BankWise November 15, 2018

“Nearly 30 percent of the Minnesota House – 39 members – will be new in 2019. (Two have served before.)” – Minnesota House Public Information Service

Special Note:
BankWise will not be distributed on Thanksgiving Day. Look for our next update in two weeks!

After Minnesota House flips, new leadership named

Melissa Hortman, a seven-term lawmaker from Brooklyn Park, was chosen by the DFL caucus to be the next speaker of the Minnesota House. Hortman had previously served as minority leader. DFLers also chose Ryan Winkler, newly-elected representative from Golden Valley, to be their majority leader during the upcoming biennium. Liz Olson of Duluth was elected as the majority whip.
The DFL gained control of the House on Nov. 6 by flipping 18 seats to gain a 75-59 majority.
Current House Speaker Kurt Daudt, a Republican from Crown, will remain in charge of his caucus as House minority leader. Daudt had been speaker for the past four years.
The GOP retained control of the Minnesota Senate, where they have a 34-33 advantage. As such, Senate Republicans unanimously re-elected Paul Gazelka of Nisswa as majority leader and chose Jeremy Miller of Winona to be the next Senate president. Democrat Tom Bakk, who represents the Iron Range, remains Senate minority leader.
Voter turnout is typically strong in Minnesota; an estimated 64 percent of eligible voters participated in this year’s midterm election. Voters gave the Northstar State another unique distinction: Minnesota has the only split legislature in the country. The 91st legislative session begins Jan 8.

FDIC security audit comes up short

Cybersecurity is a challenge up and down the industry food chain. Consider a recent report by the Office of the Inspector General that reveals the information security programs at the FDIC are NOT considered effective. The report describes “security control weaknesses that limit the effectiveness of the FDIC’s information security program and place the confidentiality, integrity and availability of the agency’s “information systems and data at risk.”
It gets worse. The audit, conducted by an outside firm, said “the FDIC had not fully defined or implemented an enterprise-wide and integrated approach to identifying, assessing and addressing the full spectrum of internal and external risks.” The report also said the risk profile of the FDIC “limits its ability to make effective risk management decisions.”
Other areas of concern include ineffective patch management processes and an undeveloped enterprise security architecture. Problems are expected to be addressed by the end of the second quarter of 2019.
The one piece of good news is that the OIG will not make its entire report available to the public.


Fed invites comments on designing payments infrastructure

A gap exists between the transaction capabilities expected inside the digital economy and the underlying structure that facilitates payments settlement. The Federal Reserve is now seeking industry input on whether it has a role in closing that gap.
The Fed convened a series of Town Hall meetings to encourage industry participation in the discernment process and ICBM attended the Nov. 9 meeting hosted by the Minneapolis Fed.
The Fed is examining real time gross settlement as what it calls “the safest and most efficient infrastructure for faster payments.” Whether you agree or not, the Fed wants to hear from you. The comment window closes Dec. 14.


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Proposed change adds burden to CECL compliance

As industry advocates work to delay the CECL implementation date, the Financial Accounting Standards Board argues for a new change that could further complicate the standard.
The proposal, discussed last week by FASB, is an effort to make credit information more useful to investors by including loan origination dates with gross write-off and recovery data. It isn’t immediately evident how the requirement, which FASB admits will require more work, might impact community banks.
This is a good time to alert you to a new CECL tool provided by CLA, an ICBM-endorsed vendor. It’s an allowance calculator that can help you comply with the new standards. The calculator comes with implementation training and ongoing support. Contact ICBM to learn more.  


The USDA has just lowered its national projections for 2018 corn and soybean yields, yet this year’s crop production is still at or near record levels. The estimated total U.S. corn production for 2018 is 14.63 billion bushels, the second-highest after 2016; meanwhile, the estimated U.S. soybean production is at a record-setting 4.6 billion bushels.
Nationally, corn production is estimated at 178.9 bushels per acre; this represents a slight reduction, or 1.8 bushels per acre less yield than October estimates. Corn production in Minnesota is projected to be slightly higher than the national average at 184 bushels per acre.
Nationally, soybean production is estimated at 52.1 bushels per acre, slightly greater than Minnesota yield estimates of 50 bushels per acre.
While the demand for corn is up, demand for soybeans is expected to decrease by 190 million bushels because of reduced exports to China. 

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