August 30, 2023

MBA Staff to Highlight Legislative Agenda at Regional Meetings

As Congress returns to Washington, D.C., following their summer break, they will be addressing several issues facing the banking community. At MBA’s regional meetings beginning next Wednesday, Sept. 6, MBA staff will highlight several key legislative issues before Congress, including the following.

• The Credit Card Competition Act would dramatically reduce interchange income from credit card transactions while increasing security and fraud risk. It would force card-issuing financial institutions to choose from routing networks selected by the Federal Reserve rather than choosing networks that may offer the best customer experience and security. It also would threaten consumer data security and limit popular credit card rewards programs that consumers enjoy.
  
  
• The Access to Credit for our Rural Economy Act, known as the ACRE Act, would give community banks the same tax-exempt status on certain earned interest that applies to farm credit institutions, allowing farm real estate borrowers and rural homeowners access to lower interest rates. The exemption would also apply to single-family home mortgage loans in rural communities with fewer than 2,500 residents and for mortgages less than $750,000.

In addition to the federal legislation, MBA staff also will highlight 2023 state legislation signed into law by Gov. Parson and discuss potential bills for the upcoming session that begins in January.

Other speakers at the regional meetings include the following.

• Davin Althoff, director of marketing and commodities with the Missouri Farm Bureau, will discuss the current conditions facing Missouri’s agricultural community.
• Representatives from the Missouri Division of Finance, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and the Federal Reserve will participate in a panel discussion.

MBA is offering discounted pricing for NextGen members attending the regional meetings. For each fully paid registrant from a bank, a NextGen Banker from the bank may attend at half price. This individual must be a member of MBA's Next Generation in Banking. MBA also is hosting networking events for NextGen members following the regional meetings.

CFPB Responds to MBA on Section 1071 Court Ruling

MBA, along with all 50 state banker associations, submitted a letter in early August to the Consumer Financial Protection Bureau requesting they extend to all FDIC-insured banks the result of a 5th U.S. Circuit Court of Appeals ruling delaying the implementation of Section 1071 of the Dodd-Frank Act for members of the American Bankers Association and the Texas Bankers Association.

“MBA firmly believes that all FDIC-insured banks should be included in relief from Section 1071,” said MBA President and CEO Jackson Hataway. “The 5th Circuit has made it clear that until a determination is made by the U.S. Supreme Court on the CFPB’s funding mechanism, the timelines for Section 1071 implementation are invalid for plaintiffs in the TBA/ABA case. The CFPB can and should maintain parity in the banking system by including all FDIC-insured banks rather than adding to confusion and difficulty for small businesses.”

The CFPB responded late last week with its own letter to MBA and the other banker associations, refusing to acknowledge the validity of the request. The Independent Community Bankers of America, the Credit Union National Association and other trade associations have submitted briefs to the court asking to be included in the stay.

Banking Regulators Propose Long-term Debt, Resolution Plan Requirements

Banking regulators released a proposed long-term debt requirement for banks with more than $100 billion in assets. The requirement is part of a package of proposed rulemakings that the Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and Federal Reserve have been pursuing since before the recent bank failures.

Under the proposed rule, a covered bank would be required to have a minimum outstanding amount of eligible long-term debt that is at least 6% of the institution’s total risk-weighted assets, 2.5% of its total leverage exposure (if it is required to maintain a minimum supplementary leverage ratio) and 3.5% of its average total consolidated assets, whichever is greater. Banks would have three years to comply with the requirement after the date they become subject to the rule, but partial compliance would be scaled up during the phase-in period.

The FDIC also moved forward with proposed requirements for resolution plans for banks with more than $100 billion in assets, as well as new information filing requirements for banks over $50 billion. It also voted to proceed with a more formalized process for dealing with receiverships for institutions over $50 billion.

Wagner Urges Reconsideration of Proposed Auditor Standards

Congresswoman Ann Wagner said a proposal to expand the requirements for auditors to identify, evaluate and communicate all company violations of laws and regulations is in direct conflict with existing rules, and it risks undermining audit quality and independence.

The proposal was issued by the Public Company Accounting Oversight Board in June. Wagner, chairwoman of the House Capital Markets Subcommittee, and House Financial Services Committee Chairman Patrick McHenry, R-N.C., urged the board to reconsider its proposal. In their letter, Wagner and McHenry said auditors are not legal professionals and should not be expected to function as law enforcement agents.

“The existing oversight and enforcement frameworks competently address instances of noncompliance,” the lawmakers said. “While auditors have traditionally been responsible for detecting illicit activities as part of financial audits, broadening their purview to encompass noncompliance with all laws and regulations could blur the lines between legal, managerial and audit functions.”