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Community Banks Reissue 4M Cards Following Data Breaches

ICBA NewsWatch Today 02/20/2014

SecurityCommunity Banks Reissue 4M Cards Following Data BreachesThe nation’s community banks have already reissued more than 4 million credit and debit cards at a total reissuance cost of more than $40 million following recent data breaches at major retailers, according to a recent ICBA survey. Due to their quick action in reissuing affected cards, community banks’ initial fraud costs were relatively low, with less than 1 percent of community bank customers reporting fraud on their accounts following the breaches at Target and Neiman Marcus. In a national news release, ICBA said that while its joint cybersecurity partnership with other financial services and retailer trade organizations is a step in the right direction, the association has not wavered in its commitment to represent community banks and their customers in the wake of the data breaches. Read ICBA Release.SecurityLoving, Fine: ICBA Taking Meaningful Steps to Stronger Payments SystemICBA recognizes how frustrated community bankers are by the recent retailer data breaches and is working to minimize the impact of the breach on the industry, ICBA Chairman Bill Loving and ICBA President and CEO Cam Fine wrote in a message to community bankers. Loving and Fine noted that ICBA has released various resources to help community banks respond to the breaches, has been in frequent communications with policymakers, and recently joined a partnership of financial services and retailer organizations to enhance inter-industry collaboration. They noted that ICBA will continue to pursue more effective data-security standards and greater accountability following data breaches. ICBA believes that:

  • the costs of data breaches should ultimately be borne by the party at fault for the breach,
  • all participants in the payments system—including merchants—should be subject to Gramm-Leach-Bliley Act–like data security standards already applied to financial institutions,
  • a national data-security breach and notification standard should be enacted to replace the current patchwork of state laws,
  • unnecessary barriers to effective threat-information sharing between law enforcement and the financial and retail sectors should be removed, and
  • while community banks and other financial institutions continue to utilize chip technology for debit and credit cards, these technologies alone may not have prevented the recent retailer breaches and do not protect against fraud in “card-not-present” transactions, such as online purchases.

“ICBA will continue pushing these priorities for as long as it takes to enact meaningful protections for our industry, our customers and our communities,” Loving and Fine wrote. Read the Joint Message. Access ICBA Data Breach Resources.RegulationICBA Urges Fed Nominee with Community Bank ExperienceICBA urged President Barack Obama to nominate to the Federal Reserve Board someone with a background in community banking or community bank supervision. The departure of former community banker Elizabeth Duke and former Maryland commissioner of financial regulation Sarah Bloom Raskin will leave the board without sufficient community banking experience, ICBA wrote in a letter to Obama. Because community banks serve a vital role in the nation’s economy, particularly with respect to small businesses and rural communities, there should be someone on the board who understands the community bank perspective, ICBA wrote. ICBA noted that community banks hold 46 percent of all small loans to businesses and farms made by FDIC-insured institutions and the majority of bank deposits in rural and micropolitan communities. Additionally, the board would gain from someone with community banking experience who could help with supervision of state member community banks and holding companies and systemically risky financial institutions, ICBA wrote. The association noted that the crushing regulatory burden on community banks makes tiered regulation imperative and that a community banking presence would have prevented recent unexpected Volcker Rule compliance problems. Read ICBA Letter.ICBA NewsWatch Today is sponsored by QwickRate:Need to replace deposits without repricing your base? Post rates on QwickRate. Consistently. Attract a steady stream of institutional, non-brokered deposits – no transaction fees! Schedule a personalized webinar tour (introducing our beneficial new Bank Performance Report Card tool) to learn more or register for webinar on March 11, 2pm ET or March 12, 11am ET.RegulationICBA Backs Bill Allowing Reassessment of CFPB “Rural” DesignationICBA expressed strong support for legislation sponsored by Sens. Mitch McConnell (R-Ky.) and Rand Paul (R-Ky.) that would create a process in which individuals could petition the Consumer Financial Protection Bureau to reassess the rural status of counties. The CFPB’s annual designation of “rural” counties is used to administer restrictions on qualified mortgage balloon loans, escrow requirements for higher-priced mortgage loans and the second appraisal requirement for certain higher-priced loans. The petition process created by the HELP Rural Communities Act of 2014 (S. 1916) would allow for a broader range of evaluation criteria, more accurately identify rural counties, and help ensure continued access to mortgage credit in rural communities. In a letter to the cosponsors, ICBA noted that S. 1916 would make the CFPB’s mortgage rules more workable for community bank customers. ICBA also said it supports an alternative solution that would grant QM status and an exemption from escrow requirements to any community bank-originated mortgage loan held in portfolio, including balloon loans in rural and non-rural areas without regard to their pricing. Read ICBA Letter. PollTake This Week’s Quick PollTake this week’s Quick Poll on recovering defaulted debts, and view results from the previous poll on a proposal that the U.S. Postal Service enter the financial services industry. View the Archive.EducationWebinar Next Week Offers Advanced Tax Return Analysis for BanksAn upcoming ICBA webinar will address several advanced tax return concepts and related analyses for community banks. “Advanced Tax Return Analysis for Bankers,” scheduled for 11 a.m. (Eastern time) Wednesday, Feb. 26, will review personal 1040 tax returns and the returns of both LLCs and an Subchapter S corporations, including Schedules M-1 and M-2, Schedule K-1, pass-through transactions, and other deductions. The remainder of the webinar will cover tax topics for business clients, such as corporate tax issues, capital gain and loss issues, qualified retirement accounts, estate planning and more. Learn More and Register.

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