Q: Has the Bureau of Consumer Financial Protection Issued a Policy Statement on Abusive Acts or Practices?​

A: Yes. 

Dodd-Frank provides the Bureau of Consumer Financial Protection (CFPB) with authority to prevent unfair, deceptive, or abusive acts or practices. CFPB recently issued a policy statement clarifying the abusive standard pursuant to that authority. While the policy statement is not law, and does not modify the existing statute or definition of abusive, it is designed to provide additional clarity as to how CFPB intends to use the abusive standard. The policy statement describes three aspects of how CFPB intends to approach the abusive standard going forward. To that extent, CFPB:

  1. Intends to focus on citing conduct as abusive if it determines that the harm to consumers outweigh its benefits.
  2. Will generally avoid investigating conduct as abusive based upon the same facts that makes conduct unfair or deceptive.
  3. Does not intend to seek monetary relief for abusive violations when a good-faith effort was made to comply with the abusive standard.

In its policy statement CFPB elaborates on how it intends to implement these approaches. The full policy statement may be found here: https://files.consumerfinance.gov/f/documents/cfpb_abusiveness-enforcement-policy_statement.pdf.

Birrenkott is WBA assistant director – legal. For legal questions, please email wbalegal@wisbank.com.

Note: The above information is not intended to provide legal advice; rather, it is intended to provide general information about banking issues. Consult your institution's attorney for special legal advice or assistance.

By, Amber Seitz

The ADP jobs report for January 2020 showed an increase in 291,000 private sector jobs over December 2019. This hiring surge demonstrates businesses' confidence in the economy, but may also leave some organizations worried they're missing out on top talent. Looking ahead for the remainder of the first year of the decade, human resources professionals report focusing on three areas of growth and challenges: talent management, mental health, and diversity. 

Talent Management

A recent study conducted by the Society for Human Resource Management (SHRM) showed over half of responding HR professionals (53%) rank employee recruitment as a "very important" challenge they will face over the next three to five years. Retention is also a top concern, considering the voluntary quit rate is at its highest point in 15 years (2.3%). 

Julia Johnson, director of organizational performance at Wipfli, recommends building brand recognition and networking relationships as two effective recruitment strategies. "Share the benefits of working at the bank and in the community," she said. Another technique is to carry business cards inviting people who have the right "spark" and level of customer service to call for an interview. It's also important to identify and weed out any employees whose behavior may create a toxic environment that drives top performers away, Johnson said.

As Gallup's recent book It's the Manager highlights, one of the best retention strategies for any company is to ensure managers are equipped to succeed. "Too often successful individual contributors are promoted into positions of management without the benefit of participating in leadership development training," Johnson said. "HR leaders need to create the business case for growing and developing managers." That means making development a strategic priority and putting it in the budget.

Crucial first step: Start measuring your culture. "Culture has a tremendous impact on your ability to retain employees," said Johnson. "In the absence of understanding and managing your culture, it will manage you. The best way to gain that understanding is to measure it." Johnson defines organizational culture as "the way employees are expected to do things." She further describes culture as shared behavioral norms that enable employees to fit in with other members of the team. Wipfli utilizes the Organizational Inventory® when working with client to measure culture. While there are other tools on the market, this is a top-notch tool that provides robust information and insight. If change is needed, it must be led from the top-down, and HR plays an important role. "In order to evolve the culture to the desired state, HR leaders must create shared learning and mutual expectations," Johnson said. "A bank must define its desired culture, identify and align the levers of change, and monitor, support, recognize, and celebrate culture transitions."

Mental Health

In 2016, 18.3% of U.S. adults experienced a mental health disorder and nearly three-quarters (71%) suffered from at least one symptom of stress, according to a 2018 report from the Centers for Disease Control and Prevention (CDC). Odds are, at least one of your bank's employees is affected by mental health issues during their time at work. 

Sarah Noll Wilson, an executive coach, keynote speaker (including at the upcoming WBA HR Conference), transformer of teams, researcher, and soon-to-be-author, says mental health isn't something only individuals diagnosed with a disorder need to pay attention to. "If you have a brain, you need to be thinking about mental health," she said. "Everyone experiences stress and traumatic life events." 

A growing number of organizations offer mental health benefits—beyond the typical employee assistance program (EAP)—as part of their total compensation package. These benefits range from expanded health insurance to cover mental health treatment to providing office spaces for meditation to offering workshops on stress management techniques. Benefits like these help destigmatize mental health, as well.

Crucial first step: Provide education and training for your managers. According to Noll Wilson, many times fear of crossing the legal restrictions about what they can ask subordinates hampers the efforts of managers to connect with an employee who is struggling, amplifying the feelings of isolation that often come with experiencing a mental illness. "The first step is education and awareness," Noll Wilson said. "Provide training on what you can and can't say, what the experience is like, and how to support someone going through it."

