Virginia Banking March/April 2013 by The Warren Group

March/April 2013

Mortgage Lending After Dodd-Frank

IN THIS ISSUE

TEACH CHILDREN TO SAVE | BANKER DAY 2013 | FINANCIAL EDUCATION FOR LAWMAKERS

A LO S TA R B A N K . C O M

Stacy Brantley SVP, Morris Bank Dublin, GA

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MEMBER FDIC

866.219.9035

March/April 2013

2012-2013 OFFICERS AND DIRECTORS OF THE VIRGINIA BANKERS ASSOCIATION Jeffrey M. Szyperski, Chairman, Chesapeake Bank Gary R. Shook, Chairman-Elect, Middleburg Bank William Couper, Immediate Past Chairman O. R. Barham, Jr., StellarOne Corporation Christopher W. Bergstrom, Cardinal Bank Katherine E. Busser, Capital One Financial Corporation Tim Butturini, Wells Fargo Bank, N.A. Larry G. Dillon, C&F Bank Randy K. Ferrell, The Fauquier Bank T. Gaylon Layfield, III, Xenith Bankshares, Inc. John R. Milleson, Bank of Clarke County

Cover

Mortgage Lending After Dodd-Frank

Susan Ralston, Bank @Lantec John G. Stallings, SunTrust Bank David P. Summers, Virginia Heritage Bank Daniel G. Waetjen, BB&T Michael O. Walker, Benchmark Community Bank AT-LARGE MEMBERS Benefits Corporation Chair Richard M. Liles, Bank of McKenney Management Services Inc. Chair Frank Bell, III, Chesapeake Bank Government Relations Committee Chair Monte L. Layman, Blue Ridge Bank VBA Education Foundation Chair H. Watts Steger, III, Botetourt Bankshares, Inc. EDITORIAL & EXECUTIVE OFFICES 4490 Cox Road Glen Allen, VA 23060 804-643-7469 Fax 804-643-6308 www.vabankers.org

SUBSCRIPTIONS If you would like to subscribe to Virginia Banking, contact Kathryn Roberts at kroberts@vabankers.org

Bruce T. Whitehurst President and CEO Virginia Bankers Association

Kathryn Roberts Coordinator, Education & Training/ Communications Virginia Bankers Association

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features

9 14 20

Teach Children to Save Season Starts Getting Ready for Teach Children to Save Day And Get Smart About Credit Day Strong Turnout for Banker Day 2013

in every issue 4 Calendar of Events 5 Insights 6 Worth Noting 8 Welcome New Associate Members

10 11 16 18 22

Legislative Update Washington Update Compliance Corner Legal Line Bankers on the Move

Send us your thoughts or ideas on Virginia Banking! Please email Kathryn Roberts at kroberts@vabankers.org Has your information changed? Please email Kellee Edelin at kedelin@vabankers.org with your new contact information. March/April 2013 | Virginia Banking 3

Calendar of

Events

Live Event

INSTRUCTOR-LED SEMINARS

Online Seminar

AIB PRINCIPLES OF BANKING ACCELERATED APRIL 22

AIB BASIC ADMINISTRATIVE DUTIES OF A TRUSTEE APRIL 22

AIB MARKETING FINANCIAL SERVICES APRIL 22

AIB LAW AND BANKING: APPLICATIONS APRIL 29

AIB MONEY AND BANKING APRIL 29

AIB SUPERVISOR CERTIFICATE APRIL 29

AIB PRINCIPLES OF BANKING APRIL 29

AIB PRINCIPLES OF BANKING ACCELERATED MAY 6

AIB ANALYZING FINANCIAL STATEMENTS MAY 6

AIB GENERAL ACCOUNTING MAY 6

AIB CONSUMER LENDING MAY 13

INTRODUCTION TO AGRICULTURAL LENDING APRIL 15

AIB ECONOMICS FOR BANKERS MAY 13

AIB CONSUMER LENDING APRIL 15

AIB LAW AND BANKING: PRINCIPLES MAY 13

AIB GENERAL ACCOUNTING APRIL 15

AIB PRINCIPLES OF BANKING MAY 13

AIB PRINCIPLES OF BANKING APRIL 15

AIB PRINCIPLES OF BANKING JUNE 10

COMPLIANCE HOT TOPICS, CHARLOTTESVILLE APRIL 11

TELLER TRAINING, GLEN ALLEN APRIL 11

SECURITY WORKSHOP, CHARLOTTESVILLE APRIL 24

HR & BENEFITS CONFERENCE, CHARLOTTESVILLE MAY 5

OPERATIONS & TECHNOLOGY CONFERENCE, STAUNTON MAY 14

INTERNAL AUDIT SEMINAR, GLEN ALLEN MAY 14

APPRAISAL REVIEW SEMINAR, GLEN ALLEN MAY 22

TRUST & WEALTH MANAGEMENT CONFERENCE, GLEN ALLEN MAY 31

120TH VBA ANNUAL CONVENTION, HOT SPRINGS JUNE 16

VBA SCHOOL OF BANK MANAGEMENT, CHARLOTTESVILLE JULY 28

ONLINE/INSTRUCTOR-LED SEMINARS

Information and online registration is available at the VBA website. Please either go to www.vabankers.org or use this form to check the box next to the program you want information about, then fax the form to the VBA office at 804-643-6308. The VBA will send you information about the program as soon as it is available, usually eight weeks before the program.

Name___________________________________________________ Bank/Firm______________________________________________ Address_____________________________________________________________________________________________________________________ City ________________________________________________________________ State/Zip ___________________________________ Phone ___________________________ Fax _________________________ Email __________________________________________________ For more information go to www.vabankers.org.

4 Virginia Banking | March/April 2013

www.vabankers.org

Insights Keeping it Simple

R Bruce Whitehurst President and CEO, Virginia Bankers Association

emember the “simplify” fad of a few years ago? A good number of books on how to simplify our lives were published, with their authors being featured on TV talk shows. The idea was to do whatever we can to live a simpler life – get rid of clutter, have fewer clothes, cook from simpler recipes, etc. – all with the promise of stress reduction and other payoffs. It seems the fad has come and gone, but the idea of simplifying our lives still has appeal, even though it seems a challenge to get there. This issue of Virginia Banking is about anything but simplicity: instead, it’s about legal and compliance issues and challenges in banking. We all know that our industry is getting increasingly complex, with numerous changes to our business models that are inevitable when you consider the 398 rule making requirements under the Dodd-Frank Act of 2010. We are only about halfway through these new rules and have already crossed the 10,000 page mark in new and proposed regulations.

