
The Governor's Housing Conference is the state's largest gathering of affordable housing professionals. Bank officers can meet nonprofit leaders from all across Tennessee and build the connections that make CRA compliance possible.
In addition to networking opportunities, the conference offers a wide range of speakers and educational sessions of interest to bank officers. Keynote speakers include the CEOs of NeighborWorks® America and the National Low Income Housing Coalition. Plus, the head of Harvard University's Joint Center for Housing Studies will discuss how to address the increasing economic segregation of America's neighborhoods.
This year's conference takes place Sept. 20-21 at the Music City Center in Downtown Nashville. Online registration closes Thursday, Sept. 14. The complete agenda is available at TNGHC.com.

Welcome New TBA Associate Member

TBA welcomes new associate member Telecom Brokers in the category of information technology. Please thank this company for their support of the Tennessee banking industry through membership. When evaluating vendor partners, review the list of all TBA associate members in our online directory.

TBA On the Road

  • As Congress returns to Washington after the August recess, TBA staff and ten bankers travel to D.C. on Monday to continue the push for regulatory relief.

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