What to Keep Your Eye on in the Third Quarter

The performance of the Wisconsin and national economy, combined with a hot political season and multiplied by conflicting business forecasts, leads to some interesting points to consider in the third quarter of 2018. Here are ten critical banking issues to think about as we head into the latter part of Q3.

  1. If the Democrats take the majority in the U.S. House of Representatives in the November election, will Congressman Sean Duffy (R-Wausau) be one of the most important voices for the banking industry? It could mean a new role and potentially more media exposure for the House Financial Services Subcommittee Chair, who was first elected to federal office in 2011.
  2. It seems like Congress has gone through the process of extending the National Flood Insurance Program about 27 times in the last 18 months. For that matter, doesn't it seem like every session in Congress now goes something like this: budget, debt ceiling increase, transportation, Farm Bill, flood insurance and other major appropriations, election. Rinse and repeat.
  3. Does imploding Turkey mean a salmonella outbreak heading into Thanksgiving? Does your bank have any exposure to the economy in Turkey?
  4. How many cease and desist letters related to credit unions' misleading marketing practices does the WI Department of Financial Institutions need to give out before the state agency starts examining all state-chartered credit unions closely on this business practice?
  5. At what point does economic development lending by the state combined with other banking products compel it to become the State Bank of Wisconsin? A little-known fact about the first successful recall of a governor in the United States: the recall was over the creation of the North Dakota state bank. 
  6. Are bankers taking federal regulators' claim that CECL reporting can be accomplished in-house on a simple Excel spreadsheet seriously? If so, please contact Mike Semmann at 608-441-1206 or via email.
  7. On August 8, American Banker reported that if Democrats win the House "there's going to be very little legislation coming out of Congress—certainly nothing transformational." So, aside from tax reform, business as usual?
  8. On the list of economic expansions in the United States, our current expansion ranks second in U.S. post-World War II history at 108+ months, but ranks second-to-last in annual employment growth and annual GDP growth (at 1.4 percent and 2.2 percent respectively). 
  9. In December 2017, WBA shared the results of its CEO survey that showed 70 percent of Wisconsin's bank CEOs believed that passing a regulatory reform bill was more important than passing a tax reform bill. If the same survey question was asked today, would it score the same?
  10. On July 31, several national trade association, including ABA, ICBA, and CUNA, collectively sent a letter to House Subcommittee Chair Rep. Bob Latta (R-Ohio) outlining four key elements to include in future data breach legislation. Among the elements of agreement is a "clear preemption of the existing patchwork of often conflicting and contradictory state laws for all entities that follow this national data security and notification standard."

Bonus Thoughts:

  1. Does your bank have customers in California? A new California law, which takes effect in 2020, mandates a wide variety of new protections for consumers, including the right to be informed about data collection, the right to know how that data will be shared with third parties, and the right to opt out of data collection and demand that companies delete data that has already been collected.
  2. The NFIB Small Business Optimism Index rose slightly in July. This is just a fraction below the record level (108.0) reached in 1983. Thirty-two percent of business owners surveyed said the next three months was a good time to expand, three points higher than last month's reading.

What are you pondering this quarter? Let Mike know! He can be reached at msemmann@wisbank.com or 608-441-1206. 

Check out more food for thought at www.banconomics.com, including geographical economic data from the Federal Reserve Bank of St. Louis. 

Semmann is WBA executive vice president – chief operations officer.