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This issue of Virginia Banking is about anything but simplicity: instead, it’s about legal and compliance issues and challenges in banking.

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According to the Bureau of Labor Statistics, the decade from 2010 to 2020 will see 1.2 million new jobs in business and financial operations – a 17 percent increase – which they attribute to the increasing complexity of American business. As part of this job growth, the bureau also estimates

190,700 new jobs for accountants and auditors, due to increasing financial regulations. Oh simplicity, where art thou? I truly believe that the average consumer craves simplicity in financial products and services and achieving that is one of the stated goals of the Consumer Financial Protection Bureau. However, the CFPB has a funny way of getting there. For example, their proposed rule to reduce and simplify the RESPA/TILA disclosure from five pages to three comes with no less than 1,100 pages of guidance. Other CFPB regulations are of similar length, suggesting that it is complicated to simplify – at least in the regulatory world. Without question, the business of banking is getting more complex by the day. As we implement the sweeping new regulations affecting our industry, it will be important for us to keep simplicity in mind on behalf of our customers. At the VBA, we are very focused on doing all we can to help banks adapt to these changes. Our website, vabankers. org, contains legal and compliance resources as well as the latest on healthcare reform and what all banks need to know. We offer several compliance services of value to banks. Our education and training offerings are full of compliance related programs and our banker committees and boards give us valuable input on other ways we can support banks in these areas. Our banker-driven VBA Advocacy program is vital as we make sure policy makers know when new regulations designed to protect consumers actually make it more difficult for them to access financial products and services. Perhaps the “going simple” fad will reappear in banking, as we look for simplicity and efficiencies amidst this time of incredible change. To that end, please let us know how we at the VBA can help you as we navigate these changes in the coming months and years.

Bruce Whitehurst can be reached by email at bwhitehurst@vabankers.org. www.vabankers.org

March/April 2013 | Virginia Banking 5

Worth

Noting cal high schools, a coloring contest for 16 elementary schools, and a special customer selection to be a “Banker for a Day.” CEO Matthew L. Burns commented on the occasion, “A community bank is special, and having been part of history for 125 years is even more special to share with our customers and with the areas we serve.” Congratulations, First National Bank!

FIRST NATIONAL BANK CELEBRATES 125 YEARS

JOHN MARSHALL BANK HONORED

April marks the 125th anniversary of First National Bank in Ronceverte, West Virgina. First National Bank began with $40,000 in capital and had 26 initial shareholders. Today, First National Bank is a $260 million bank, with approximately 185 shareholders, and 64 employees. To celebrate the 125 year milestone, the bank will be doing a variety of activities within the community, including an essay contest with six lo-

John Marshall Bank was honored by the Greater Reston Chamber of Commerce and Reston Interfaith, Inc. with the prestigious 2013 Best of Reston Award in the Corporate Business Leader category. The General Assembly also commended John Marshall Bank with House Joint Resolution 798 for the organization’s strong commitment to the Reston community. The bank has a strong tradition of charitable giving, including thousands

Not all of a bank’s assets are found on its balance sheet.

with a 60-year reputation for helping banks operate stronger, wiser, better. Let us know how we can be an asset to you.

compliance. Our financial services practice is 90 professionals strong,

During the 2013 Session, the General Assembly honored the life of Larry Heaton with House Joint Resolution 673, which expresses great appreciation and respect for his contributions to the community. Before his passing in early December 2012, Larry Heaton served as a VBA board member and chairman, president and CEO of Franklin Community Bank. He was a community leader, serving on various boards in Franklin County, and a loving husband and father to his wife and two sons. He will be fondly remembered by all.

SALLY GREEN RETIRES FROM FEDERAL RESERVE BANK OF RICHMOND

THE GENERAL ASSEMBLY HONORS POWELL VALLEY NATIONAL BANK FOR 125TH ANNIVERSARY

More than 100 banks in the Southeast, large and small, depend on including external and internal audit, SEC reporting, taxation and

CELEBRATING THE LIFE OF LARRY HEATON

Sally Green is retiring this May from the Federal Reserve Bank of Richmond, where she served as chief operating officer and first vice president. She has been with the Federal Reserve System for more than 35 years. Since assuming her role at the Richmond Fed in 2006, she has overseen the bank’s financial services and support areas and strengthened operational performance. We wish Sally well in retirement!

Jason Caskey, CPA Financial Services Practice Chair

Elliott Davis for personal attention, industry experience and services,

of dollars to regional charities every year. Congratulations to the officers and employees of John Marshall Bank for your great work in the community!

Kudos to Powell Valley National Bank on being commended by the Virginia General Assembly with House Joint Resolution 680, which honors their work over the past 125 years. Powell Valley, located in Jonesville, Virginia, was authorized to commence business on Jan. 1, 1888, and has since made significant and long-lasting contributions to the communities in which it serves. Happy 125th anniversary!

3900 Westerre Parkway • Richmond, VA 23233 • www.elliottdavis.com 6 Virginia Banking | March/April 2013

www.vabankers.org

SENIOR HOUSING CRIME PREVENTION FOUNDATION HOLDS NINTH ANNUAL DOING WELL BY DOING GOOD CONFERENCE The Senior Housing Crime Prevention Foundation, which oversees the Senior Crimestoppers program nationwide supported by the Virginia Bankers Association, held its ninth annual Doing Well by Doing Good Bankers Conference in Washington, D.C. The foundation provides safe and secure living environments through operation of the Senior Crimestoppers program to nursing homes, at no cost, through community development loans and investments funded by community bankers and the banking industry. In return, these community banks receive CRA credit for helping to protect low- and moderate-income individuals in nursing homes within their community. Rann Paynter of the Virginia Bankers Association, Jerry Williams of Virginia Heritage Bank, Patricia Gallagher of EVB, and Frank Bell of Chesapeake Bank were among the conference attendees.

The official magazine of the Virginia Bankers Association VIRGINIA BANKERS ASSOCIATION — SERVING VIRGINIA’S FINANCIAL COMMUNITY SINCE 1893

Reach Your Targeted Business Audience with Accuracy

VIRGINIA BANKERS ASSOCIATION — SERVING VIRGINIA’S FINANCIAL COMMUNITY SINCE 1893

REACH YOUR TARGETED BUSINESS AUDIENCE WITH ACCURACY. Virginia Banking magazine will now be delivered in both print & digital formats. The official magazine of the Virginia Bankers Association, Virginia Banking, reaches more than 11,000 banking industry professionals in 130 different banks across the state. Financial leaders in Virginia turn to this bimonthly magazine to gather information and move their business forward. In 2013, Virginia Banking boasts increased circulation, new content, a modernized, full color design, and more. Connect with the leaders of the banking community, increase your market share and grow your business – just by consistently marketing in Virginia Banking. Visibility and repetition within your sales and marketing efforts will establish stronger relationships within this vital market.

