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Bank Closures in California and New York

The recent closures of Silicon Valley Bank and Signature Bank mark the first bank closures in nearly three years, underscoring the resilience of the nation’s banking industry. Nebraska banks are in a strong financial position to absorb economic shocks and continue to serve Nebraska communities.

During a call yesterday, Federal Deposit Insurance Corporation (FDIC) Deputy Director of Resolution Readiness Ryan Tetrick and FDIC's Senior Counsel Pen Stark reviewed “bridge banks” established following the closures. The bridge banks assumed the deposits and selected liabilities, as well as purchases of specific assets, of the failed banks. The mission of the CEOs of the new entities is to maximize value and minimize the cost to the Deposit Insurance Fund. The FDIC consistently indicated that the bridge banks can do anything that the original banks could do and that they have ample financial backing for purposes of liquidity and restoring confidence in the banks that continue to operate.

The FDIC representatives also shared information regarding the marketing of the two institutions for purposes of a potential acquisition. The FDIC is hopeful that a sale of both institutions will occur in the near future.

The new Bank Term Funding Program established by the Federal Reserve in response to the closures offers loans to eligible depository institutions for up to a year. The loans will require eligible assets, such as U.S. Treasuries, agency debt and mortgage-backed securities, to be used as collateral and valued at par. The program aims to provide an extra source of liquidity for high-quality securities, thereby eliminating the need for institutions to sell these assets during times of stress. See the program FAQ’s for more information. The Federal Reserve held a webinar today on the program. Access the recording by registering for Ask the Fed. 

The NBA is actively responding to the closures and remains in close contact with state and federal policymakers. Early Monday morning, we released a statement emphasizing the strength and stability of Nebraska’s banks. NBA President and CEO Richard Baier shared that message during interviews with several Nebraska media outlets, including 10/11, Fox42, KETV, KFOR, KLIN, KMTV and News Channel Nebraska.

Legislative Briefing

Join the NBA government relations team for an update on this year’s legislative session on March 17 at 9:00 a.m. CT via Zoom. The NBA government relations team will discuss several issues important to the banking industry including:

NBA Affirmative Legislative Agenda

• LB 69 (Life Insurance Assignment-Notice of Lapse/Termination)
• LB 94 (UCC Article 12)
• LB 207 (Trust Deeds-Location of Trustee’s Sale)
• LB 279 (Executive Officer Reporting Requirements) 
• LB 330 (Small Estate Affidavit-Endorsement of Checks)

Bills Opposed by NBA

• LB 67, LB 730, and LB 743-ESG 
• LB 483-Credit Union access to Public Funds
• LB 268, LB 476, and LB 594-Political Subdivision Investment Pools
• LB 721-Credit Union Expanded Powers 

State Budget

Tax Relief

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Rep. Mike Flood met with bankers at the NBA office on Monday. The recent bank closures, data privacy, tiered regulation and capital needs were among the topics of discussion. Flood shared his perspective on these issues as a member of the House Financial Services Committee.

An excess deposit bond is a cost-effective way to provide depositors with coverage that is over and above Federal Deposit Insurance Corporation (FDIC) coverage. The bond can be provided for all account and depositor types and puts the depositor in control of their excess deposit coverage.

For a comprehensive review of your bank’s insurance coverage, contact Mitch Florea at NBISCO at 402-904-7014 or [email protected].

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Legislative, Policy & Regulatory Updates

CFPB and DOJ: Mortgage Lenders Can be Held Liable for Discriminatory Appraisals from Third-Party Appraisers

The Consumer Financial Protection Bureau (CFPB) and the U.S. Department of Justice (DOJ) stated on Monday that mortgage lenders can be held responsible under federal law for relying on discriminatory appraisals from third-party appraisers. This statement was made in connection with a lawsuit where a black couple claimed that their Baltimore home was undervalued by an appraiser who had provided a higher appraisal after they replaced photos of their family with pictures of white people. The CFPB and DOJ argued that lenders are legally obligated not to rely on appraisals that are inaccurate or violate the law, and that lenders can be held liable for discriminatory appraisals under the Federal Housing Act and Equal Credit Opportunity Act.

Joint Agency Statement

Statement of Interest

Bankers are invited to attend the Nebraska Investment Finance Authority (NIFA) Innovation Expo on April 18-19 in Lincoln. The conference is an opportunity to learn about NIFA homebuyer and agriculture programs. Session topics include rural housing challenges, resources for multifamily development, opportunities for beginning farmers and ranchers and a community showcase. In addition, Richard Baier will be part of a panel on financial literacy. 

Learn More and Register