Tennessee Bankers

This Week Newsletter

February 05, 2018 - Issue No. 1805

Sen. Hatch Writes NCUA with 'Concern' About Credit Union Activities

U.S. Senate Finance Committee Chairman Orrin Hatch (R-Utah) last Wednesday sent a letter to the National Credit Union Administration expressing concern about whether credit union activities – and NCUA’s supervision – align with the purposes of the tax exemption they enjoy.

Hatch expressed particular concern about NCUA’s “common bond” requirements, which he said “seems to have been significantly watered down.” He also noted the common credit union tactic of allowing new members to join by paying a nominal fee to join a linked association that may be “operated by the credit union itself” as well as the overbroad fields of membership that may make up entire states.

Hatch noted that many credit unions now offer insurance, real estate brokerage, and wealth management, “appear[ing] to operate in the same manner as taxable banks,” including acquiring for-profit banks and buying stadium naming rights. Hatch asked NCUA to provide information to the committee on how the agency oversees associations for purposes of CU membership, how NCUA enforces policies related to CUs offering services outside of their tax-exempt purpose, and how it oversees executive compensation and corporate sponsorships. A response by Mark McWatters, Chairman of the NCUA, is due by April 6. Read the letter.

Governor Haslam Delivers Final State of the State Address

Governor Haslam last Monday delivered his eighth – and final – State of the State address where he presented his budget, reflected on accomplishments during his tenure, and focused on the future while challenging Tennessee to lead the nation in jobs and education.
The governor’s budget for fiscal year 2018-2019 calls for more than $200 million in new state funding for K-12 education, including $50 million for teacher pay raises; $128 million in job-growth investments; $30 million for a previously announced effort to address the opioid epidemic; and a $50 million increase to the Rainy Day Fund. The budget also calls for $108.1 million in cuts, including the elimination of 335 vacant positions across state government.
Some of the accomplishments noted during his speech include the lowest unemployment rates in the state’s history; fastest-improving students in the nation across math, science, and reading; highest high school graduation rates in state history; a cut in year-to-year spending by more than a half billion dollars; and a tripling of the state’s Rainy Day Fund.
Haslam ended his speech by calling on all Tennesseans to help finish “what we began.”

Day on the Hill March 13

Day on the Hill, sponsored by the TBA Young Bankers Division, introduces future leaders from banks across the state to the legislative process. Participants hear from members of the General Assembly and the TBA government relations team about Tennessee’s legislative process, observe committee meetings, and have an opportunity to meet with legislators. Don't miss out on this unique opportunity to engage in the legislative process. The event also features a panel luncheon featuring legislative leaders hosted at Bone McAllester Norton PLLC.

Register Today!

Court Upholds CFPB Structure, Overturns RESPA Penalty

A federal appeals court last week upheld the constitutionality of the CFPB’s leadership structure – a single powerful director who can be removed by the president only “for cause,” not at will – reversing a three-judge panel’s decision in 2016. However, the full court upheld the three-judge panel’s findings with respect to the statutory claims of PHH, a mortgage lender fined by the CFPB under the Real Estate Settlement Procedures Act.

In a complex ruling, the D.C. Circuit Court of Appeals held that the limitation on the president’s power to remove the director is consistent with Supreme Court rulings on other federal agencies, including the FTC and the SEC.
The case arose in 2015, when then-CFPB Director Richard Cordray overruled an administrative law judge’s recommendation for a $6.5 million fine against mortgage lender PHH for allegedly engaging in unlawful arrangements in violation of RESPA. Cordray demanded that PHH pay 18 times more – or $109 million – for each time it received a payment deemed improper by the bureau on or after July 21, 2008. PHH objected, arguing that the bureau was misinterpreting Section 8 of RESPA in forbidding the kind of captive reinsurance arrangement that PHH used as well as changing prior RESPA interpretations long since issued by the Department of Housing and Urban Development and applying them retroactively.

The full circuit court left intact the panel’s holding that retroactively applying a new RESPA interpretation violated PHH’s due process rights and that the bureau is bound by the three-year statute of limitations for RESPA violations, even in administrative actions.

Fed Holds Rates in Yellen's Final Meeting

In Federal Reserve Chair Janet Yellen’s final Federal Open Market Committee meeting last week, the panel held interest rates steady. The committee said it expects inflation to move up this year, indicating another round of hikes could come at the March meeting. With incoming Fed Chair Jerome Powell set to take over for Yellen this weekend, the federal funds rate stands at a range of 1.25 percent to 1.50 percent following a 25-basis-point increase in December.

Welcome Five Iron, LLC as New Associate Member

TBA welcomes new associate member Five Iron, LLC in the category of information technology. Please visit our online directory of associate members and thank these companies for their support of the Tennessee banking industry through membership.

Nashville-area Trust Organizations Finalize Merger

At the end of 2017, Nashville-based Argent Trust Company of Tennessee completed the acquisition of Franklin-based Independence Trust Company. Under the deal, the combined entity will operate as Argent Trust Company. As of March 31, Independence Trust had $4.3 million in assets.

TBA On the Road

  • Colin Barrett and TBA GR Chairman Jim Rieniets travel to Washington D.C. to meet with Tennessee's Congressional delegation on advancing regulatory relief.
  • CFO/Controller Forums meet in Nashville for the first of three sessions in 2018.
  • 41 bankers travel to Nashville to make up The Southeastern School of Advanced Commercial Lending class of 2018.

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