Page 1 - Updates on various issues
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Monday, December 10, 2018

               Below are a few updates on various federal regulatory issues. Bankers need to be
               involved with many of these so please scan these updates to spot where you should
               submit comment letters or take other steps within your bank.

               Updates on various issues.
               • Faster Payments
               • De Novos
               • CECL
               • CRA Reform
               • LIBOR
               • BSA/AML
               • Flood Insurance

               Updates on various issues:
               Faster Payments. Comments are due this Friday, December 14, on the Fed’s faster
               payments proposal.  CBA strongly urges banks to comment.  See CBA material. While
               we recognize comment letters are in development by a number of banks, only 60
               comment letters had been submitted as of Monday, December 10.

               FDIC and De Novos. The FDIC has announced a number of new initiatives intended to
               make the agency more receptive to de novo formation. It started December 6, 2018,
               with an op/ed from FDIC Chair Jelena McWilliams, “We can do better.”  That was
               followed by several pieces by FDIC about streamlining applying for FDIC insurance, and
               FDIC is now seeking industry input and will hold meetings throughout the U.S.

               CECL. FASB’s Current Expected Credit Loss (CECL) is getting more attention and
               more regulatory movement.  Despite that three problems exist: Additional buffer for
               losses, forecasting uncertainty, and minimal attention to tailor CECL to community
               banks. It is not believed a standard set of requirements can be developed since
               application varies so much by institution, creating volatility. There is a Congressional
               hearing this week.

               This week the ABA told the House Financial Services Committee that FASB should
               delay CECL’s effective date and perform a quantitative impact study of the model. ABA
               noted that by relying on notoriously unreliable economic forecasts, CECL will increase
               procyclicality and thus exacerbate economic downturns. To minimize this volatility,
               banks would need to keep more capital on hand – which would increase the cost of
               credit and reduce its availability, especially on longer-term loans. CECL’s projected
               effects would be felt more by community banks, ABA added, which have more long-
               term real estate loans.
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