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Financial Institutions News

Will Cordray and CFPB survive the Trump administration?
Feb. 20, 2017
Regardless of their political views, most community bankers I know would not disagree with President Trump's assessment of The Dodd-Frank Act. For more than six years, bankers, board members, auditors and, even worse, consumers have dealt with the fallout from the overhaul created by Dodd-Frank. Community bankers and their customers have dealt with the heavy burden that many call the overly regulated regulatory environment. A lot of people would argue that all the Dodd-Frank Act accomplished was limiting and restricting access to much needed credit for the consumer. For this reason, President Trump has promised to do "a big number" on the Dodd-Frank Act.
 
Flood insurance: Sometimes enough is not enough
Oct. 19, 2016
The recent devastation in the southeastern United States will likely result in heightened regulatory attention to flood regulation compliance. Flood insurance laws and regulations have been, and continue to be, a hot topic with regulators. Significant flood insurance violations can result in retroactive file searches, enforcement actions and the assessment of civil financial penalties by the federal regulators. The regulators have already increased the maximum civil money penalty for a significant flood insurance violation to $2,000 (previously $385) per violation and deleted the penalty cap per year (previously $135,000).
 
FASB issues new rules for credit loss reporting
July 15, 2016
The Financial Accounting Standards Board (FASB) has released a long-awaited accounting standard that responds to some concerns prompted by the global financial crisis. In addition to its effect on current-period earnings, the updated guidance will affect the amounts banks, credit unions and other entities report for such assets as loans, securities, bond insurance and many receivables.
 
Banks strive to balance regulatory compliance and customer expectation
July 15, 2016
Familiarity breeds contempt. That's how some bank compliance officers have come to regard the TILA-RESPA Integrated Disclosure Rule (TRID). I've heard some compliance officers transform the acronym into "The Reason I Drink." I agree that the complexity of the changes brought about by this portion of the regulation make this joking reference to TRID a fitting description. But, as we are well aware, compliance is no joking matter.
 
Regulators scrutinize lender compensation
March 11, 2016
With the Consumer Financial Protection Bureau (CFPB) cracking down on improper lender compensation plans, banks should anticipate increased scrutiny in this area from their primary regulator.
 
Current Expected Credit Losses (CECL) Update
Nov. 20, 2015
On Nov. 11, 2015, the Financial Accounting Standards Board (FASB) decided that large banks that file with the SEC would apply the new CECL standard in annual and interim periods beginning after Dec. 15, 2018, which will mean the first quarter 2019 and year end 2019 filings. Community banks that do not submit SEC filings would apply the new standard for annual statements after Dec. 15, 2019 and interim reporting periods within fiscal years beginning after Dec. 15, 2020.
 
$2 billion in penalties assessed for violating BSA
April 10, 2015
In 2014 alone, the Financial Crimes Enforcement Network (FinCEN) and regulatory agencies assessed over $2 billion in penalties for violating the Bank Secrecy Act (BSA.) So while lending and deposit regulations have garnered a lot of attention recently, don't let your team become lax about BSA compliance.
 
Integrated mortgage disclosures take effect October 3
March 6, 2015
The regulatory environment continues to evolve in 2015 with new disclosure requirements taking effect Oct. 3, 2015. As in January of 2010 when we learned how to complete a new Good Faith Estimate and HUD Settlement Statement, we are embarking on similar challenges in 2015. This time it's the new integration of the Good Faith Estimate with the initial Truth in Lending disclosure, and the HUD Settlement Statement with the final Truth in Lending disclosure. There are new fields and new timing requirements as well.
 
FFIEC allows PCC accounting alternatives for call reports of private banks
March 6, 2015
On Oct. 2, 2014, the Federal Financial Institutions Examinations Council (FFIEC) released Financial Institution Letter 50-2014 (FIL-50-2014) -- providing some good news for private banks. In part, this FIL documents the banking agencies' approval of the use of the Private Company Council (PCC) accounting alternatives, issued by the Financial Accounting Standards Board (FASB), for the preparation of call reports for 2014. One of the alternatives allowed by the private company accounting alternatives permits a bank to elect to amortize goodwill on a straightline basis over a period of 10 years (or less than 10 years if more appropriate) and apply the simplified impairment model to goodwill.
 
How to reduce the risk of cybersecurity threats in your bank
March 6, 2015
At a recent banking conference, it became clear that the topic keeping CEOs and CFOs up at night is cybersecurity. Boards and their audit committees are also troubled about cybersecurity with good reason. With all the breaches, from Target to Home Depot, banks have been significantly affected. Banks are taking a financial beating due to use of bank credit and debit cards in these breaches, and some examiners believe hackers will target community banks increasingly because their controls seemingly are weaker than those of large banks.
 
Basel Committee issues new guidelines to enhance bank governance
Nov. 14, 2014
As I think about the past six years in the banking industry, I'm reminded of a long-running musical at the Opryland Theme Park that featured a "New Year's Eve Party." It depicted our economy's expansion in the 1920's and then likened the next decade to the whole country waking up with a hangover. In many ways, community banks, their management and directors may feel as if they are waking up with a business hangover. Being a director in a highly regulated industry has always been somewhat stressful, but add the strain of a distressed economy, and many directors are now understandably fatigued by all the demands of the position.
 
Fair lending comes under the microscope
April 16, 2014
The complexity of the regulatory environment is a challenge for community banks, and Fair Lending compliance is increasingly garnering the attention of regulators and the Department of Justice. Many compliance officers in financial institutions admit to feeling overwhelmed by the tidal wave of new regulations. While you need to comply with all the rules and regulations, special attention should be given to areas that are high risk. Fair lending is one such area.
 
FASB moves forward with expected impairment proposal, but nonaccrual guidance is off the table
Feb. 25, 2014
On Feb. 19, 2014, FASB met to continue working on its expected impairment proposal. The session resulted in three major items: 1) the removal of guidance on accounting for "nonaccrual" loans from the draft 2) a change in the accounting for the discount on purchased credit-impaired (PCI) assets 3) ongoing discussions related to Troubled Debt Restructurings (TORs).
 
COSO updates internal control framework
Feb. 21, 2014
In May 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) updated the framework used for internal control testing and reporting by public companies to accommodate a more complex business environment and the increased use of technology. The Securities and Exchange Commission (SEC) has not stated a required implementation date, saying instead that entities should transition to the new framework in their applications and related documentation as soon as possible. The transition period will run until Dec. 15, 2014, at which time COSO will consider the older model to be superseded by the 2013 framework.
 
IRS issues new revenue procedure on change of accounting method
Feb. 21, 2014
On Jan. 24, 2014, the Internal Revenue Service (IRS) published Revenue Procedure 2014-16. This revenue procedure provides guidance for changes in accounting method resulting from the so-called repair regulations, and to expense acquisition and holding costs related to Other Real Estate Owned (OREO) property.