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CSBS Examiner

A weekly report of events affecting the state banking system from the Conference of State Bank Supervisors


 In This Issue...

 Upcoming Events...

Day One: Examiner Training, Web-based (ongoing)MSB Examiner Training, Mortgage Examiner Training, and Bank Safety & Soundness Examiner Training. CSBS's Day One platform allows examiners to begin training on their first day on the job instead of delaying training while waiting for an on-ground school to become available. These innovative online training modules enable examiners to get up to speed more quickly.

Fraud Identification Training *Web-Based*, October 2-November 3: This course examines financial institution practices and procedures that would be considered red flags, potential examination procedures that would identify such weaknesses, and the corrective measures needed to improve them. 

Real Estate Appraisal Review *Web-Based*, October 2-November 3: This course analyzes how the regulatory agencies and supervised institutions use appraisal reports, describes the various types of appraisal reports, explains the appraisal valuation process, identifies and describes the relevant factors about the property and the market, and much more.

Bank Analysis School, San Diego, CA, October 2-6: Designed to expand on the Day One: Bank Safety & Soundness Examiner Training program, attendees focus on analysis of asset quality, earnings, capital, liquidity, and sensitivity to market risks. 

IT Examiner School, San Diego, CA, October 2-6: This school provides a broad overview of the IT examination process. Attendees gain an understanding of how IT meets banking and basic IT infrastructure.

Examiner Education Forum/Learning 2017, Orlando, FL, October 22-25: A forum for financial regulatory department training contacts and directors to discuss trends and needs in examiner training. CSBS is again partnering with the Masie Center in their Learning 2017 Conference. 

IT Examiner School, Salt Lake City, UT, November 6-9: This school provides a broad overview of the IT examination process. Attendees gain an understanding of how IT meets banking and basic IT infrastructure. 

ETS Custom Template Building Class, Washington, DC, November 7-8: Hands-on instructor-led course on how to build custom templates within ETS. The instructors are state regulators, have vast knowledge on all functionality and have built custom templates for their banking departments. 

Real Estate Appraisal Review Course, Palm Desert, CA, November 13-17: This course analyzes how the regulatory agencies and supervised institutions use appraisal reports, describes the various types of appraisal reports, explains the appraisal valuation process, identifies and describes the relevant factors about the property and the market, describes the identification aspects of highest and best use analysis step of the appraisal valuation process, and much more. 

Large Bank Supervision Forum, Arlington, TX, November 13-15: This training is comprised predominantly of presentations and facilitated discussions, and is designed to provide participants with an overview of the large bank supervisory processes and key regulatory concerns that are specific to large, complex financial institutions. This course was developed for senior examiners involved in the supervision of large banks to collaborate and will complement other federal Large Bank Supervisory programs. 

Effective Meetings with Management School, Palm Desert, CA, November 13-17: is based on expanding communication skills with upper and lower-level management, managing effective meetings in the workplace, dealing with conflict, and delivering difficult messages. It also includes an out-of-the box approach on fact finding interviews to enhance examiner skills and abilities to think on their own and utilize all the resources available to them. 

Introductory BSA/AML Examiner School, Palm Desert, CA, November 13-17: This school provides a strong base for attendees’ BSA compliance knowledge and adds value to their regulatory agency, financial institution, or money service business. 

“Pivot! Pivot! Pivot! Pivot. Pivot. Pivot.”  – Ross (Friends), trying to get a couch into an apartment. Friends debuted this day in 1994.

CFPB Seeking Comment on HMDA Data to be Made Public

The CFPB released this week its proposal on what data on home mortgages will be made public, and is seeking comment on its proposal.

The Home Mortgage Disclosure Act requires many lenders to report and disclose to the public certain information about their mortgage lending activities.

In 2015 the CFPB finalized changes to Regulation C, the CFPB’s rule implementing HMDA, updating the quality and type of data that financial institutions report. Financial institutions will begin collecting the new information in 2018, which includes data fields such as the property value, the interest rate of the loan, and the applicant’s debt-to-income ratio.