Contact The Warren Group at 617-896-5344 or email advertising@thewarrengroup.com and put each solution to work for you. Call today and receive a 20% discount off a new 2013 ad campaign.* *New Advertisers Only

www.vabankers.org

March/April 2013 | Virginia Banking 7

Welcome

New Associate Members

ACCOUNTING, INVESTMENT BANKING

GRANT THORNTON LLP

60 Broad Street, 24th Floor New York, NY 10004-2350 Phone: (212) 624-5310 Fax: (212) 624-5219 Website: www.grantthornton.com CONTACT: NICHOLE JORDAN Email: nichole.jordan@us.gt.com Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd.Their people provide personalized attention and the highest quality service to public and private clients in more than 100 countries.The Grant Thornton banking and securities team provides audit, tax and advisory services to banks in Virginia and around the world.

COMPLIANCE SERVICES, MORTGAGE & REAL ESTATE SERVICES

COLLATERAL EVALUATION SERVICES

590 Colonial Park Drive, Suite 201-202 Roswell, GA 30075 Phone: (678) 580-6250 Fax: (678) 580-6101 Website: www.ces-wm.com CONTACT: LARRY WOODALL, FOUNDER, CEO Email: lwoodall@ces-wm.com CES is a “virtual appraisal department” for community and regional banks.

CONSULTING & TRAINING, INSURANCE

BUSINESS OWNER EXIT STRATEGIES 1518 Willow Lawn Drive, Suite 244 Richmond, VA 23230 Phone: (804) 357-5877

8 Virginia Banking | March/April 2013

CONTACT: JAMES COWAN, MANAGING MEMBER Email: jbcboss@gmail.com The company works with small to mid-sized private and family-owned businesses to develop eventual exit strategies.

EMPLOYEE BENEFITS

RUTHERFOORD MMA 222 Central Park Avenue, Suite 140 Virginia Beach, VA 23462 Phone: (757) 333-3813 Fax: (757) 456-5296 CONTACT: DAVID P. MORGAN, ACCOUNT EXECUTIVE Email: david.morgan@ rutherfoord.com Rutherfoord, Marsh & McLellan Agency was founded in Roanoke Virginia and joined MMA three years ago.The firm continues to specialize in benefits and property and casualty brokering for public and private companies throughout the Mid Atlantic Regions.

INSURANCE

MUTUAL ASSURANCE SOCIETY OF VIRGINIA PO Box 6927 Richmond, VA 23230 Phone: (804) 213-3672 Fax: (804) 212-1259 Website: www.mutual-assurance.com CONTACT: L. GERALD ROACH, PRESIDENT Email: jroach@ mutual-assurance.com Mutual Assurance Society of Virginia writes primarily homeowners insurance and has been in business in Virginia since 1794.

INVESTMENT BANKING

BANKS STREET PARTNERS

200 Providence Road, Suite 210 Charlotte, NC 28207 Phone: (704) 927-6244 CONTACT: GARY MCNORRILL, MANAGING DIRECTOR Email: gmcnorrill@ banksstreetpartners.com Banks Street Partners is an investment banking firm serving financial institutions in the Southeastern U.S.With three decades of experience and 500 successful transactions, they offer community banks and thrifts a wide range of advisory services, including: mergers and acquisitions; branch sales; capital raises; FDIC-assisted transactions; and strategic planning.

LAW FIRMS

KUTAK ROCK LLP 1111 East Main Street, Suite 800 Richmond, VA 23219 Phone: (804) 644-1700 Website: www.kutakrock.com CONTACT: LOC PFEIFFER, PARTNER The firm has represented hundreds of state and local governmental units, a substantial number of Fortune 500 corporations, every major investment banking firm in the United States, major European, Asian and domestic money-center banks, insurance companies, national real estate investors and developers, major national franchising enterprises and numerous other financial institutions and businesses.

MCGUIREWOODS LLP One James Center 901 East Cary Street Richmond, VA 23219 Phone: (804) 775-1000 Fax: (804) 775-1061 Website: www.mcguirewoods.com

CONTACT: CRAIG BELL OR MARK WILLIAMSON Email: cbell@mcguirewoods.com; mwilliamson@mcguirewoods.com McGuireWoods LLP is an international law firm with more than 900 lawyers and 19 offices. McGuireWoods represents banks, bank holding companies, trust companies and other financial institutions in a full range of corporate, lending and regulatory compliance matters such as mergers, acquisitions and securities. Additional areas of focus include employee benefits, labor and employment, technology and outsourcing, litigation, data privacy and security, commercial and real estate loans, loan workouts, bankruptcies, tax-exempt financings, insurance coverage, unclaimed property, bank franchise tax and tax audits. In addition, the firm has a team exclusively focused on community banks.

RECRUITMENT & HR SERVICES

BDS YARMOUTH & CHOATE 35 Dogwood Road, Suite 100 Asheville, NC 28804-2642 Phone: (828) 333-6300 Fax: (877) 349-3381 Website: www.YarmouthChoate.com CONTACT: ROBERT O’HALLORAN, MANAGING PARTNER Email: rohalloran@ yarmouthchoate.com BDS Yarmouth & Choate provides specialty executive search and consulting services to community banks.They are intimately familiar with the evolution of the banking industry in Virginia and the sensitive needs of clients within its borders. They are nationally recognized experts contributing material to The New York Times, NBC Evening News, and Fox News Channel. www.vabankers.org

Teach Children to Save Season Starts

s a local banker and trusted community resource, you have a unique opportunity to put your expertise to work on Teach Children to Save Day (TCTSD) 2013 by: • Helping youngsters discover the joys and rewards of saving for something special. • Encouraging the savings habit in tweens, a prime consumer target group. • Providing teens and young adults with solid information, tools and practical training to develop the financial knowhow needed to manage their finances. You can join thousands of fellow bankers across the country in Teach Children to Save Day 2013 activities. Registration is now open on the VBA’s website, www. ® vabankers.org. The official Teach Children to Save Day takes place on Tuesday, April 23; however, we encourage your bank to participate in related activities on another day if that day does not work for you. What better time is there to encourage financial fitness in your community? Please contact Kathryn Roberts at kroberts@vabankers.org for more information on how to get involved.

