The Daily Dividend: Industry News

News, notes and insights from around the industry

JULY 28, 2017
Friday Hot Links
By Mark Loehrke, Editor, Financial Managers Society

Nothing beats a good summer page-turner, so enjoy a few long reads for these long late-July days.

Ain’t No Party Like a Third Party
Vendor management is a topic to which almost every community institution can relate, which is why thinking about better ways to approach third-party risk should be a clear and ever-present priority for banks and credit unions. 

The Millennial Gravy Train
Millennials may have their share of financial wellness issues – not to mention a lack of huge sums of present-day funds – but financial institutions should consider that these are their potential customers of the future, which is why it makes sense to start learning how to better serve their needs. 

What They Don’t Know Can Hurt You
Credit unions have been fighting an uphill battle for years when it comes to knowledge and awareness among the general public, but a pair of recent studies outlining some of the gaps and fallacies that continue to fester shows just how steep the incline remains.  

JULY 27, 2017
NCUA Rearranges the Furniture
By Mark Loehrke, Editor, Financial Managers Society

What it ultimately means for the credit unions subject to its jurisdiction remains to be seen, but for its part the NCUA aims to “achieve greater efficiency, responsiveness and cost-effectiveness” through its recently announced plans to significantly restructure and consolidate its operations. 

In the release, NCUA board member Rick Metsger noted that “credit unions will reap tangible benefits” from the agency’s first restructuring work since 2003, which will unfold over the coming years and include:

Consolidating the agency’s five regional offices into three (the Albany and Atlanta offices will be closed) and eliminating four of its five leased facilities

Redefining and realigning the agency’s chartering and field-of-membership, credit union development, grants and loans, and minority depository institutions programs into a new Office of Credit Union Resources and Expansion

Restructuring the Office of Examination and Insurance into specialized working groups

The NCUA also plans to eliminate overlapping functions and improve its processes surrounding examination reporting, records management and procurement. The agency will provide more details on its plan – and the projected cost savings – in its fall budget briefing.


JULY 25, 2017
Four Rules for Ultra-Fast Change Management
By Hilary Collins, Assistant, Publications and Research, Financial Managers Society

Change management is always a struggle, as we’ve seen in the past and will learn more about in the future. Financial services especially seem to struggle to keep pace on a treadmill that is constantly speeding up. When dealing with outside changes and the inside shifts they necessitate, Margaret Keane gives us some principles to keep in mind:

Open Communication
Change creates anxiety within an organization, and open lines of communication and transparency can help quell concerns and increase buy-in. Listening can also help you hone in on problem areas that would otherwise have gotten lost in the headlong rush forward.

Consciously Build Culture
Use this new cycle of constant evolution to reaffirm your commitment to the parts of your culture that you want to keep and to better the parts of it that need improvement.

Be Creative
More specifically, be creative with policy. Many policies are outdated or out of touch with what your employees really want. As benefits like flex time and PTO become more ubiquitous, you might have to choose between losing employees or making new rules.

Celebrate
Change is tiring, and constant change can be exhausting. Make sure that you’re rewarding those who follow you, celebrating your successes, and allowing time for yourself and your employees to recharge.


JULY 24, 2017
In Brief
By Hilary Collins, Assistant, Publications and Research, Financial Managers Society

There’s always change afoot in the accounting world, and Crowe Horwath has your back with its latest Financial Institutions Executive Briefing, featuring updates from the accounting, governance, risk and compliance world, including:

The CFPB finalized TRID amendments this month, including tolerance provisions for the disclosed total of payments. These amendments will also correct and clarify topics such as affiliate charges, escrow account disclosures and payment ranges on the projected payments table.

The FASB issued new accounting guidance this month, addressing the accounting for certain financial instruments with down round features and mandatorily redeemable financial instruments of certain nonpublic entities and mandatorily redeemable noncontrolling interests.

The AICPA proposed a new framework for the valuation of financial instruments and their underlying components, providing guidance on performance requirements and more. 


JULY 21, 2017
Friday Hot Links
By Hilary Collins, Assistant, Publications and Research, Financial Managers Society

It’s been another stormy summer week, but there’s some sunshine in the news!

Record highs
Regulation hasn’t been able to keep banks down. In fact, quarterly net income is just shy of pre-recession record highs. It looks like banks can weather a crisis without sacrificing profit.

Setting the barometer 
With all the talk about building your organization’s brand, it’s easy to overlook a crucial fact: the people make the brand. The team you have in place is what sets the tone for your entire organization.

Whether the weather is hot
Everyone’s talking about climate change, and it might be a risk that banks will need to start addressing. A recent task force identified two ways climate change could potentially impact financial institutions: the risks created as we move toward a lower-carbon economy, and the physical risks of actual climate change.

Hot topic
If you missed the FMS Forum in Las Vegas, don’t worry. Baker Tilly has your back with a quick recap. Catch up on the main themes we covered and join us for more at the 2018 Forum in sunny Orlando! 

 

JULY 20, 2017
Post Crisis
By Hilary Collins, Assistant, Publications and Research, Financial Managers Society

Many things were permanently changed by the subprime crisis of 2008, and community institutions have been toiling to keep up with regulatory changes ever since. Banks have felt pressure to both step away from making home loans and servicing said loans. And while regulatory relief might be coming soon, it’s not here yet.

Some quick numbers on how things have changed since the crisis:

From 2008 to 2016, the percentage of home loans serviced by banks has fallen by 23%
From 2007 to 2015, 518 banks failed – but only one of those banks failed primarily because of its mortgage-servicing assets
Even if the borrower is up to date on payments, the cost of servicing a loan has almost tripled since 2008

The good news is that even under all this pressure, the industry (including community institutions) is still enjoying record profits. Yet with more manageable regulations, it’s likely that things might be going even better. 

Besides, smaller community institutions often have a built-in regulator that is the envy of any federal agency – word of mouth in a close-knit community that keeps them honest in ways that regulations simply can’t match.
 

JULY 18, 2017
The End of Arbitration?
By Hilary Collins, Assistant, Publications and Research, Financial Managers Society

Last week, the Consumer Financial Protection Bureau enacted a hotly contested new rule that bans financial institutions from using mandatory arbitration clauses in their contracts, arguing that these clauses prevent groups of customers from banding together to pursue their similar disputes in court under the banner of a class-action lawsuit, as opposed to working individually through an out-of-court arbitrator. The CFPB says these clauses have enabled institutions to avoid court cases, avoid paying out large refunds and continue harmful practices.

While the initial proposal generated more than 110,000 comments (most in opposition), in explaining his agency’s reasoning CFPB Director Robert Cordray said mandatory clauses made it “nearly impossible” for customers to take legal action when things went south, resulting in a “free pass” for financial firms to avoid the possibility of a court case while limiting the rights of consumers. Cordray backed up this assertion with a study showing that less than 7% of those customers subject to an arbitration clause knew they were unable to sue.   

“The clauses allow companies to avoid accountability altogether by blocking group lawsuits and forcing people to either go it alone or give up,” said Cordray. “Our new rule will stop companies from sidestepping the courts and ensure that people who are harmed together can take action together.”

While the ruling affects all consumer financial products and services, bank accounts and credit cards are among the most likely to have arbitration clauses in their contracts.


Contributors


Mark Loehrke
Writer/Editor
Email: markl@fmsinc.org 



Danielle Holland
President/CEO
Email: dholland@fmsinc.org 



Autumn Wolfer
Director, Membership and Marketing
Email: awolfer@FMSinc.org


Hilary Collins
Assistant, Publications and Research
Email: hcollins@FMSinc.org