November 17, 2021
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Vendor * Spotlight
Pushback continues against SBA direct lending plan

ICBA continued its campaign opposing proposed changes to the SBA 7(a) loan program in the House budget-reconciliation bill.
In a letter to House and Senate leaders, ICBA said the bill’s proposal to authorize the SBA to issue direct 7(a) loans would harm small businesses and taxpayers.
The letter says:

  • The proposal may not comply with the Byrd Rule because its budgetary effects are incidental to the nonbudgetary components of the provision, so it should not be considered under reconciliation procedures.
  • The SBA canceled a previous direct lending experiment because the subsidy rate was 10 to 15 times higher than that for loan guaranty programs.
  • With the PPP ending successfully, the SBA has already guaranteed a record $30.1 billion in 7(a) lending in fiscal 2021.
ICBA has spoken out against the proposal in a news release, previous letter to committee leaders, and testimony before the House Small Business Committee.

Source: ICBA
Chip shortage could harm payment card access

Payments groups expressed concerns to the Commerce Department about the impact of semiconductor supply chain risks to U.S. consumers and businesses.
In a Joint Letter: The groups said:

  • EMV “chip” cards have helped reduce fraud at the physical point of sale.
  • Contactless card usage has increased due to the pandemic.
  • Expiration dates are embedded in EMV chips and cannot be turned off, so extending the lifespan of a payment card is not a feasible option for addressing potential chip shortages.
  • The payments industry should be designated as a priority industry to mitigate possible disruptions.
  • Policymakers should work on long-term domestic chip production improvements.
An impending chip shortage caused by pandemic-era supply chain disruptions could affect consumer access to payment cards.

Source: ICBA Bancard
Treasury targets ransomware operators

The Treasury Department announced a new round of coordinated actions as part of the federal government’s response to ransomware.
The Office of Foreign Assets Control designated and targeted with sanctions:

  • Chatex, a virtual currency exchange, for facilitating financial transactions for ransomware actors.
  • Ukrainian Yaroslav Vasinskyi and Russian Yevgeniy Polyanin for perpetuating Sodinokibi/REvil ransomware incidents.
Additionally, the Financial Crimes Enforcement Network updated its ransomware advisory with information on current trends, typologies, recent incidents, and red flags.

Source: Treasury Department
Mortgage-servicing flexibility ends

Federal and state regulators rescinded regulatory flexibility for mortgage servicers issued in April 2020.
Regulators last year said they would not take action against servicers for failing to meet certain timing requirements under Regulation X servicing rules as long as servicers made good-faith efforts to provide required notices or disclosures within a “reasonable” time.
In a new joint statement, the agencies said the flexibility no longer applies because servicers have had sufficient time to adjust their operations. They will thus apply their regulatory authorities to address noncompliance or rule violations.

Source: Financial Institution Regulators
Regulators continue raising digital asset concerns

U.S. regulators continued raising concerns about digital assets as policymakers work to develop a regulatory framework.
In a public statement, SEC Commissioner Caroline Crenshaw spotlighted risks posed by decentralized finance and smart contracts, noting that few people can understand the code on which these instruments are based and even experts can miss flaws or hazards.
Separately, this recent Federal Reserve Financial Stability Report rates stablecoins and cryptocurrency as the fifth-most-cited potential financial shock over the next 12-18 months, ahead of climate, political uncertainty, and cyberattacks.
ICBA is encouraging regulators to collaborate on a comprehensive approach to unregulated platforms and expressed support for efforts to ensure a consistent federal regulatory framework for stablecoins.

Source: SEC; Federal Reserve; ICBA
Treasury issues guidance on small-biz capital program

The Treasury Department issued guidance on the State Small Business Credit Initiative Program, which will provide a combined $10 billion to jurisdictions to fund small-business programs. The funding will go toward venture capital, loan participation, loan guarantee, collateral support, and capital access programs.

Source: Treasury Department
FedNow step-by-step guide released

The Federal Reserve released a new step-by-step overview of how the FedNow instant payments service will work.
The overview and the complete FedNow Service Readiness Guide are available on the agency’s resource center.

Source: Federal Reserve
Economy at a glance

Consumer sentiment drops to 10-year low
Consumer sentiment fell in early November to its lowest level in a decade due to escalating inflation, according to the University of Michigan’s index. The sentiment index declined 6.8% from October and was down 13.1% from a year ago

Gas prices fuel October CPI increase
The Consumer Price Index increased a seasonally adjusted 0.9% in October on a 6.1% increase in the gasoline index after rising 0.4% in September, the Labor Department reported. The index is up 6.2% over the past 12 months.p

Wholesale inventories continue gains
Wholesale inventories rose 1.4% in September and were up 13.1% from a year ago, the Commerce Department reported. Sales rose 1.1% from the previous month and were up 22% from last year.

Household debt rises in Q3
Overall household debt balances increased during the third quarter, the New York Fed reported. The increase was bolstered primarily by a sizeable increase in mortgage balances and a second consecutive quarterly gain in credit card balances.

Small-biz optimism edges down
The NFIB Small Business Optimism Index decreased 0.9 points in October to 98.2. The group said the lack of workers for unfilled positions and inventory shortages are fueling pessimism about business conditions in the near future.

Producer prices continue gains in October
The Producer Price Index increased a seasonally adjusted 0.6% in October following gains of 0.5% in September and 0.7% in August, the Labor Department said. The index is up 8.6% over the past year.

Source: Various