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aRTiCLeS


          Ely: Tax Reform Reduces FCS’s                          GAO Finds Banking Agencies’

          Competitive Edge on Real                               Regulatory Analyses Are
          Estate Loans                                           Limited, Incomplete

          The tax reform bill has slightly reduced the           The reviews of regulatory effects
          competitive edge the Farm Credit System                on small institutions that financial
          enjoys on loans secured by real estate, Bert           agencies are required to conduct
          Ely reported in the latest edition of Farm             under the Regulatory Flexibility
          Credit Watch.                                          Act are often limited or incomplete,
                                                                 according  to  a  Government
          “The profits FCS institutions earn on real
          estate loans have always been exempt from              Accountability Office report. The
          federal and state income taxes while FCS   Bert Ely    GAO reviewed rulemakings issued
          profits on loans not secured by real estate,           by the Federal Reserve, FDIC, OCC, the Consumer Financial
          such as equipment and production loans, are subject to federal   Protection Bureau, the Securities and Exchange Commission
          income tax, but not state and local income taxes,” Ely noted.   and the Commodity Futures Trading Commission.
          “The reduction in the basic federal corporate income tax rate   In many cases, the GAO found that financial regulators
          from 35 percent to 21 percent  effectively has reduced, but   conducted only limited evaluations of the potential economic
          certainly did not eliminate, the tax disadvantage bankers have   effects of regulation and alternative regulatory approaches.
          long suffered in competing against the FCS for loans secured   Five of the six agencies surveyed did not disclose data sources
          by real estate.”                                       or methodologies used for their analyses and were unable to
                                                                 provide documentation to support their analysis, the report
          To read the Farm Credit Watch visit: https://
          bankingjournal.aba.com/2018/01/farm-credit-watch-tax-bill-  added.
          reduced-fcss-competitive-edge-in-real-estate-lending/  GAO made 10 recommendations to help the agencies meet
                                                                 RFA requirements, noting that “regulators will be in a better
          OCC Releases Report                                    position to minimize any significant economic impact of a
          Highlighting Cyber Threats                             rule on the small entities that the statute seeks to ensure.” ABA
                                                                 has previously raised concerns about regulators’ RFA analyses
          Facing Industry                                        and has long advocated for more rigorous examination of the
                                                                 effects of rulemaking on community banks and other small
          The  OCC  has  released  its                           institutions.
          Semiannual  Risk   Perspective
          report, highlighting several cyber-                    To read the report visit: https://www.gao.gov/
          related risks facing U.S. banks. The                   assets/690/689732.pdf
          report noted that operational risks
          continue to be a major challenge for                   Secret Service Issues Warning
          banks  with increasing  complexity                     about ATM ‘Jackpot’ Attacks
          of cybersecurity threats and use
          of third-party service providers. The report also found that   The U.S. Secret Service has issued an alert warning ATM owners
          increasing concentrations in third-party service providers for   and operators of cash-out criminals conducting “jackpotting”
          some critical operations, such as merchant card processing,   attacks on standalone front-loading ATMs located in drive-
          denial-of-service  mitigation,  trust  accounting  systems   throughs and retail outlets in multiple locations across the
          securities settlements and custody, and other specific product   United States. Jackpot attacks, also known as “logical attacks,”
          or market service have also posed great risks. The report   combine physical intrusion and malware to command ATMs to
          revealed that the use of unpatched or unsupported software   empty themselves out in a matter of seconds.
          and hardware by banks and their service providers is another   According to the alert, criminals dressed as service technicians
          key risk threatening to expose data.
                                                                 use ATM access keys readily available online to gain entry
          To read more visit: https://www.occ.treas.gov/publications/  via the ATM’s top hat, install malware on the ATM and take
          publications-by-type/other-publications-reports/semiannual-  control of the machine in order to initiate ATM withdrawals.
          risk-perspective/semiannual-risk-perspective-fall-2017.pdf  In some cases, the criminals swap out the ATMs’ existing hard
                                                                 drive and replace it with one already infected with malware.





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