Tennessee Bankers

This Week Newsletter

October 16, 2017 - Issue No. 1741

House Panel Passes Eight Regulatory Reform Bills

On Thursday, Oct. 12, the House Financial Services Committee advanced eight regulatory reform bills, including several that ABA, TBA, and other state bankers associations have long championed. The Tailor Act (H.R. 1116), which would require regulators to tailor their actions to meet the diverse characteristics of different banks, cleared on a bipartisan 39-21 vote. The Systemic Risk Designation Improvement Act (H.R. 3312)—which would replace the automatic $50 billion asset threshold to be designated a systemically important financial institution with a more nuanced, customized measurement—sailed through on a 41-19 vote.

Treasury Issues Recommendations on Capital Markets Regulatory Reform

As part of its ongoing response to President Trump’s executive order outlining core principles for financial regulation, the Treasury Department issued a report recommending reforms to streamline U.S. capital markets regulations.

The Treasury recommendations are focused on promoting access to capital for all types of companies, fostering robust debt and equity markets, tailoring regulations on securitized products, rationalizing the capital markets regulatory structure, and promoting greater transparency in global financial standard-setting.

Specific recommendations include expanding the definition of high-quality liquid assets under the Basel III liquidity measures; adjusting the leverage capital ratio to better reflect bank depositor behavior and derivatives risk; maintaining the current threshold for swap dealer registration; revising the Volcker Rule to improve secondary market liquidity; and exempting smaller reporting companies from detailed SEC compensation disclosures. Read the report.

CFPB Updates TILA-RESPA Compliance Guide

The Consumer Financial Protection Bureau recently released an updated version of its TILA-RESPA Integrated Disclosure rule compliance guide for small entities. The updated guide incorporates amendments and clarifications set forth in the final rule issued on July 7.

The updates to the rule clarify fees and transfer taxes that may be charged with housing-assistance lending transactions, extend the rule to cooperative units, outline how creditors may provide separate disclosure forms to consumers and sellers, and more. Access the CFPB Compliance Guide.

Community Bank Compliance Costs Rise $1B in Two Years

Community bank compliance costs have increased by nearly $1 billion in the past two years, according to a new survey from the Federal Reserve and Conference of State Bank Supervisors. Economists at the St. Louis Fed estimate total 2016 compliance costs of $5.4 billion, or 24 percent of community bank net income. That is up from $5 billion in 2015 and $4.5 billion in 2014.

The survey said the costliest regulations are affiliated with the Bank Secrecy Act and TILA-RESPA, which respectively accounted for 22.3 percent and 21.2 percent of respondent banks’ compliance expenses. They were followed by deposit account compliance, qualified mortgage, Community Reinvestment Act, ability-to-repay, noncall report financial reporting, and Basel III capital regulations. Read the survey.

Bank Security and Risk Management Conference Hotel, Early Registration Deadline This Week

The Bank Security and Risk Management Conference, scheduled for Nov. 2 and 3, gives both new and experienced security officer a critical resource for receiving timely and continuing security education.

Benefits of attending:

  • It provides established and emerging industry-standard security practices
  • Enhances the security professional's credibility with peers and their board of directors
  • Allows you to continue your personal and professional development
  • Reduces your personal and corporate liability

Hotel reservation deadline has been extended to Monday, October 16. If you have not booked a room at the Nashville Airport Marriott already, our group rate of $161 is still offered through end of day on Monday. Also, the early registration deadline for this program is October 19, so register before that date and save your bank money.

Click here to register.

Leadership Luncheons Announced for November

The Young Bankers Division will host Leadership Luncheons in seven regional sites around the state November 6-9 and November 14-17. These events offer Tennessee’s next generation of bank leadership the opportunity to network with industry peers from the area and hear from Young Bankers Division officers and TBA’s SVP of Membership Stacey Langford about priorities and initiatives of the Association. Each luncheon features a local elected official who will update attendees on the current political landscape and legislative issues of importance to the community.

Click here to register.

Professional Development Directory Now Available

Each year TBA hosts 80 live training and professional development programs. TBA has announced the dates and locations for several schools and conferences through 2018, and the Professional Development Directory is now available online, along with the two-sided At-a-Glance calendar of educational programming. Click here to view the Professional Development Directory.

For more information about TBA's 2018 educational offerings please contact Debbie Brickles.

Financial PSI This Week: Underwriting/Risk Control

Cyber insurance and other related insurance lines, such as the fidelity bond, will cover actions related to network security, fraud and privacy matters. It seems the news each day provides us with an example of how this coverage would have or will aid a firm in recouping the heavy costs that result when lax controls are present or controls are simply not where they need to be.

Recently, a lawsuit was filed against a bank in the Midwest by a customer claiming lax cybersecurity measures. This individual lost approximately $200,000 due to a hacker’s actions and claims that the bank’s lack of security measures is the reason the loss occurred. The hacker was able to gain control of the customer’s email and phone accounts. Using the email account, the hacker sent a message to one of the bank’s employees requesting a wire transfer to a bank account the hacker controlled, per the lawsuit.

The bank had an employee make a call as per their policies and procedures to verify the request. However, the employee only verified the wire amount. They did not have the extra layer of procedure which will normally include a “fob” with a specific code or two-factor authentication. The situation was exacerbated by the fact that the bank had publicly issued a report on the importance of two-factor authenticating just a few years prior to this incident.

In a situation like this, the bank can be held responsible under UCC for failure to follow agreed upon security measures. If the bank is ultimately held liable in this case, the carrier that insures them under their fidelity bond will be on the hook for the damages.

Financial PSI provides coverage required by regulators and covers various types of fraud exposures. Please contact Jon Goodson or Ted Frizen if you have any questions or have interest in Financial PSI looking at one of your insureds for this coverage.

Welcome New TBA Associate Member

TBA welcomes new associate member Wittenbach Business Systems in the category of bank equipment/supplies. 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.

2018 Bank Holiday Closing Signs Available

TBA's 2018 Bank Holiday signs are are now available for purchase. These signs, posted at each entrance to your main office and branches as well as drive-through windows, will alert your customers to the bank being closed. The signs are 5" x 7" in size and adhere to any glass or wood surface without leaving residue upon removal. The cost of each 2018 Holiday Closing Sign set is $25.75 for TBA members, plus shipping and handling and sales tax. If you have ordered signs, those are processed and will be shipped soon. Click here to order you signs.

TBA On the Road

  • TBA holds the Bank Directors Retreat and the Independent Bankers Division Convention back-to-back in Nashville.
  • TBA hosts the Trust & Wealth Management Conference in Nashville.

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

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