The CDC has created a Workplace Health Resource Center to provide employers with a one-stop shop for resources to create a healthy work environment. Visit www.cdc.gov/WHRC to learn more and access resources, including mental health success stories.

Diversity and Inclusion

XpertHR's fourth annual survey of over 700 HR professionals found managing diversity and inclusion (D&I) to be extremely challenging for 38% of respondents. Combine that with Glassdoor's recent study showing nearly half of employed adults have witnessed or experienced some form of discrimination in the workplace, and it's easy to see why D&I is on the minds of many human resources professionals. 

Cedric Thurman, chief diversity officer at the Federal Home Loan Bank of Chicago, said demographics are driving the increased focus on D&I issues because both the labor pool and consumer marketplace are changing. "Having a diverse staff helps you understand your marketplace," he explained. "They'll bring a different thought process for how to design and market products and services for a different kind of consumer." Thurman says having staff who understand the bank's new customers makes the business sustainable. 

Crucial first step: Ensure your D&I project is not siloed it in the human resources department. "It has to be part of your business strategy," Thurman said. "If the CEO of the bank gives D&I to HR, it's then their responsibility to broaden the scope and bring strategic vision, rather than just tactical execution." So, banking HR professionals charged with implementing or improving a diversity and inclusion initiative at their institution should work closely with other key stakeholders throughout the bank. "It's not just an HR matter," Thurman said. "Whoever you have at the table for a strategy conversation should be at the table for a D&I conversation."

Seitz is WBA operations manager and senior writer.

FHLB – Chicago is a WBA Gold Associate Member.
Wipfli is a WBA Silver Associate Member.

Focus on Your Human Capital

  • Looking for compensation strategies to help you obtain and retain talent?
  • Want to build your network of bank HR professionals?
  • Need to keep abreast of changes in employment law?

The WBA Human Resources Conference is for you! Join us on Tuesday, April 7 in Wisconsin Dells for a day jam-packed with the information you want and the people you need to connect with. The WBA Human Resources Committee designed this conference for their peers: Wisconsin banking industry HR professionals like you! 

Visit www.wisbank.com/HR2020 to learn more and register online today!


By, Amber Seitz

The below article is the Special Focus section of the February 2020 Compliance Journal. The full issue may be viewed by clicking here.

Globally, the London Interbank Offered Rate (LIBOR) is one of the most widely used interest rate benchmarks. However, this benchmark may cease to exist at the end of 2021, necessitating a transition away from LIBOR. This article briefly discusses the reasons why LIBOR may be ending and then concentrates on how financial institutions should prepare for its potential end.

The End of LIBOR

LIBOR is calculated as the average of interest rates that a panel of large London banks report that they would charge other banks to borrow unsecured for a specified period of time. Despite LIBOR’s widespread use as a reference rate by financial institutions, its reliability and sustainability has been called into question in recent years for a number of different reasons. 

Concerned that LIBOR was becoming less stable and reliable, the Financial Conduct Authority (FCA), the United Kingdom’s financial regulator, announced that by the end of 2021, it would no longer compel banks to report their interest rates to the LIBOR administrator. The FCA also explained that although it would no longer require banks to submit their rates to the administrator, it would not prohibit banks from continuing to submit their LIBOR data after 2021. LIBOR’s administrator has stated that it will continue to calculate LIBOR as long as at least five banks continue to submit their information. This means that LIBOR may continue to exist after 2021; however, the rate will no longer be representative of the inter-bank interest rate offered and accepted by major financial institutions. There are also fears that this number would be more volatile. This occurrence has been referred to as the “zombie LIBOR.”

The FCA’s announcements have made the future of LIBOR uncertain but clarified the increasing risk associated with continued reliance on LIBOR. With the uncertain future of LIBOR, financial institutions should prepare for the either the retirement or instability of LIBOR.

Transition from LIBOR to SOFR

Based on the potential problems with LIBOR in 2021, market participants and regulators have worked to identify the best alternative reference rate to replace LIBOR and implement plans to transition to that reference rate. The Federal Reserve convened the Alternative Reference Rates Committee (ARRC) to identify a more robust reference rate and to facilitate the transition way from LIBOR. The ARRC is composed of many private-sector entities that have a presence in markets that are impacted by LIBOR. Further, several federal regulators, including the FDIC, the Federal Reserve, the OCC, and the CFPB, serve as non-voting, ex officio members of the ARRC. 

In 2017, the ARRC identified the Secured Overnight Financing Rate (SOFR) as its recommended best alternative to LIBOR. SOFR is based on transactions in the U.S. Treasury repurchase market, measuring the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the market. Because of the size and liquidity of the market underlying SOFR, the ARRC believes that the index is more robust and resilient than LIBOR. To support the transition to SOFR, the ARRC has begun implementing steps to help SOFR gain momentum. As a part of this work, in April 2018, the New York Federal Reserve Board began publishing SOFR in conjunction with the Office of Financial Research.

