Aug 3, 2022
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Vendor * Spotlight
Senate spending deal excludes opposed tax provisions

The surprise deal, announced by Senate Majority Leader Chuck Schumer (D-N.Y.) and Sen. Joe Manchin (D-W.Va.) —which is supported by President Joe Biden and could reach the Senate floor as soon as this week—includes no tax increases that would directly target community banks.
 
In a recent letter to congressional leaders, ICBA said it continues to strongly oppose:
  • A 3.8% net investment income tax on active Subchapter S shareholders.
  • Any new requirements that financial institutions transfer customer financial data to the IRS.
  • Any increase in the taxation of capital gains or individual tax rates, including a new surtax.
  • Any cap or phaseout of the Section 199A deduction for shareholders in Sub S community banks and other pass-through small businesses.
 
None of these proposals are included in the draft deal, which under reconciliation rules could pass the Senate with a majority vote. Instead, the deal would:
  • Institute a 15% minimum tax on corporations with profits exceeding $1 billion.
  • Close the “carried interest loophole,” which allows the income of investment managers to be taxed as capital gains at 20%.

Source: ICBA
SBA accepting requests for PPP partial-forgiveness reviews

The Small Business Administration said its Paycheck Protection Program platform can now accept borrower requests to review lenders’ partial forgiveness decisions.
 
Under a procedural notice issued earlier this year:
  • When a lender receives a forgiveness remittance from SBA on a PPP loan for which only a portion was forgiven, the lender must inform the borrower that it has 30 calendar days to seek an SBA loan review of the lender’s partial approval decision.
  • Lenders were required by Feb. 26 to notify all borrowers with loans that received a partial forgiveness decision that they have 30 days to seek the review through their lender.
  • SBA retains discretion to accept or deny the borrower’s request to review the loan.
  • If SBA selects the loan for review, the loan is not deferred and the borrower must continue to make payments on the remaining balance of the loan.
Source: SBA
House panel advances overdraft bill

The House Financial Services Committee voted to advance legislation that would impose new overdraft restrictions.
 
The Overdraft Protection Act of 2021 (H.R. 4277)—which passed on a 27-22 party-line vote—includes restrictions such as barring financial institutions from charging an overdraft fee more than once per month and six times per year.
 
ICBA, ACB and 42 other state community banking associations continued calling on the committee to reject the legislation, noting it would lead to bounced checks, declined transactions, credit rating harm, and other unintended consequences.
Source: ICBA
Senate drops postal banking funding

Senate appropriators dropped a legislative proposal to expand the U.S. Postal Service’s banking pilot.
 
The Senate Appropriations Committee’s fiscal 2023 financial services appropriation bill leaves out funding to expand the USPS banking pilot program, which offers financial services in four locations.
 
The announcement hinders congressional efforts to support the pilot after the House Appropriations Committee last month advanced a bill with $6 million to expand the USPS program.
 Source: ICBA
House passes notarization bill

The House passed legislation to expand consumer access to online notarization a day after passing a bill supporting de novo bank formation.
 
The bipartisan SECURE Notarization Act (H.R. 3962) would:
  • Authorize the nationwide use of remote online notarization for real estate transactions, financial services, and other legal documents.
  • Create a minimum national security standard for the use of RON.
 
The Promoting New and Diverse Depository Institutions Act (H.R. 4590)—which the House passed on a voice vote would:
  • Require federal regulators to study the challenges faced by proposed depository institutions—including minority banks—seeking de novo charters.
  • Provide legislative recommendations to help these institutions obtain charters.
Source: ICBA
Crypto - World

Stablecoin growth poses structural vulnerabilities

The value of outstanding stablecoins grew roughly fivefold last year, the Federal Reserve said in its 2021 annual report.
 
In the report, the Fed said stablecoins have structural vulnerabilities similar to those of other cash-like vehicles, making them susceptible to runs and posing risks to payment and financial systems.
 
The Fed also said it is studying the implications of crypto and other emerging financial technologies, which have raised fundamental questions about appropriate legal and regulatory safeguards.

Banking agencies should oversee stablecoins

The head of the Commodity Futures Trading Commission said his agency has a role in regulating cryptocurrencies, but stablecoins are payment systems that are best situated to oversight by the prudential banking regulators.
 
CFTC Chairman Rostin Behnam said he agrees with a report from the President’s Working Group on Financial Markets, which advocated legislation that would require stablecoin issuers to be insured depository institutions.
 
Behnam said the CFTC needs clear market oversight over digital commodity assets, though the debate over categorizing different digital assets as commodities under CFTC oversight or securities under the purview of the Securities and Exchange Commission remains ongoing.

FDIC, Fed order Voyager crypto firm to halt deposit insurance claims

The FDIC and Federal Reserve Board issued a joint letter demanding that the crypto brokerage firm Voyager Digital cease and desist from making false and misleading statements regarding its FDIC deposit insurance status.
 
The agencies said Voyager and certain officers and employees have said or suggested—including on its website, mobile app, and social media accounts—that:
  • Voyager itself is FDIC-insured.
  • Customers who invested with the Voyager crypto platform would receive FDIC insurance coverage for all funds provided to Voyager.
  • The FDIC would insure customers against the failure of Voyager itself.
 
The agencies noted that while Voyager maintains a deposit account for its customers at the Fed-supervised Metropolitan Commercial Bank, customers who invested through its crypto platform are not insured in the event of Voyager's failure.

FDIC issues fact sheet, advisory on crypto deposit insurance claims

The FDIC published a fact sheet to consumers and an advisory to financial institutions on FDIC deposit insurance and crypto companies.
 
The fact sheet says some crypto companies have misrepresented FDIC deposit insurance for crypto products and addresses common and emerging misconceptions. It notes that deposit insurance does not apply upon the failure of a nonbank and does not protect consumers with nondeposit products.
 
The advisory reminds FDIC-insured banks dealing with crypto companies to confirm and monitor that these companies do not misrepresent the availability of deposit insurance.
 
Financial firms targeted

Instances of "cryptojacking," a form of cyberattack where hackers target financial firms such as banks and trading houses, hijacking their computers to mine cryptocurrencies, have surged 30% to 66.7 million in the first half of the year, according to a report by SonicWall, Bloomberg News reported. The attacks more than tripled on a year-over-year basis.
Source: Various
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With the exception of official announcements, the Arkansas Community Bankers Association Board of Directors, Officers and staff disclaim any responsibility for opinions expressed and statements made in articles published in Arkansas Community Bankers NewsWatch 2022.
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