IBA E-News 4-14-17


Indiana General Assembly in Final Days of Session
The Indiana General Assembly has only one week left to conclude all legislative business for 2017. This week lawmakers have been working on conference committees, the process where reconciliation of changes is made to bills that were amended by the other chamber. All bills must pass this final approval process by the original author and one final vote by the full legislative body before being sent to the governor’s desk for action. Final outcomes for road funding, the state budget and recent alcohol matters are the dominating issues that continue to draw considerable attention. The IBA GR Team continues to monitor specific conference committees on bills that the team has been monitoring all session. With the final day of the 2017 session tentatively set for April 21, anticipate a flurry of legislative activity to occur in the coming week.     

IBA Regional Meeting Dates Set
Mark your calendar, and plan to attend a regional meeting near you. The IBA Regional Meetings will include an IBA and legislative update of the 2017 Indiana session, followed by lunch with local legislators at noon. These grassroots meetings provide an ideal opportunity to build relationships and discuss banking issues with your elected officials. Please remember that attendance by you or one of your employees will count toward your bank’s grassroots portion of the IBA Five Star program. Information on registration will be forthcoming.



Report: Trump ‘Very Close’ to Fed Nominations
President Trump is “very close” to nominating a Federal Reserve vice chairman for supervision, and another governor to fill a designated seat for an individual with community bank expertise, according to Treasury Secretary Steven Mnuchin, who was interviewed with Trump by the Wall Street Journal.

Trump changed course from previous statements about Fed Chairman Janet Yellen, whose term expires early next year. Trump told the Journal that she was “not toast” and added: “I like her, I respect her. It’s very early.” During the 2016 campaign, Trump had signaled that he would not reappoint Yellen over her approach to monetary policy, but in the interview, he said that he “do[es] like a low-interest rate policy, I must be honest with you.”

During the interview published on Wednesday, Trump also said that he would fill vacancies on the Export-Import Bank board, allowing the bank to make larger loan guarantees again. “Instinctively, you would say, ‘Isn’t that a ridiculous thing,’” Trump commented about Ex-Im. “But actually, it’s a very good thing. And it actually makes money.”

Estes Wins Kansas House Seat
Republican Ron Estes won Tuesday's special election in the fourth congressional district of Kansas. Estes, currently serving as Kansas state treasurer, received approximately 52 percent of the vote, with most precincts reporting last night in the strongly Republican district. He will replace Mike Pompeo, whom President Trump named to head the Central Intelligence Agency.

Fed’s Esther George Takes Aim at Basel III, Appraisal Rules for Community Banks
Speaking to a community bank conference in New York last Thursday, Esther George -- president and CEO of the Federal Reserve Bank of Kansas City -- emphasized several areas where regulation is ill-suited to community banks and needs to be tailored.

For example, she pointed to the Basel III capital standards, which “layer on unnecessary reporting requirements and complexity for banks that already held high levels of capital.” Many in the industry have called on regulators to exempt highly capitalized banks from cumbersome Basel calculations.

George also fingered appraisal requirements as a challenge, noting that community banks “often located in more rural markets, struggle to find knowledgeable appraisers with sufficient comparable property sales to comply with the rules.” Making appraisal requirements more flexible to address the shortage of rural appraisers and long closing times is another area where industry advocates have been focusing.

“Ultimately, communities suffer when access to credit is unnecessarily limited, and so does the larger economy,” George said. “Rules that aim to address the business models and incentives of the largest banks may unintentionally put the diversity of the banking system at risk, and the lack of new bank charters over the past decade suggests the barriers to entry may be high.”

OCC Issues New Exam Guidance on Retail Lending
The OCC on Wednesday issued a new booklet on retail lending as part of its Comptroller’s Handbook. The booklet discusses risks associated with retail lending and provides a framework for examiners to evaluate retail credit risk management activities. It supplements the core assessment sections of the Comptroller's Handbook booklets on large bank supervision, community bank supervision, and federal branch and agency supervision.

Posted 4-14-17