April 17, 2019
 
Community Bank Services


 
 
 
Argent Money
 
 
CFT 
 

 
 




Accelerate LIBOR Transition 
Banks must accelerate the transition from the London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate, Federal Reserve Vice Chairman for Supervision Randal Quarles said.

Speaking in Washington, Quarles noted that U.K. authorities have said they can only commit to publishing Libor-which has been marred by manipulation controversies-through the end of 2021.

Quarles was addressing a roundtable discussion of the Financial Stability Board, which he chairs. He noted that national working groups have performed due diligence on SOFR, the alternative reference rate designed to replace the Libor benchmark, upon which some $200 trillion in U.S. dollar-based derivatives and loans are based.

ICBA President and CEO Rebeca Romero Rainey represented community banks at the FSB meeting. ICBA serves on the Fed's Alternative Reference Rates Committee, which is implementing the transition.

In a comment letter to the AARC last fall, ICBA expressed concern with community bank awareness of the transition and warned it could effectively convert some Libor-based loan agreements to fixed-rate contracts, resulting in unintended consequences to all parties.

Bill Would Make Sub S Deduction Permanent    
Community bank supported legislation to make permanent the Tax Cuts and Jobs Act's 20 percent deduction for pass-through income was introduced in the Senate. Sen. Steve Daines (R-Mont.) introduced the bill in the Senate following its House introduction by Reps. Jason Smith (R-Mo.) and Henry Cuellar (D-Texas).
 
Over 100 trade groups expressed support for the legislation in a joint letter to congressional tax writers.  "Despite the economic importance of the pass-through sector, the Section 199A deduction is scheduled to sunset at the end of 2025," the groups wrote. "Repealing this sunset will benefit millions of pass-through businesses, leading to higher economic growth and more employment."
 
The 20 percent pass-through deduction passed following strong community banker advocacy on the tax-reform law, which was signed at the end of 2017. Continued advocacy on Treasury Department implementation of the deduction significantly expanded it under the department's final rule issued in January.
The Letter  >>

 Senate's Turn on Cannabis-Banking Bill 
Legislation to establish a cannabis-banking safe harbor was introduced in the Senate after companion legislation passed out of a House committee last month.

The bipartisan Secure and Fair Enforcement Banking Act (S. 1200) was introduced in the Senate by Sens. Cory Gardner (R-Colo.) and Jeff Merkley (D-Ore.) with 20 additional original co-sponsors.

Like its House companion, which advanced on a 45-15 committee vote on March 28, the bill would establish a cannabis-banking safe harbor for financial institutions and ancillary companies that serve cannabis-related businesses in states where cannabis is legal.

Treasury Secretary Steven Mnuchin last week encouraged Congress to find a bipartisan solution to conflicting state and federal laws on cannabis regulation, noting that the IRS has built rooms to hold cash from cannabis-related businesses because they are forced to operate on a cash basis.

Higher Loan Limits Under Farm Bill 
The USDA announced higher limits for the department's direct and guaranteed farm loans under the 2018 farm bill.

Raising limits for USDA guaranteed farm loans was a top community bank priority during the debate over the farm bill, which raised guaranteed farm loan limits to $1.75 million, indexed to inflation.

The department also released an update on implementation of the farm bill following its enactment on Dec. 20, 2018. The update provides a title-by-title breakdown of implementation of the law, including policies on commodities, conservation, trade, and credit.
 

More Community Banks Explore Fintech Partnerships   
More and more community bankers are working on how to adjust their businesses to make the best use of new technologies, Federal Reserve Governor Michelle "Miki" Bowman said.

Speaking at the San Francisco Fed, Bowman said community banks' relationship-based business model helps insulate them from fintech competitors, allowing these entities to partner and better compete against larger banks.

Bowman said banking regulators and examiners should consider whether their requirements deter some community banks from innovating and adopting new technologies. As an example, she said risk-management guidance on outsourcing should reflect the present realities of supervised banks.

Bowman-the first person to fill the Fed's community banking seat-was recently renominated for a full 14-year term. Her remarks on fintech collaboration follow the recent conclusion of the ICBA ThinkTECH Accelerator, a first-of-its-kind program to exclusively cultivate community bank-focused technologies.
The Speech  >> 

CUs Continue Commercial Lending Push
Credit union advocates slipped a call to reform the cap on member business lending into congressional testimony on the Small Business Administration.

Testifying before a House Small Business subcommittee on the fiscal 2020 SBA 7(a) budget proposal, an executive representing the National Association of Federally-Insured Credit Unions led by saying the "arbitrary" lending cap hampers small-business lending by the tax-exempt financial firms.

The NCUA's inspector general recently said the agency should improve how it monitors credit union loan concentrations following the failure of three New York credit unions that cost the Share Insurance Fund an estimated $765.5 million in losses.

Compliance Conference  -  September 10 & 11