STATE GOVERNMENT RELATIONS
Register Today for 2021 IBA Regional Meetings
Register today and join us for a series of regional meetings around the state. The IBA has implemented these meetings in an effort to facilitate grassroots communication between the bankers we serve and the legislators who serve our state. The meetings include an hour-long update on the IBA, including legislative information and advocacy opportunities. Following the update, local legislators from the Indiana General Assembly will meet for lunch with bankers from the community. This year, the IBA will be hosting 5 regional meetings, each beginning at 11:00 a.m. local time. Follow the links below for your preferred location and register today!
Columbus
Hotel Indigo Columbus Architectural Center
Tuesday, September 7
Click here to register
Indianapolis
The Columbia Club
Thursday, September 16
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Fair Oaks
The Farmhouse Restaurant at Fair Oaks Farms
New Date! Monday, October 4
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Evansville
The Bauerhaus
Tuesday, October 5
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Fort Wayne
The Landmark Centre
New Date! Monday, October 25
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FEDERAL GOVERNMENT RELATIONS
Action Alert: Urge Congress Now to Oppose Burdensome, Unnecessary IRS Reporting Proposal
The Biden administration is proposing requiring community banks and other financial institutions to report to IRS on all business and personal accounts worth more than $600. This will create an enormous burden on community banks and an unnecessary invasion of privacy for our customers. Contact members of Congress today to urge them to oppose this ill-conceived proposal.
FFIEC Issues Guidance on Digital Banking Authentication, Access Risk Management
The Federal Financial Institutions Examination Council on Wednesday issued a guidance for financial institutions on effective authentication and access risk management principles for digital banking services. The guidance does not impose any new regulatory requirements on banks, nor does it serve as a comprehensive framework for access management programs or endorse any specific information security framework or standard. The FFIEC also noted that the guidance “is relevant whether the financial institution or a third party, on behalf of the financial institution, provides the accessed information systems and authentication controls.”
The guidance highlights current cybersecurity threats, including increased remote access by customers and attacks that take advantage of compromised credentials. It also includes information on the risks from push payment capabilities, examples of authentication controls and a list of government and industry resources to assist financial institutions with authentication and access management.
The new guidance also highlights weaknesses in single-factor authentication and discusses how multifactor authentication can effectively mitigate risks. The guidance replaces FFIEC-issued resources on digital banking released in 2005 and 2011.
Financial Trades Strongly Oppose Fed’s Durbin Proposal
National financial trade groups on Wednesday urged the Federal Reserve to withdraw its proposal to expand the Durbin Amendment’s implementing rule (Regulation II), unless the Fed fixes key legal and technical deficiencies. Earlier this year, the Fed proposed to mandate that banks of all sizes enable two unaffiliated payment debit card networks and accept “PIN-less” transactions for internet purchases. In the letter, the financial groups warned that this rule would become a costly and complicated compliance burden, particularly for smaller card issuers, and would result in $27 billion in lost revenue by 2031.
“At a time when they are rightly focused on doing everything they can to support the economic recovery, our members did not anticipate a new government mandate that would require us to undertake costly, time-consuming, inefficient and unnecessary efforts to change our core network infrastructure,” one letter noted. “The proposal is particularly surprising given that the primary beneficiaries of the board’s action would not be small businesses but instead large multinational retailers that have experienced double-digit profitability increases during the pandemic.”
It was noted that the Fed’s proposal was presented as a “clarification,” as it would materially change the compliance obligations associated with Reg II, and accordingly, the agency should provide the public with impact analyses on how the changes would affect – among others – community financial institutions, competition and low-income bank customers. Since the proposal did not contain these analyses or sufficient implementation detail, the groups state that the current proposal does not comply with administrative law and is “void for vagueness.”
Should the Fed decide to move forward with the proposal, several significant changes were recommended. These include: the removal of the requirement for issuers to “enable” multiple networks on their cards and a return to the original language that issuers should “allow” multiple networks on their cards; the specification of the exact transaction types that must be capable of being routed on multiple networks; and the establishment of a four-year time frame for issuers to comply with the rule. In contrast, retailer groups have asked the Fed to immediately enforce the proposal’s provisions.
SEC Approves Nasdaq Rules to Promote Board Diversity
The Securities and Exchange Commission last week approved new Nasdaq rules for companies listing on the stock exchange that will require them to publicly disclose consistent transparent diversity statistics regarding their board of directors. Under the new rules, most Nasdaq-listed firms will be required to demonstrate – or explain why they do not have – at least two board members who represent Nasdaq-designated categories, including at least one individual who self-identifies as female and at least one who self-identifies either as a member of a racial or ethnic minority or as LGBTQ+.
The rules will take effect on a “two-stage deferred basis” and will provide transition periods for newly listed companies and listing transfers. Exceptions will also be provided for certain companies. Companies listed on the Nasdaq Global Select Market, Nasdaq Global Market and Nasdaq Capital Market would have slightly longer time frames to comply.
Companies will begin annual disclosures of their board diversity data using a board diversity matrix by the later of one calendar year from Aug. 6, or the date the company files its proxy statement or its information statement for its annual shareholder meeting during the calendar year of the effective date. Companies also have the option to publish the information on their websites rather than providing the disclosure in the proxy statement.
The new rules could face legal challenges in the coming days.
Amendment Blocking New Account Flow Reporting Requirements Narrowly Defeated
Both the American Bankers Association and Independent Community Bankers of America wrote to Senate leaders in support of an amendment to the budget resolution put forth by Sen. Mike Crapo (R-Idaho) that would prevent the Internal Revenue Service from establishing a new information reporting framework for individual or business bank accounts with flows of $600 or more. Such a framework was included as part of the Biden administration’s tax proposal earlier this year to help shrink the tax gap. Both Indiana Senators Braun and Young voted in favor of the resolution. Unfortunately, the amendment was narrowly defeated by a vote of 49 to 50.
CFPB Issues Report on Mortgage Servicing During COVID-19
The Consumer Financial Protection Bureau on Tuesday released a report highlighting data collected from 16 bank and nonbank mortgage servicers between Dec. 2020 and April 2021. The bureau requested that these servicers report call center data; forbearance requests, denials and exits; delinquency; and borrower profiles.
Among other provisions, the report found that most reporting servicers “managed the anticipated high call volume without significant increases in metrics such as average time to answer, handle times, or call abandonment rates,” though a few outliers were identified. The CFPB also noted that delinquent forbearance exits “increased substantially during the reporting period,” but noted that some servicers had “significantly higher numbers and rates” than others. (The CFPB acknowledged, however, that its report did not take into account different compositions and risk profiles of individual servicers, or servicer portfolios.)
The report also flagged servicers’ tracking of borrowers’ race and limited English proficiency status, noting that half of reporting servicers did not collect this information. The bureau cautioned servicers that failure to maintain data on borrowers’ race may raise the risk of fair lending violations.
The bureau encouraged servicers “to enhance their communication capabilities and outreach efforts to educate and assist all borrowers in resolving delinquency and enrolling in widely available assistance and loss mitigation options. The CFPB also encourages servicers to ensure that their compliance management systems include robust measures to identify and mitigate fair lending risk.”