Supreme Court Lets Interchange Decision Stand January 21, 2015
The Supreme Court has declined to hear a challenge by the retail industry to the Federal Reserve Board’s debit interchange fee cap rule. The court’s decision leaves in place a D.C. Circuit Court of Appeals ruling from March 2014 upholding the Fed’s rule. The appellate court had reversed a 2013 lower court decision that would have required even lower debit interchange fee caps than the Fed’s rule calls for.
“The Supreme Court has reached the right result, but we shouldn’t lose sight of the fact that the underlying policy -- the Durbin Amendment -- has not accomplished its goal of lowering prices for consumers,” AmBA President and CEO Frank Keating said. “The Durbin Amendment has significantly harmed consumers and financial institutions. At the end of the day, American consumers have paid the price for the efforts of big-box retailers to line their pockets at their own customers’ expense.”
In the 2013 decision, a federal district judge said the Fed violated congressional intent in the Dodd-Frank Act by setting the interchange fee cap too high and failing to allow merchants to choose multiple unaffiliated PIN and signature networks for each card transaction they process.
Hensarling Added as Summit Keynote Speaker January 21, 2015
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) has been added as a keynote speaker at the AmBA Government Relations Summit, March 23-25 in Washington, D.C. Hensarling joins “Meet the Press” host Chuck Todd on the speaker roster for the largest gathering of banking industry leaders in the nation’s capital.
Bank employees and directors are invited to register for free. Directors are especially encouraged to attend, as their roles in their hometowns position them well to explain to lawmakers the value banks bring to local economies.
AmBA also encourages bankers to bring younger bank employees with them to introduce them to advocacy early. This year’s Summit will include the second annual Emerging Leaders Forum and an orientation to make the most of a Capitol Hill visit. Register now.
VISA Modifies Account Recovery Program January 16, 2015
Visa has announced several immediate changes to its Global Compromised Account Recovery program, which helps card issuers recover operating costs and fraud losses after a data breach. GCAR will now allow recovery for all Visa-branded magnetic stripe cards put at risk in a breach without regard to what network processed the transaction that put the card at risk.
Visa said that it will cover costs related to one card replacement every six months, versus the old rule of only one per year. However, Visa raised the threshold for a breach to be covered by GCAR from 15,000 to 30,000 eligible accounts and from $150,000 to $300,000 in total recoveries for all eligible issuers.
The company also announced that it is “researching operating expenses incurred by clients of various sizes to determine the actual costs to payments system participants. This information will be used to re-evaluate Visa’s current operating expense recovery.” AmBA has worked for the past year with the card networks to provide such data and to make the case for greater reimbursements, particularly for lower-volume issuers. Read more.
Fed Survey: Community Banks Remain Key to Small Business Growth January 16, 2015
Community banks have a critical role in funding fast-growing small businesses, according to a survey released yesterday by four regional Federal Reserve Banks. Of the 22 percent of small businesses that applied for credit in the first half of 2014, 34 percent applied to a community bank, and of those, 59 percent saw their applications approved.
Community banks were aggressive in meeting small business credit needs, with 90 percent of newer firms with profits and growing revenues getting approvals. Of these high-growth firms, about half received credit approvals from money center and regional banks. Larger banks focused their approvals on mature small businesses, according to the survey.
The survey found significant variability in what kinds of small business applied for credit. Just 18 percent of “microbusinesses” -- those with under $250,000 in annual revenues -- applied, while 58 percent of businesses with revenues over $10 million did. Microbusinesses were more likely to fund operations and growth out of personal savings.
Small businesses that sought credit were primarily seeking to expand. Nearly half sought a line of credit, about one-third applied for a business loan, and a quarter applied for a credit card. Twenty-three percent of applicants sought a Small Business Administration loan. Most applicants sought under $100,000 in financing. Read the survey report.
ABA Seeks Feedback for Amicus Brief in FDIC v. Willetts January 13, 2015
The FDIC is appealing a federal judge’s ruling rejecting the agency’s legal case against the directors and officers of a failed North Carolina community bank. Relying on North Carolina’s business judgment rule -- which protects directors and officers from liability for decisions made in good faith and according to a rational process -- the judge in FDIC v. Willetts dismissed all the agency’s claims against the defendants.
The FDIC is challenging the business judgment rule, and if it prevails, it is more likely bank directors and officers could be found liable if their decisions -- such as loan approvals -- cause a loss to the bank. To help prevent this outcome, ABA intends to file an amicus brief.
ABA is inviting member bank CEOs, or their designees, to take a brief online survey in order to ensure that the brief reflects its members’ views. All survey responses will be kept anonymous and confidential, and all data will be aggregated before being included in the brief. If you would like to participate but have not yet received the survey invite, please email ABA’s Andrew Doersam.
Obama Nominates Community Banker to Fed Board January 7, 2015
President Obama has nominated Al Landon to one of the two vacant seats on the Federal Reserve Board. Landon served from 2004 to 2010 as chairman and CEO of Bank of Hawaii Corporation and is currently a partner at a community bank investment fund. He recently served as a director at MidFirst Bank in Oklahoma City.
AmBA President and CEO Frank Keating welcomed the news. “ABA has long advocated for community banking expertise on the Fed board, and we applaud President Obama’s important nomination,” he said. “Allan Landon’s background and experience would help ensure the Federal Reserve has a full perspective on both bank regulatory issues and broader economic policy.”
AmBA Highlights Government Relations Priorities for 2015 January 7, 2015
AmBA has released the association’s banker-identified advocacy priorities for 2015. The priorities, organized into five broad areas, “represent ABA’s overarching focus on helping banks serve their customers and grow the economy,” said Government Relations Council Chairman Laurie Stewart, president and CEO of Sound Community Bank, Seattle. The priority areas are:
- Leveling the playing field with credit unions and the Farm Credit System and preserving charter choice.
- Removing regulatory impediments to serving customers.
- Enhancing cybersecurity and rebalancing data breach liability.
- Protecting the integrity of the payments system.
- Achieving tailored regulation that matches a bank’s risk profile and business model.
Several issues are identified under each category, including regulatory relief, credit union and Farm Credit System competition, data breach liability and arbitrary asset thresholds.
The 70-member GRC Administrative Committee -- made up of banks of all sizes and charter types -- developed these priorities at its December meeting and recommended them to the ABA Board. Although the list focuses on topics deserving special emphasis in 2015, AmBA staff will continue to work aggressively with the Hill and the bank regulatory agencies on other important issues beyond those on this list. View the priorities.
OCC Outlines Risk Supervision Priorities for 2015 December 18, 2014
Noting an environment of “high” strategic and operational risk, the OCC outlined nine priorities for midsize and community bank supervision in 2015 in its Semiannual Risk Perspective report released yesterday.
The OCC said its examiners will focus on strategic planning, corporate governance, stress testing for banks with more than $10 billion in assets, operational risk management, cybersecurity, underwriting practices in certain portfolios where the agency has observed slippage, interest rate risk, compliance and “fair access.”
These priorities respond to increasing credit risk as competition for loans picks up, evolving cyber threats, more frequent data breaches and sluggish earnings. The OCC noted that overall return on equity for federally chartered banks is down year over year, although smaller banks’ ROE has improved and now almost matches that of larger banks. Read the report.
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