Your Data. Your Future. CRM offers FUTURE FOCUSED Risk Management Tools www.vabankers.org

March/April 2013 | Virginia Banking 9

Legislative

Update

Meet the New Congress, Same as the Old Congress?

T Matt Bruning Vice President, Government Relations, Virginia Bankers Association

he 113th Congress began on Jan. 3 with several new members, including the new junior senator from Virginia, former Gov. Tim Kaine. While some of the faces may have changed, there is little function difference in the composition with Republicans maintaining the majority in the House of Representatives, a Democratic majority in the Senate and President Barack Obama returning for another four year term. Voters once again selected divided government in the federal legislature at the polls last November, but respond in polling that they want collaboration and compromise on important matters. The dichotomy of the return of the previous gridlock brought on by the partisan makeup on Capitol Hill through the electoral process, and the overwhelming sentiment among the general public for lawmakers to reach accord on significant national issues, could prove difficult to reconcile. With a tip of the hat to rock legends The Who, will the American public meet the new boss, same as the old boss and get fooled again into believing the outcomes from this Congress will differ from the last? The 113th Congress

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In all these fiscal decisions, Virginians are sure to have a seat at the table, albeit sometimes at opposing ends.

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already has some critical legislative mileposts rapidly approaching that will add clarity to the answer. The first deadline is March 1, when the $1.2 trillion across-the-board spending cuts of

sequestration are scheduled to go into effect. Kicked down the road to that date by the previous iteration of Congress, whether those cuts will be avoided is very much in doubt. Some conservatives have indicated their desire to allow the reductions on all aspects of the federal budget to occur, including those to national defense. The president and some Democratic members have used the deadline as a means to redouble their efforts to raise tax revenues to supplant some cuts. Some are calling for a grand bargain to include cuts and tax increases, while many expect that, if any action transpires, it would only serve to further delay the difficult decisions. Two other intertwined dates are the April 15 tax day deadline for passage of a budget and May 19, when the current suspension of the debt ceiling ceases. The former comes with a small incentive, as a missed deadline on a budget agreement results in withheld paychecks for members. The latter is a continuation of discussions about the national debt and how to curtail and reduce it from its historic size. VIRGINIA’S ROLE In all these fiscal decisions, Virginians are sure to have a seat at the table, albeit sometimes at opposing ends. Sen. Mark Warner has been a vocal participant in the debate in bringing the country’s fiscal house in order through his leadership in the “Gang of Eight.” Sen. Tim Kaine now serves on the Senate Budget Committee, responsible for assessing the president’s proposed budget and drafting the Senate version. Majority Leader Eric Cantor, as a key leader in the House leadership, will continue to be involved in shaping all policy measures and stances in the House. Rep. Frank Wolf, as a senior member of the House Appropriations Committee, is an influential voice on federal spending. Continued on page 22

Matt Bruning can be reached by email at mbruning@vabankers.org.

10 Virginia Banking | March/April 2013

www.vabankers.org

Update

Washington

Financial Education for Lawmakers

B Frank Keating President and CEO, American Bankers Association

anking issues can be complicated, but the business of banking – taking in deposits and making loans – is basic and essential. It’s the fuel that powers our nation’s economic growth engine. We want to make sure that policymakers understand this vital relationship. As part of our advocacy efforts, we’re embarking on a course to educate members of Congress and others about banking and the critical role Virginia banks play in the health and well-being of the local and national economy. We’ve learned from past experience that a lack of understanding about banking – the hows and whys of what you do – poses a threat to good policy. It makes it difficult to approach a complex banking issue when policymakers lack a solid grounding about our industry. We’re working to change this. In January, we sent every lawmaker in the U.S. House and in the Senate a copy of “The Business of Banking: What Every Policy Maker Needs to Know.” This 72-page guide, which you can download at aba.com/businessofbanking, explains how banks convert customer

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We’ve learned from past experience that a lack of understanding about banking – the hows and whys of what you do – poses a threat to good policy.

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deposits and other funds into loans that help businesses and communities grow. “The Business of Banking” provides a fact-based examination of the industry as well as the competitive landscape of financial services, including nonbanks and credit unions. One interesting fact: Of the nation’s 6,900 banks, 66 percent have been in business for 50-plus years and 38 percent have been in business for 100 years or more. That’s mak-

ing a long-term investment in the community and our nation. While we’re using “The Business of Banking” in our efforts to educate lawmakers at the national level, you can put it to work in Virginia when you talk with state and local leaders. You can also use it to educate employees. The topics covered include the basics of banking, deposits, loans, jobs and job creation, economic growth and more. I hope you find it useful. We also recently published and posted online a guide for lawmakers on hot-button issues. Our guide, “2013 Key Banking Issues for Congress: Why They Matter to You and Your Constituents,” is designed to help educate Congress on our top policy issues. The guide provides background information on the credit union tax exemption, Basel III, municipal advisor registration requirements, and bank examination legislation, among other issues. For each topic, we explain how the issues affect lawmakers’ constituents and what Congress can do to help. You can read or download the guide at aba.com/keyissues. The bankers and state association executives participating in the recent ABA Freshman Fly-In hand-delivered copies of the guide to their new senators, representatives and staffers during their Capitol Hill visits. The purpose of these visits: To educate the new lawmakers and their staffs on, among other things, the overall need for regulatory relief; bank examination reform; eliminating the credit union tax exemption; the importance of a strong banking system in a healthy economy; and credit unions’ attempts to expand their businesslending authority. Educating and advocating are the first steps in bringing about change. If you want to see a shift in how our industry is regulated, I invite you to join hundreds of bankers at the ABA Government Relations Summit, April 15-17 in Washington. Help us tell policymakers your story so they can make informed decisions. You can register at aba.com/ summit.

Gov. Frank Keating can be reached by email at keating@aba.com. www.vabankers.org

March/April 2013 | Virginia Banking 11

Mortgage Lending After Dodd-Frank By Edmund Harllee

By now, itâ&#x20AC;&#x2122;s common knowledge that the process of getting a mortgage has changed â&#x20AC;&#x201C; less common is knowledge of what those changes really look like. The Mortgage Reform and AntiPredatory Lending Act (the Mortgage Act or the act) became law on July 21, 2010, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act).The purpose of the act was to correct a wide variety of perceived weaknesses and abuses in mortgage lending.