The CFPB proposal would exclude loan-level data like property addresses and credit scores, as well as data that could be used alongside public data to reidentify a customer, such as the loan officer’s identification number in NMLS.  Additionally, the CFPB plans to exclude content such as race or ethnicity from publicly-released data. For some data fields that may be too specific for public release but nonetheless valuable information (like property value or applicant age), the CFPB is proposing using rounded numbers or ranges of numbers to prevent easy identification of applicants.

The public comment period will be open for 60 days after the proposal is published in the Federal Register. More information can be found on the CFPB’s website.

CSBS Releases State-by-State Marijuana Policy Map

CSBS released Wednesday an interactive map sharing comprehensive data on state-by-state policies concerning marijuana use.

The map directly displays whether a state fully permits marijuana ownership, only allows possession of marijuana for medical purposes, or does not permit marijuana.

When a state is clicked, further information is made available, such as the types of medical and recreational marijuana licenses that exist and more information from the state agency with the authority to provide licenses. Additionally, the map provides a tab of information with federal documents on state management of marijuana policy, including the Controlled Substances Act and memoranda setting expectations on how to handle states legalizing marijuana.

Institutions or individuals with further questions on the legality of cannabis or the financing of marijuana-related activities should contact their relevant state licensing or chartering authority.

Louisiana Commissioner Shares Insight on State Community Banks

The Community Banking in the 21st Century conference committee has launched its “Commissioner Commentary” video series. The series features state banking commissioners discussing how community banks meet the credit needs of the communities they serve. The first video in the 2017 series features Louisiana Commissioner John Ducrest discussing how community banks were able to help lead the post-Hurricane Katrina recovery efforts in their local communities.

“A Community Bank has to live in its community,” said Guy Williams, President of Gulf Coast Bank and Trust. “If our community doesn’t make it, we don’t make it.”

In 2005, Louisiana was struck by Hurricane Katrina, one of the largest natural disasters in the history of the country. After the levees broke in New Orleans, many financial institutions were left starting again without branches or operations centers.

Louisiana Commissioner John Ducrest, responding to the crisis, brought together bankers from across the state at the Louisiana Bankers Association. Gulf Coast Bank and Trust, after hearing some major banks indicate they planned on waiting for the area to recover, decided to take the lead and reopen.

The bank reopened their branch in Baton Rouge and began reassuring customers that their money was not lost. When reopening in St. Bernard, the bank decided to completely landscape their land, sending a message to the local community that the city would come back and that it was time to rebuild.

State Regulators Issue Consumer Advisories on Equifax Breach

Several state agencies are now sending out advisories to consumers on how to best protect themselves after the cyber-breach at Equifax.

Pennsylvania, for example, issued an advisory to consumers on how to “take control” of their personal data following the breach.

“We are living in an age where technology has made simple tasks easier and complex functions more convenient,” Pennsylvania Secretary Wiessmann said. “However, along with these advances in technology, the associated risks to consumers have evolved and become more challenging and daunting. People’s identities can be stolen, their bank accounts can be drained, and their credit can be ruined by criminals in distant lands over the course of weeks, months, or even years.”

New York issued a similar advisory, telling consumers to review their personal data and confirm the validity of data in their Equifax reports.

“The scope and scale of this cyberattack is unprecedented and DFS is prepared to take all actions necessary to protect New York’s consumers and financial markets,” New York Superintendent Vullo said.  “Given the seriousness of this breach, the potential harm to consumers and our financial institutions, and in light of the fact that a number of financial institutions have arrangements with Equifax under which financial institutions provide consumer account and debt information to Equifax and receive similar information from Equifax, DFS is issuing this guidance to ensure that this incident receives the highest level of attention and vigilance at New York’s regulated institutions.”

Several additional states have also released similar advisories. If a consumer has questions or concerns, they should contact their state financial agency.

Closing Comment

"During a crisis, it is critical to show empathy towards those who have been affected.”

     - David E. Johnson, in an American Banker piece on how Equifax has mismanaged its crisis plan following a cybersecurity breach.

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