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IBA E-News 5-31-19


IBA Regional Meeting Dates

Don’t miss out on this summer’s IBA regional meetings! Make plans to join your banking peers and local lawmakers for lunch and conversation at one of eight regional meetings. The IBA is delighted to host this important grassroots advocacy series once again in the cities of Bloomington (July 31), Evansville (June 3), Fort Wayne (July 9), Indianapolis (July 10), West Lafayette (June 11), Merrillville (July 18), New Albany (July 29) and Richmond (June 19). For more information click here or contact Michelle Long at 317-333-7148.



Report: GOP Senators Give Positive Signals on SAFE Banking Act

Two Republican senators have expressed optimism that the Senate Committee on Banking, Housing, and Urban Affairs will take up the SAFE Banking Act, which would provide a framework under federal law for banks to serve legitimate cannabis businesses in states that have legalized the drug.

Senate Banking Committee member Kevin Cramer (R-N.D.) and Sen. Rand Paul (R-Ky.) recently met with committee Chairman Mike Crapo (R-Idaho) to discuss bringing the SAFE Banking Act up for consideration, the news outlet Marijuana Moment reported on Tuesday. “He didn’t say ‘hell no,’” Cramer told the outlet. “I thought he was quite open-minded to it.” Meanwhile, Paul said that “I think there’s a good chance they’re going to bring it up.”

With cannabis now legal in 33 states covering 68 percent of the nation’s population, industry advocates urge congressional action to address the barriers financial institutions face in serving cannabis-related customers. Last week, 51 state bankers associations called on the Senate Banking Committee to hold hearings on the issue. The SAFE Banking Act cleared the House Financial Services Committee and is currently awaiting a vote by the full House. 

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House Passes Flood Insurance Extension

Yesterday afternoon the House passed S. 1693, which was approved by the Senate last week, extending the National Flood Insurance Program through June 14. The program was originally set to expire today, May 31. The House is expected to vote as early as next week on a disaster relief package that contains a six-month extension for the NFIP.

Sen. Schumer Takes NCUA to Task Over Predatory Taxi Medallion Lending

In a May 21 letter to the National Credit Union Administration, Senate Minority Leader Chuck Schumer (D-N.Y.) asked the regulator to conduct an immediate review of its supervisory practices in the wake of “deeply troubling conduct” by credit unions involved in New York’s taxi medallion business.

Schumer pointed to a recent investigation by The New York Times that found that many NCUA-regulated institutions “worked to artificially inflate taxi medallion prices while hooking taxi drivers with reckless, exploitative loans. As a result of these predatory practices, taxi drivers lost their life savings and were left with crushing debt once the market crashed and the value of these medallions rapidly decreased.”

A recent inspector general report suggested that with a timelier and more aggressive supervisory approach, some of the losses cab drivers experienced could have been mitigated, Schumer added. He requested that NCUA respond to Congress with changes that should be made to its current supervisory practices to protect these consumers against this type of predatory lending in the future.

Read the letter.

Agencies Issue Host-State Loan-to-Deposit Ratios

The banking agencies have updated the host-state loan-to-deposit ratios they will use to determine compliance with section 109 of the Riegle-Neal Act of 1994. Section 109 generally bars banks from establishing or acquiring branches outside their home states primarily for deposit production. These ratios replace the previous ratios released on June 15, 2018.

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OCC’s Risk Outlook Reflects Strong Economy, Healthy Banks

While banks continue to show strong asset quality, capital and liquidity and earnings amid positive economic conditions, they should remain vigilant about underlying credit and liquidity risks that could begin to creep up, the Office of the Comptroller of the Currency indicated in its most recent Semiannual Risk Perspective report.

While banks have had a strong year contributing to the health of the economy, the OCC noted several risks that deserve attention. The agency warned that imbalances such as inflation can emerge when the economy operates above its full potential. “Successive years of growth, incremental easing in underwriting, risk layering, and building credit concentrations result in accumulated risk in loan portfolios,” it reported.

The OCC also cautioned that while deposits have risen, an uncertain rate environment and technological advances in moving funds “could result in markedly different depositor behavior than in previous economic cycles.” Strategic risk – driven by the need for banks to invest in innovative technologies, transition from legacy systems and achieve greater efficiencies – along with cyber risk and BSA compliance risk are also elevated.