Unlike the majority of earlier banking laws, which provided a general framework of law and left filling in the gaps to applicable regulatory agencies, the Mortgage Act has few gaps. The act is so detailed that it is possible to highlight the effect and consequences that some of its provisions will have on the mortgage lending and servicing industries, even though all of its provisions have not yet been implemented. This article will focus on both the highlights and the consequences of the Mortgage Act. LOAN ORIGINATION The mortgage originator provisions of the act were designed to outlaw certain abusive practices of mortgage brokers and other originators, such as “steering” (giving a high-rate subprime loan to a borrower who would have qualified for a low-rate conventional loan), “affinity fraud” (where a loan originator of a certain ethnicity takes advantage of other members of the same group by gaining their trust), and other predatory practices. In addressing some of these issues, the act and its regulations are very broad: • The extensive definition of a “loan originator” includes any individual who takes a mortgage application or helps the applicant obtain or complete a mortgage application, or who negotiates the terms of a mortgage. This can be read to include not only the traditional loan broker, but many bank employees. • The act prohibits loan originators from engaging in lending practices that are abusive or unfair, or that promote disparate treatment. Unfortunately, there is little guidance on what the new Consumer Financial Protection Bureau (CFPB) considers abusive, unfair or promoting disparate treatment. Since employees of banks and other mortgage lenders might be considered “loan originators,” the incentive may be to shy away from loan origination practices. • The act and regulations prohibit loan originator compensation based on a term of a transaction. The purpose of these rules is to ban “yield spread premiums,” which encourage loan originators to push for high-cost mortgages. www.vabankers.org

As with the definition of “loan originator,” the problem with these restrictions is the lengthy, but not very helpful, explanation of “based on a term of a transaction.” • In an effort to prevent evasion of the compensation rules, the act and regulations prohibit, among other things, compensation based on a “proxy,” which is a factor that, while not strictly a “term of a transaction,” is “so tied” to a term or condition of the loan that it is deemed to be “a term of a transaction.” Again, given the vagueness of these rules, and the penalties for noncompliance, the incentive may be to limit loan origination efforts.

during the origination process, but during the life of the mortgage loan (see below). Use of the model forms provided in the regulations will protect the lender from liability for improper disclosure, provided the information in the disclosures is accurate. To lenders, this means that new or upgraded documentation systems, forms and procedures will be required and inevitably, lawyers and consultants hired. While always a large expense, volume will help defray the cost for large mortgage lending institutions. Smaller lending institutions will need to rethink or curtail the variety of mortgage programs offered to their customers, or otherwise retreat from mortgage lending.

When reviewing an application for a mortgage loan, the lender is required to determine the applicant’s ability to repay the loan. The final regulations of the CFPB encourage the lender to consider: credit history, current or reasonably expected income or assets, current obligations, debtto-income ratio, employment status, and monthly payments on the subject mortgage, any simultaneous loan and other mortgage obligations. Calculations made to determine these factors must be supported by third-party information, such as tax returns and pay stubs. There are several exceptions to this requirement in the regulations, including one for a “qualified mortgage” (see below). Some commentators have expressed doubts as to the usefulness of these factors in predicting the ability of the borrower to repay a mortgage, citing studies that show that the loan-to-value percentage at origination would tend to be the best predictor but is not one of the factors in the regulations. If they are correct, the “ability-to-pay” requirement may miss the point. However, one problem with using the loan-to-value percentage is that it may tend to favor those wealthy enough to make a large down payment, thereby possibly “promoting disparate treatment” (see above). As is typical with federal consumer financial regulation, the Dodd-Frank Act requires a host of new disclosures and revisions to existing disclosures, not only

LOAN PROGRAMS The centerpiece of the Mortgage Act is the “qualified mortgage,” or QM. In developing the definition of a QM, the drafters sought to fashion a “plain-vanilla” mortgage loan. To be a qualified mortgage, the loan must have a term of no more than 30 years, points and fees of no more than 3 percent of the loan amount, and contain no negative amortization, interest-only payments or balloon payments. When underwriting a QM, the lender must consider insurance, taxes and assessments on all loans, assume the maximum rate possible during the first five years on a variable-rate loan, and require the borrower to have a total debt-to-income ratio of less than 43 percent. The act strongly encourages lenders to make qualified mortgages, by granting QMs an exception from some of the more onerous regulations, or by simply outlawing certain terms. On the other side of the spectrum, the Mortgage Act addresses “high cost mortgages.” A high cost mortgage is generally one having a high interest rate or high fees. Prior to the Dodd-Frank Act, these mortgages were regulated under the Home Ownership and Equity Protection Act (HOEPA). The Mortgage Act expanded the coverage of HOEPA to almost all loans secured by a consumer’s principal dwelling. Coverage under HOEPA requires additional disclosures and enhanced remedies Continued on page 17 March/April 2013 | Virginia Banking 13

Back to School at the VBA

Getting Ready for Teach Children to Save Day By Kathryn Roberts

group of 23 participants from banks all over the state joined the Virginia Bankers Association for a fun day of financial literacy tips and lessons on March 14. Back to School at the VBA, a one-day program designed to provide training to bankers interested in making a difference in economic and financial education in their local schools, mixed elementary and high school lessons plans together for a jampacked schedule of events. Bruce Whitehurst, president and CEO of the Virginia Bankers Association, greeted the group with welcoming words and a big thank-you for their support of financial literacy efforts in Virginia schools. The VBA’s Chandler Dewey and Kathryn Roberts shared tips for teaching in the classroom for the first time and where to find the best resources for supplies and giveaways. Guest speakers Jennifer Boyle of Junior Achievement of Central Virginia and Kathryn Kelly of the American Bankers Association Education Foundation explained community partnerships through Junior Achievement and the Lights, Camera, Save! program 14 Virginia Banking | March/April 2013

Get Smart About Credit Day

sponsored by the ABA. Both of these financial literacy programs strive to make learning about saving fun for students and try to promote responsible spending habits. The training room stayed lively and active throughout the Teach Children to Save Day activities. After breaking into small groups, participants read the children’s book Pigs Will Be Pigs and pigged out on money and math concepts. The Federal Reserve Bank of Kansas City’s Fifty Nifty Econ Cards provided entertainment for a round of bingo and popcorn economics, and participants ended the Teach Children to Save Day activities session with a game called “Saving for a Sunny Day.” The group felt confident about teaching students the importance of saving and making smart choices with their money by the end of the session. The post-lunch warm-up activity brought attendees together to play the Price is Right game on credit limits. This activity provided an introduction for the Get Smart About Credit Day segment on credit cards, debit cards, and online banking. Along with games on credit scores and electronic

methods of payment, participants learned a handful of great ideas to take into the classroom from the financial literacy panel featuring Tracie Gallahan of First National Bank, Johanna Northstein of Chesapeake Bank, and Judy Sydnor of Bank of Lancaster. They discussed their experiences with VBA events as well as other ways to get involved in financial literacy. Learning from fellow bankers who have previous experience in the classroom helped attendees tremendously. Back to School at the VBA wrapped up with attendees returning to their institutions with a binder full of lessons and crafts to use in future presentations. Many participants from the event will enter the classroom on April 23 for Teach Children to Save Day. Get Smart About Credit Day will take place in October. Kathryn Roberts is the coordinator of education, training and communications for the Virginia Bankers Association. Contact her at kroberts@vabankers.org or (804) 819-7461. www.vabankers.org