Following the selection of SOFR as its alternative reference rate, the ARRC also published a Paced Transition Plan that outlines specific steps and timelines to promote the adoption of SOFR. These steps focus on updating existing contracts that cite LIBOR as the reference rate and encouraging the issuance of new products that use SOFR. The ARRC has supported the issuance of SOFR-linked products and securities. Recognizing the importance of updating existing contracts that use LIBOR as a reference rate, the ARRC has developed guiding principles for fallback contract language. Following this, the ARRC released recommended fallback contract language for several products including adjustable-rate mortgages and floating-rate notes.
On November 15, 2019, Fannie Mae and Freddie Mac announced their support of the ARRC’s fallback language and their plan to incorporate the recommended language into its uniform notes and other legal documents for ARMs. They also announced their plan to offer new SOFR-based index and ARM products and have now become regular issuers of SOFR-indexed debt. Similarly, on February 5, 2020, Fannie Mae and Freddie Mac announced that they had incorporated the ARRC’s fallback language into their existing standard ARM notes and riders. Further, they announced that, by the end of 2020, they will no longer acquire loans indexed to LIBOR.

Planning for the End

Given either the upcoming end or instability of LIBOR, financial institutions should prepare for 2022. Institutions should use the next two years to comprehensively assess their risks and develop an action plan to mitigate those risks. It might be best to appoint one person to head the financial institution’s strategy and implementation. First, financial institutions should review their existing agreements that use LIBOR as a reference rate. The existing agreements should be divided into those in which a third party is involved, i.e., trust preferred securities or swap agreements, and those in which the financial institution and the other contracting party are the only parties to the transaction (the In-House Contracts).

Any financial institutions that have issued debt securities (such as subordinated debt or trust preferred securities) at the holding company or bank level should check the documentation governing those issuances. Typically, those contracts provide for the substitution of a comparable rate. Financial institutions should confirm the substitution language and also review the procedures for substituting the rate. If the issuance involves an institutional trustee, such as Wilmington Trust Company for many outstanding trust preferred securities, it may be necessary or advisable to contact the institutional trustee far in advance of the LIBOR end to discuss the process of changing rates.

The In-House Contracts should be further subdivided into those whose term ends prior to the end of 2021 and those whose maturity is after 2021. Next, financial institutions should ensure that existing In-House Contracts are able to substitute a comparable rate. Then, the financial institution should determine whether it will substitute a new rate and a new margin and at what point the change will be made. Consideration should be given to the stability of a new rate and a new margin. The decision on a new rate and a new margin may involve several committees and personnel at the financial institution as different considerations of interest rate risk, stability, competition and other factors will influence the ultimate substitute reference rate the financial institution will utilize. Financial institutions should note that the Prime Rate will continue to be available unaffected by the impending demise of LIBOR.

After a decision has been made on the financial institution’s new reference rate, it may be advisable to educate the financial institution’s LIBOR customers on the new rate, especially if it’s a rate that customers may not be familiar with. Although a customer may not have the right to contest the new reference rate, educating the customer may alleviate the customer’s anxiety about the new reference rate.

Finally, the financial institution should determine how the new reference rate will be implemented. The financial institution should consider whether it will draft amendments to existing loan documents to implement the new reference rate or whether it will simply notify the other party to the contract of the new reference rate. Financial institutions should contact their legal counsel for advice on this issue.
The WBA forms distributed through FIPCO currently contain a provision that if the index rate a lender uses with respect to a particular loan becomes unavailable then the lender may substitute a comparable index rate. To alleviate concerns with the zombie LIBOR, FIPCO has created the LIBOR Addendum. This Addendum allows the lender to replace LIBOR if a “Replacement Event” occurs. The Addendum is drafted to define a Replacement Event to include a situation in which LIBOR would continue to exist in a zombie state. The LIBOR Addendum can be used for new loans that use LIBOR as the index rate. The form could also be used for existing loans, but the borrower is required to sign the LIBOR Addendum.

When making new loans using LIBOR that will mature after 2021, financial institutions should ensure that any new contracts allow for an easy transition to a new reference rate. Consideration should be given to using the LIBOR Addendum to In-House Contracts. Additionally, financial institutions should consider incorporating the fallback language adopted by Fannie Mae and Freddie Mac to any residential real estate mortgages using LIBOR intended to be sold on the secondary market.

Taking the steps outlined above will help financial institutions mitigate their risks in the post-LIBOR market.

WBA wishes to thank Atty. Catherine Wiese, Boardman & Clark, llp for providing this article. 

