Tennessee Bankers

This Week Newsletter

November 20, 2017 - Issue No. 1746

Senators Make Bipartisan Reg Relief Deal

Last Tuesday Senate Banking Committee Chairman Mike Crapo (R-Idaho) announced a bipartisan deal for regulatory relief. The compromise legislation is supported by nine Republicans, including Sen. Corker (R-Tenn.) and nine Democrats—led by committee members Joe Donnelly (D-Ind.), Heidi Heitkamp (D-N.D.), Jon Tester (D-Mont.) and Mark Warner (D-Va.). Enough Democrats support the measure to clear procedural hurdles in the Senate requiring at least 60 votes.

Some of the bill’s key provisions would designate all mortgages held in portfolio as Qualified Mortgages for banks with less than $10 billion in assets, expand exemptions for HMDA reporting and escrow requirements, raise the threshold for designation as a systemically important financial institution from $50 billion to $250 billion in assets, end stress tests entirely for banks with under $100 billion in assets, simplify capital calculations for community banks, provide relief from appraisal requirements for smaller mortgages, and institute longer exam cycles for community banks. Read a section-by-section analysis.

Cordray Stepping Down from CFPB

Richard Cordray will resign as director of the Consumer Financial Protection Bureau by the end of the month, he said in an email to CFPB staff last Wednesday. Cordray’s five-year term as director was set to expire in July 2018. His email did not mention future plans, but many analysts have expected him to run for governor of Ohio, where he previously served as attorney general.

As he did when Comptroller of the Currency Thomas Curry’s term ended this spring, President Trump will name an acting director to serve until a new CFPB director is confirmed. “The administration will announce an acting director and the president’s choice to replace Mr. Cordray at the appropriate time,” said a White House spokesman.

Tax Reform Continues to Advance

Congressional efforts to advance comprehensive tax reform for the first time in over 30 years continue and will resume the week after Thanksgiving. As of now, the House Ways and Means Committee passed the Tax Cuts and Jobs Act (H.R. 1) on Nov. 9 and the legislation passed on the House floor last Thursday by a vote of 227-207.

The Senate Finance Committee introduced its version of the Tax Cuts and Jobs Act on Nov. 9 with Chairman Orrin Hatch (R-Utah) releasing a modified plan last Tuesday. The modified version updates the measure’s pass-through provisions, which would better assist Sub S banks and also repeals the individual health insurance mandate, doubles the child tax credit to $2,000, and reduces individual tax rates. It would also make permanent the 20 percent corporate and sunset individual tax cuts after 2025. 

The Senate Finance Committee approved the Chairman’s markup last Thursday, and the full Senate is expected to vote on it after Thanksgiving. Because the Senate and House-passed versions are different, the measure will then go before a conference committee and could likely go to President Trump for signature before Christmas.

Tennessee Bankers Urge Credit Union Taxation

More than 50 Tennessee bankers sent a joint letter last week to all members of our Congressional delegation encouraging them to include taxation of credit unions over $1 billion in assets in tax reform legislation. 

Tennessee bankers pointed out in their letter that taxing credit unions of this size would result in $27 billion in revenue and affect only 4 percent of credit unions nationally. It would affect only seven of the 146 credit unions in our state and preserve the tax-free status of the smaller credit unions that have stayed true to their original mission of serving people of low to moderate income. 

Although neither the House nor Senate tax reform plan included taxation of credit unions, TBA’s goal is for taxation of credit unions over $1 billion to be included in the final tax reform bill. Read the letter.

House Passes Five-Year Flood Insurance Reauthorization

In a bipartisan 237-189 vote last Tuesday, Nov. 14, the House passed H.R. 2874, which would reauthorize the National Flood Insurance Program for up to five years. In addition to extending the NFIP before it expires Dec. 8, and thus providing greater certainty to lenders and borrowers, the legislation also includes updates to interagency guidance and mandatory staffing that will facilitate compliance. 

The legislation now goes to the Senate for passage before the NFIP’s authorization expires next month.

House Committee Passes More Reg Relief Bills

The House Financial Services Committee last week approved several regulatory relief bills, with ones of those sponsored by Rep. David Kustoff (R-Tenn.). Almost all were approved with bipartisan majorities.

H.R. 3299—a bill codifying the “valid-when-made” doctrine, which ensures validly made loans remain valid when they are sold or assigned but which has come under question in the courts—cleared on a 42-17 vote. The committee also passed a bill (H.R. 4296) with a 42-18 vote that would prohibit the establishment of operational risk capital requirements based on a number of factors.

The committee approved a number of mortgage-related bills, including H.R. 1153, which would clarify the Qualified Mortgage points and fees test (46-13 vote); H.R. 3978, which would allow the accurate disclosure of title insurance premiums and potential discounts under the TILA-RESPA integrated disclosures (53-5 vote); and H.R. 3221 by Rep. Kustoff, which would eliminate appraisal requirements for certain portfolio loans (32-26 vote).

Individual Retirement Accounts: Advanced Update and Review

This advanced IRA workshop will cover changing regulations, rules, and detailed explanations of the more technical areas of IRAs. This intermediate-level seminar will explain the most up-to-date changes, including Health Savings Accounts and nonspouse beneficiary rollovers from Qualified Plans. You also will learn to include in your IRA customer files.

You will get the answers to these and many more common questions.

  • What are the legislative updates for 2017 and 2018?
  • How do you report Qualified Charitable Distributions on the 1099-R?
  • What is the three-piece puzzle to solve regarding rollovers and transfers?
  • What is a "late rollover" and when can this exception be used?
  • What are the nine–yes–nine biggest mistakes we make on beneficiary payouts?

This regional seminar takes place Nov. 28 in Knoxville, Nov. 29 in Nashville, and Nov. 30 in Jackson.

There's still time to sign up. Click here to register.

England Elected FHLB Vice Chairman

Former TBA Chairman Jim England has been elected to serve as Vice Chairman of the Federal Home Loan Bank of Cincinnati. England is Chairman of Decatur County Bank in Decaturville. He has served on the FHLB board since 2011. His two year term as Vice Chairman commences January 1, 2018 and expires December 31, 2019.

2018 Bank Holiday Closing Signs Available

TBA's 2018 Bank Holiday signs 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. Click here to order you signs.

TBA On the Road

  • TBA travels to Cleveland to participate in the business advocacy leaders roundtable with Southeast Tennessee state legislators. 
  • If you're traveling for Thanksgiving, make it a safe trip. Happy Thanksgiving from the TBA! 🦃

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