Are the hundreds of new and changing rules and regulations forcing you to hire additional staff to keep your bank in compliance? Compliance officers receive an average salary of $62,000 plus benefits. Bank attorneys are paid upwards of $100,000. The risk of noncompliance is too great to not get help.

HELP IS AVAILABLE!

CALL TODAY: 888-353-3933 OR VISIT: www.compliancealliance.com www.vabankers.org

March/April 2013 | Virginia Banking 15

Compliance

Corner

Additional Examiner Scrutiny Changes Secondary Market Notifications By Jim Dray, CRCM, Thomas Compliance Associates, Inc.

ome lending may be back, depending on what you read and your local market. Or housing may be perching on top of another bubble, depending on the media you watch and your local market. The one thing that’s certain is that federal regulators are paying more attention to housing – and the mortgage lending process. Certainly the mortgage lending business has changed since the housing market crash in 2008, and examiners are taking note. In the “old days,” applications submitted to secondary market investors for underwriting approval were processed quickly with a decision issued in a matter of days. In today’s world, that is hardly the case. More documentation is required by the secondary market investor to underwrite the loan, which often pushes decision times to 45 to 60 days – which in turn creates a potential notification nightmare for a creditor who submits applications to multiple secondary market investors. Regulation B addresses notification requirements when an application is submitted through a third party (for example, a bank acting as a broker) to a creditor. Section 1002.9(g) and the related Official Staff Commentary state that the notification may be provided by the creditor or by the broker on behalf of

“

In today’s wor ld, things are complicated. Banks acting as broker s are not locking rates with multiple investor s simultaneously. Instead, applications are submitted to one secondar y mar ket investor for underwriting at a time.

”

the creditor. If the broker provides the notification, it must disclose the identity of the creditor making the decision and provide contact information for

the primary federal regulator of the creditor. Recognizing that loan applicants may be confused by multiple notifications, Section 1002.9(g) also provides that if an applicant accepts an offer of credit from one of the creditors, notification of action taken by the other creditors is not required. That’s a paperwork and processing plus. Assume, for example, that ABC Bank submits an application to both HLM Mortgage Company and XYZ Mortgage. HLM Mortgage Company denies the application, but XYZ Mortgage approves the application. If the applicant accepts the loan from XYZ Mortgage, ABC Bank does not have to send an adverse action notice on behalf of HLM Mortgage. If, however, the applicant does not accept the offer of credit from XYZ Mortgage, ABC Bank must send an adverse action notification on behalf of HLM Mortgage within 30 days of the date a completed application existed. The process on paper seems complicated, but it worked well in the old world, as it was possible to submit an application to multiple secondary investors simultaneously. However, in today’s world, investors are tracking “pull-through rates.” The pull-through rate is a percentage that measures the dollar volume of loans closed versus the dollar volume of loans locked by best efforts pricing. Any loan that has expired or been withdrawn will adversely affect the broker’s pull-through rate and loan pricing offered the broker by the investor. In today’s world, things are more complicated. Banks acting as brokers are not locking rates with multiple investors simultaneously. Instead, applications are submitted to one secondary market investor for underwriting at a time. If the first investor denies the loan, the application may be submitted to another investor for review. The problem this creates is that the 30-day notification clock does not stop ticking when the application is submitted to the second investor for underwriting. If the second investor fails to make a decision

VBA members can obtain additional information about all of the many home lending aspects by calling TCA’s toll-free number, 800-934-7347. TCA is the VBA’s endorsed provider of compliance consulting and support. 16 Virginia Banking | March/April 2013

www.vabankers.org

Mortgage Lending After Dodd-Frank Continued from page 13 within the remaining time, the bank taking the application must either send an adverse action notification on behalf of the first investor that denied the loan or ensure that the investor sent its own adverse action within the 30 days. That can be confusing for applicants when they are told by the bank that their application is still being considered in underwriting, yet they receive a denial notice on the basis of the action taken by the first investor. As experienced by a bank outside Virginia, examiners are looking into this and expect documentation that notification requirements were met in the timeframes required. Here’s what you should be doing: Check your secondary market investor contracts and guides to determine whether your bank will be responsible for providing adverse action notification requirements on the investor’s behalf. If that turns out to be the case, make certain your staff understands that the adverse action should identify the investor as the party making the credit decision and list the contact information for their primary federal regulator. A little updated training might be appropriate. If the investor provides the required notification to the applicant, stipulate that a copy be sent to your bank for the loan file. That’s important so your institution can demonstrate timely delivery for examination purposes. If the application is submitted to a second investor after denial by the first investor, implement a tracking system to ensure that required notification is provided within the required time frame. The notification can be provided by either your bank or the investor, as required under your contract, but timeliness matters. There will be no shortage of compliance issues during 2013, especially as the Consumer Financial Protection Bureau revs up its oversight programs. It’s safe, however, to expect lending issues to be at the top of the regulatory watch list.

www.vabankers.org

for violations. Under the final regulations, high cost mortgages are restricted as to penalties and fees (no prepayment penalties, no modification fees or fees for providing payoff statements, late fees limited to 4 percent), borrowers are to be given information on “homeownership counseling,” and there are enhanced underwriting requirements on lenders. The obvious result of these regulations is that lenders will now tend to favor qualified mortgages and shy away from highcost mortgages. What is not obvious is the longer-term effects of having the government design a loan program. The QM rules create a conclusive presumption (a “safe harbor”) that the borrower of a QM that is not a high cost loan is able to repay the loan. Some commentators have suggested that the reliance of the lawmakers on the debt-to-income ratio in granting this safe harbor will mask the real risk of non-payment (see the “ability-to-pay” discussion, above). In addition, the creation of a series of incentives and disincentives may lead to a “check-list” mentality among mortgage lenders where, so long as all of the regulatory requirements are met, the loan will be made, or not made, without regard to any need for underwriting or decision-making skills on the part of the lender. Another possible result is a shift to certain loan products that take advantage of the exceptions to these rules, such as open-end loans and reverse mortgages. LOAN SERVICING The Mortgage Act added several requirements for mortgage loan servicers. They range from the informational, such as periodic billing statements, interest rate adjustment notices and payoff notices, to the substantive, such as the requirement to promptly credit payments and restrictions on force-placed insurance. Some of these are current requirements in either federal or state law, but the act takes over the regulation, making them uniform in most cases. As with the loan origination disclosures, use of the model forms provided in the regulations will protect the servicer from liability for improper disclosure, provided the information in the disclosures is accurate.