By, Ally Bates

Statement on the release of fourth quarter 2019 FDIC numbers from Rose Oswald Poels, president/CEO of the Wisconsin Bankers Association 

  • Growth in net loans and leases by 3% 
  • Increase in deposits by 2% 
  • Farmland loans grew by 1.1%, showing the banking industry’s support for this important and struggling facet of the Wisconsin economy 

“Wisconsin ended 2019 on a positive note showing signs of strength and stability despite stress in certain economic sectors including the agricultural community.

Year-over-year comparisons show that overall lending grew 3% with loans totaling $85,946,584,000. Supporting that growth were increases in commercial and industrial (.7%), residential (.7%), and farmland lending (1.1%).  

Deposit growth increased 2% with the demand for those deposits remaining high as shown by an increase of 30.8% in total interest expense. Margins are holding steady which helps to maintain net income.  

These indicators demonstrate the stability of Wisconsin’s economy as businesses and families leverage the opportunities offered by bank services to improve their quality of life and services to their customers. In a December survey of Wisconsin’s bank CEOs and presidents, low unemployment, strong manufacturing, low interest rates, a diverse economic base, and strong consumer confidence were some of the factors cited as to why the economy was doing so well during the fourth quarter. 

Agricultural bankers continue to proactively work with their customers during these challenging times. Farmland loans increased 1.1% while farm loans decreased by 7%. In a December survey of Wisconsin’s ag bankers, respondents indicated liquidity, farm-level incomes, and uncertainty around tariffs and trade were their top concerns on conditions facing their customers during the fourth quarter. Bankers value the farms, agribusinesses, and hardworking people that make up the communities they serve. It’s important for the ag community to have Wisconsin banks to help them through these tough times. As lenders, trusted advisors, drivers of economic growth, and central pillars of the community, banks are uniquely positioned to help their agriculture customers through the challenges of this down cycle. 

Noncurrent loans and leases increased 9.2% which meant a return to normal levels after a historically low quarter reported in 2018. This is a trend the banking industry will be watching in the next quarter. 

Wisconsin banks continue their important role as key drivers of our state’s economy by helping businesses grow and families prosper.”  

FDIC Reported WI Numbers* 





Net loans and leases 




Total deposits 




Commercial and industrial loans 




Residential loans 




Farmland loans 




Farm loans 




Total assets 




Noncurrent loans and leases 




* dollar figures in thousands 


The Wisconsin Bankers Association is the state’s largest financial industry trade association, representing nearly 235 commercial banks and savings institutions, their nearly 2,300 branch offices and 23,000 employees. 

By, Eric Skrum


The Wisconsin Bankers Association (WBA) is pleased to announce the 2019 Community Banker of the Year is Todd Nagel, CEO/President of IncredibleBank.

After leading River Valley Bank and its online branch IncredibleBank to separate success for a decade, Nagel led the re-defining merger of the two entities into a single IncredibleBank. In addition to national media attention, the bank showed a 1.53% return on assets for the nine-month period of Jan. 1 – Sept. 30, 2019. Over that same span, IncredibleBank achieved a 16.36% return on equity (the state average was 9.95%). Perhaps most impressive, the bank grew new accounts acquired through digital efforts by 1,200% over 2018. 

As a banking industry leader, Nagel currently serves on the WBA Government Relations Committee and as President of the Marathon County Development Economic Corporation. Under his leadership, IncredibleBank has received several awards, including being named a “Best Bank to Work For” in 2019 by the American Banker (for the fourth year in a row) and the ABA Foundation Community Commitment Award in the category of Protecting Older Americans; over 150 IncredibleBank employees are certified in a Dementia Friendly Training Program. Additionally, the bank was listed among the Most Innovative Banks for 2019 by Independent Banker and recognized by SBA as a top lender at the end of 2018. 

Nagel’s service to the community can be seen through the many people and organizations he has touched throughout his career. These include Beacon House, Aspirus Family House, Wausau YMCA, The Salvation Army, Honor Flight, Stable Hands, St. Vincent DePaul, and many others.

Part of Nagel’s service is through his leadership style at IncredibleBank. Nagel and his team have fostered employee engagement and cultural innovations including a gym and fitness center, tuition reimbursement, paid community service opportunities, comprehensive wellness programs, birthday holidays, and more. 

Nagel was recognized for his lifetime of caring and commitment to his staff, bank, and community at the WBA Bank Executives Conference in Wisconsin Dells, the largest banking event in Wisconsin, on Feb 4, 2020. 

The award is granted to one Wisconsin community banker each year. The person must be a Wisconsin bank CEO or president who has made an outstanding effort in service to his or her bank over their career, who invests in the continued vitality of their communities, and to the banking profession as a whole.

A photo is available upon request.

# # #

The Wisconsin Bankers Association is the state’s largest financial industry trade association, representing nearly 235 commercial banks and savings institutions, their nearly 2,300 branch offices and 23,000 employees.

By, Eric Skrum