Pub. 7 2019 Issue 1

www.uba.org 4 S ignificant progress at the regulatory agencies as well as the passage and implementation of long-sought bipartisan regulatory reform made 2018 a breakthrough year in many ways. The new year brings fresh challenges, including how to maintain momentum for policy improvements in the face of a newly divided Congress. But as I have said on many occasions, the fundamental business of banking — from the deployment of credit to the building of communities — does not belong to one party. Banking issues can and should be bipartisan. So while our tactics might change with the new dynamic in Washington, our agenda hasn’t, and won’t. ABA will actively advocate on a range of policy issues in 2019, including additional regulatory reforms that didn’t make it into S. 2155, such as exam-fairness provisions that would establish deadlines for banking agencies to issue exam reports and create an independent examination review and appeal process. Other topics we think are ripe for bipartisan action include: Bank Secrecy Act Reform There is growing consensus that now is the time to update the com- pliance structure surrounding the nation’s anti-money laundering rules, which has not changed since 1970. We will be working to build bipartisan support for BSA/ AML reform, including updated Suspicious Activity Re- port and Currency Transaction Report thresholds, further modifications to customer due-diligence rules and better com- munication between banks and law enforcement. Cannabis Banking As cannabis is now legal in some form in 33 states, the growth in dispensaries as well as numerous fast-growing offshoot businesses is putting our industry in an untenable position. A bank might choose not to serve a marijuana grower or dispen- sary since cannabis remains illegal under federal law, yet still face significant legal, operational and regulatory risk if it offers services to a customer with a tangential connection to cannabis. We’ve heard many stories, like the bank that was told by its reg- ulator not to lend any more to a local mall owner after it leased space to a cannabis dispensary. This conflict between federal and state law is reaching a tipping point, and we believe Congress and regulators must provide greater legal clarity. Watch for hearings, likely to begin with the House Financial Services Committee, and for the introduction of bills that address banks’ challenges. While ABA is not weigh- ing in on the societal, cultural or moral aspects of this issue, we do want legal protections for banks providing services in states where cannabis is legal. CECL Accounting Standard Understanding the impact that the Financial Accounting Standards Board’s Current Expected Credit Loss accounting standard will have when fully implemented is a significant chal- lenge. But we know that the standard’s upfront loss recognition changes the economics of lending and could force hundreds of banks to raise capital or limit their product offerings. For this reason, ABA is advocating that a thorough quantitative impact study be conducted before allowing the standard to take effect. 2019: Different Approach, Same Agenda By Rob Nichols, President and CEO, American Bankers Association