As discussed above with respect to loan origination, the servicing requirements mean that new or upgraded systems, forms and procedures will be required (along with lawyers and consultants). As with initial disclosures and procedures with respect to lenders, a large volume of customers will help defray these costs for large mortgage servicers, while possibly causing smaller institutions to outsource servicing or otherwise retreat from the servicing industry. LOAN DELINQUENCY AND DEFAULT The Mortgage Act’s servicing requirements also require “early intervention” and continuing contact by a mortgage servicer with a delinquent borrower. The final rules contain very lengthy and specific rules for servicers to follow when pursuing a “loss-mitigation strategy” (otherwise known as a “workout”). As with the other loan servicing requirements, these rules will provide a degree of consistency in a mortgage servicer’s operations, since most of the requirements have to do with notices and timing of the workout process. Currently, loan servicers must comply with sometimes overlapping requirements from GSEs and other investors. The act does require an appeals process and a requirement that a foreclosure must be delayed until no loss-mitigation strategy is feasible, either because the borrower is not cooperating or because the borrower does not qualify for any of the servicer’s loss-mitigation programs. This may or may not require changes to mortgage documentation. CONCLUSION While the devil is often in the details, the Mortgage Act left few details to be developed. Mortgage lenders and servicers have enough current knowledge to start revising forms and processes in order to comply with the act, or, alternatively, to determine that the cost of doing so outweighs the potential income in remaining in the mortgage business. Time will tell. Edmund Harllee is an attorney with Williams Mullen in McLean, Va. Contact him at eharllee@williamsmullen.com or (703) 760-5208. March/April 2013 | Virginia Banking 17

Line

Legal

Patco Construction Co., Inc. v. People’s United Bank The Multifaceted, Evolving Bank Liability Standard for Corporate Account Takeovers, Cyber Theft and Unauthorized Transfers

T Mel Tull General Counsel, Virginia Bankers Association

he growth of electronic banking and greater sophistication of cyber thieves continue to increase the risks for account takeovers, cyber theft and unauthorized transfers. Security measures must continually be evaluated and improved to adequately safeguard customer information and minimize losses from electronic account theft. The standards for allocating liability for those losses between financial institutions and their customers continue to evolve as well. Regulation E limits a consumer customer’s liability for unauthorized electronic funds transfers from a consumer account and imposes much of that liability on the bank.1 A different, more nuanced, rule applies to commercial accounts, partly because the financial and technological sophistication of commercial customers varies greatly and because commercial account transactions involve substantially greater amounts. Under Article 4A of the UCC, financial institutions bear the risk of loss for unauthorized transfers unless the bank can show that the payment was sent by an authorized person or the bank followed commercially reasonable security procedures.2 The standard is not whether the security procedure is the best available, rather it is whether the procedure is reasonable for the particular customer, bank, account and transactions involved. The FFIEC’s Authentication in an Internet Banking Environment provides additional guidance that applies to both retail and commercial customers. It recommends conducting risk-based assessments and adopting authentication techniques tailored to address the risks associated with specific characteristics of the customer, products and services. Where risk assessments indicate the use of single-factor authentication is inadequate, financial institutions should implement multifactor authentication, layered secu-

rity, customer awareness programs and other controls reasonably calculated to mitigate those risks. The guidance does not endorse any particular technology. In Patco Construction Co., Inc. v. People’s United Bank, 684 F.3d 197, (1st. Cir. July 3, 2012), the First Circuit Court of Appeals held a bank potentially liable for its corporate customer’s losses after hackers infiltrated the customer’s computer systems, stole the customer’s bank account access security information, and used that information to initiate unauthorized funds transfers from the customer’s account. In seven days, nearly $600,000 of fraudulent wire transfers were made from Patco’s account before the fraud was discovered. The court found the bank’s security procedures were not “commercially reasonable” under Article 4A. According to the court, the bank worked with a third-party vendor to conduct a risk assessment and institute appropriate authentication protocols to comply with the FFIEC’s guidance. The bank determined that its e-banking product was a “high risk” system that required enhanced security, and in particular, multifactor authentication. The security system they implemented included: • use of a company ID and password and a user-specific ID and password; • challenge questions for transactions in excess of a specified dollar amount; • a “device cookie” placed on customer computers so the bank could identify them; • customer risk profiling; and • a system that compared transaction characteristics (such as the user’s internet address) with those of known instances of fraud and automatically blocked suspicious transactions. The bank set the transaction threshold triggering challenge questions at $1.

Mel Tull can be reached by email at mtull@vabankers.org. 18 Virginia Banking | March/April 2013

www.vabankers.org

The court concluded the bank’s security system was commercially unreasonable because the $1 trigger substantially increased the risk of fraud by asking for security answers for every transaction. This policy made customers like Patco, which often had multiple transactions each week, more vulnerable when its computers became infected with “keylogger” malware because it was more likely the customer would be prompted to answer its challenge questions before the keylogger malware was discovered and removed from the customer’s computer. The court also noted the bank’s failure to adopt additional security measures such as hardware based “tokens” and other means of generating “one-time” passwords, and indicated this failure was especially unreasonable in light of the fact that the bank had knowledge of recent increases in internet fraud involving keylogging malware. The court also considered the security system to be commercially unreasonable because it generated warnings that fraud was likely occurring, but the bank neither monitored the transactions nor provided notice to Patco before allowing the transactions to be completed. The payment orders at issue were wholly uncharacteristic of Patco’s ordinary transactions in that they were directed to accounts to which Patco had never before transferred money, they originated from computers Patco had never before used, they originated from an internet address Patco had never used, and they specified amounts significantly higher than the payments Patco ordinarily made to third parties. As a result, the security system flagged these transactions as uncharacteristic, highly suspicious, and potentially fraudulent from a “very high risk non-authenticated device.” The transactions generated unprecedentedly high risk scores ranging from 563 to 790, well above Patco’s regular risk scores which ranged from 10 to 214. Yet, no one at the bank saw the risk flags and no one at Patco was notified. www.vabankers.org

The court emphasized that it was these collective failures taken as a whole, rather than any single failure, which rendered the security system commercially unreasonable. The court then noted that commercial customers may have system security responsibilities even when a bank’s security system is commercially unreasonable, and a customer’s failure to satisfy those responsibilities could impact the allocation of liability between a bank and its customer or mitigate damages. The court remanded the case back to the district court to make that determination. The parties later settled the dispute, which means the district court will not make that determination. Bankers and their commercial customers will now have to wait for the next bank account cyber theft case to make its way through the court system to find out how the liability allocation standard will ultimately evolve.

Regulation E limits a consumer customer’s liability to $50 if they notify the financial institution within two business days after learning of the loss or theft of an access device such as a debit card. If the consumer fails to report the loss within two business days, his or her potential liability increases to $500. If the consumer fails to notify the bank about unauthorized transfers appearing on a statement within 60 days after the bank’s transmittal of the statement, the consumer’s liability is unlimited for unauthorized transfers occurring after the 60th day.

Virginia has substantially adopted UCC Article 4A in Title 8.4A of the Virginia Code.

Resourceful. Responsive. Reliable.

Do business with someone who thinks like you. www.CBBonline.com

804.239.0452 March/April 2013 | Virginia Banking 19

STRONG TURNOUT FOR BANKER DAY 2013 M

ore than 370 bankers from all

ing by the VBA staff. Bankers then met

The VBA would like to thank ev-

over Virginia made their pres-

with their state legislators throughout

eryone who participated in this year’s

ence known at the General Assembly

the morning, discussing key industry is-

Banker Day. Both legislators and lob-

Building on Jan. 10 at the Virginia Bank-

sues. Topics of importance included de-

byists from other industries took note

ers Association’s annual Banker Day

rivative transactions, IOLTA, tort reform

of the significant banker turnout at this

event. This year’s attendance number

legislation, lien preferences, education

key event.

clearly demonstrated that Virginia bank-

and the state budget.

Thank you to all Leadership Divi-

ers are engaged and understand the im-

Following a full morning of meetings

sion members who joined us for the

portance of a strong grassroots effort as

at the General Assembly Building, at-

Pre-Banker Day Reception at the Ber-

the 2013 General Assembly session be-

tendees gathered for a luncheon at the

ry Burk. The event, sponsored by the

gan.

Downtown Richmond Marriott. The lun-

VBA’s Leadership Division, attracted a

Led by VBA Chairman Jeff Szyperski

cheon featured a discussion with Ameri-

group of more than 40 people and pro-

and VBA Government Relations Com-

can Bankers Association Executive Vice

vided the opportunity to network with

mittee Chairman Monte Layman, the

President for Communications Stepha-

other Banker Day participants.

day started with a greeting by House

nie O’Keefe, who focused on the ABA’s

Speaker William J. Howell and a brief-

communication plan for the industry.

20 Virginia Banking | March/April 2013

Save the date for Banker Day 2014 on Thursday, Jan. 9!

www.vabankers.org

March/April 2013 | Virginia Banking 21

Move

Bankers on the

McVey

Jacobson

Tressler

Dorn

Sewell

Haque

Bank of Hampton Roads

Freedom Bank of Virginia

Kevin Chase, Senior Vice President

Kevin Curtis, Chief Lending Officer

Benchmark Community Bank

John Marshall Bank

Courtney Bender, AVP/Compliance/BSA Officer Michell Savee, Relationship Banker

Erik Dorn, Senior Vice President Lynn Gulick, Senior Vice President for Business Development Heather Skigen, Senior Vice President/Senior Credit Officer

Cardinal Bank Jaimie B. Jacobson, Vice President, Commercial Loan Officer William “Randy” McVey, Vice President, Commercial Loan Officer Monica L. Tressler, Vice President, Assistant Vice President

Shore Bank Jean Sewell, Senior Vice President/Director of Marketing

TD Bank

Community Bankers’ Bank

Tina S. Haque, Store Manager

Emily K. Maze, Vice President & Loan Portfolio Officer Charles B. Akers, Assistant Vice President & Senior Credit Analyst Robin Cupka, Senior Vice President, Senior Loan Officer Nancy Sullivan, Senior Vice President, Senior Credit Officer

Virginia Commonwealth Bank Lori K. Powell, Senior Vice President/Commercial and Consumer Lender

First State Bank Kenneth Yates, Senior Vice President, Chief Lending Officer

Are your bankers on the move? Email submissions to kroberts@vabankers.org.

Legislative Update Continued from page 10 In addition to the unresolved conclusion of these weighty fiscal issues, matters directly impacting the banking industry also face an indeterminate fate in the new Congress. While this marks the first session absent its two namesakes in Congress, significant legislative alteration to provisions in the DoddFrank Act are likely to remain a struggle. Despite an anticipated continuation of pushback from the House to certain aspects of the law, especially in regards to the structure and funding of the CFPB, and signals of openness from members in both parties and chambers to revisit technical matters to clean up, Democratic Senate leadership and the Obama administration have made clear they are unwilling to repeal or substantially 22 Virginia Banking | March/April 2013

remake the law. The recent uncertainty surrounding the validity of the CFPB director’s appointment could portend an opportunity to revisit alterations to the regulatory agency, but advocates of the current status quo have thus far remained entrenched. Chairmen of the respective committees that traditionally handle banking legislation – House Financial Services and Senate Banking, Housing and Urban Affairs – have indicated they plan to tackle oversight of regulatory implementation, addressing housing finance policy and promoting access to capital. There will be competing views on how to deal with each of those topics and many, especially GSE reform, are unlikely to be fully resolved. Both bodies will once again have a bill on examination fairness

and reform which we will continue to advocate for passage. With Warner and 5th District Congressman Robert Hurt serving on their respective chambers’ banking panels, Virginia bankers will have the opportunity to help shape the discussion as each have been open to hearing our views. Legislators have expressed a willingness to push back on regulator overreach, such as the letters on the Basel III proposals, and many understand the stifling consequences of the uncertainty pervading our industry. The previous Congress did little legislatively to address those concerns. In order to ensure real action, bankers across Virginia and the nation must continue to engage with our elected leaders in the new Congress. Otherwise, expect more of the same. www.vabankers.org

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