Richard's Rapid Fire - June 8, 2018

 

TESTIFYING ON CAPITOL HILL

MY TESTIMONY BEFORE THE HOUSE FINANCIAL SERVICES COMMITTEE SUBCOMMITTEE – I WAS ON CAPITOL HILL ON WEDNESDAY TO TESTIFY BEFORE THE HOUSE FINANCIAL INSTITUTIONS SUBCOMMITTEE ON WAYS TO DEPOLITICIZE AND BRING TRANSPARENCY TO THE BUREAU OF CONSUMER FINANCIAL PROTECTION. AS I MENTIONED BEFORE THE COMMITTEE, CBA AND OUR MEMBERS SUPPORT THE MISSION OF THE BUREAU. THERE ARE MANY CHANGES THAT CAN BE MADE, BUT IMPROVING ITS GOVERNANCE STRUCTURE UNDERPINS THEM ALL. I WAS PLEASED TO HAVE BEEN JOINED BY FORMER CBA TEAM MEMBER KATE LARSON PROCHASKA OF THE U.S. CHAMBER OF COMMERCE. 
 
A few key takeaways from the hearing are as follows:
  • There was strong support from most of the witnesses as well as Members of the Committee on both sides of the aisle for changing the leadership structure at the Bureau from a sole director to a bipartisan commission.
  • Members of the Committee, especially on the Democratic side of the aisle, focused on lending discrimination. Many of their questions specifically dealt with HMDA, CRA and other fair lending matters.
  • Republican Members of the Committee discussed regulatory burdens and asked witnesses if regulations were limiting banking activity, like loan originations.
A CBA-provided summary of the hearing is available here
 
 
 
CRA MODERNIZATION LOOMS
 
Next on the Docket – We now expect the upcoming ANPR from the OCC to be released by the end of June. This may be released in coordination with the FDIC and Federal Reserve as well. Stay tuned!
 
OCC’s Otting to Take the Hill – Comptroller Joseph Otting will testify before the House Financial Services Committee on Wednesday June 13, 2018 and before the Senate Banking Committeeon Thursday June 14, 2018.Otting may reveal information regarding the timeline for CRA reform and CBA will keep you posted.
 
CBA Committee Chair Whitson Briefs Policymakers – Sue Whitson of BMO Harris, Chair of CBA’s Community Reinvestment Committee, made the trip to Washington, D.C. this week to brief policymakers on the Community Reinvestment Act. During the briefing, Sue stressed the need to modernize the law with digital banking and individual bank business models in mind. In a previous Rapid Fire, we highlighted Sue’s accomplishments and now you can add one more to the list.
 
 
BMO Harris' Sue Whitson testifying this week in Washington, D.C.
 
 

REGULATORY ROUNDUP

No Systemic Issues on Bank Sales Practices – The OCC has concluded its review of banks sales practices and the results are in: no systemic issues regarding bank sales practices exist. The OCC did “identify some weaknesses in policies, procedures, and controls and in the risk governance framework addressing sales practices,” but the agency noted many banks have taken “timely action” to address these isolated issues.  
 
Stress Tests & CCAR Results on Tap – The Fed revealed it will release its stress test results on June 21, 2018, while it will release the Comprehensive Capital Analysis and Review (CCAR) results on June 28, 2018. As of this moment, the Fed has not excused any banks from the tests due to Congress raising the SIFI threshold.
 
McWilliams Sworn in As FDIC Chair – Jelena McWilliams was sworn in this week as the 21st Chairman of the Federal Deposit Insurance Corporation (FDIC), succeeding Martin Gruenberg. Her unique combination of policy, regulatory and banking experience make her an exceptional selection for the role of FDIC Chair. She also took 800 brownies to work on her first day.
 
 
THIS WEEK AT THE CFPB
 
CBA RFI Comments Roll On – CBA submitted comments this week to the Bureau of Consumer Financial Protection detailing our concerns with the agency’s complaint reporting and rulemaking processes.
 
For complaint reporting, our concerns are as follows:
  • The Database Creates Consumer Harm and Privacy Concerns: The Database does not protect consumers from re-identification risks and creates consumer harm. 
  • The Database Does Not Enhance Consumers’ Ability to Compare: The publication of unverified, raw complaint narratives may actually misinform consumers; doing the exact opposite of what the Bureau is mandated to accomplish.
  • The Dodd-Frank Act Does Not Require or Contemplate the Database be Public: The authors of Dodd-Frank did not intend for Bureau to publicly share complaints.  In fact, plain reading of the statute indicates that they did not specifically authorize it as they have in other contexts.
On rulemaking processes, our letter focuses on ways to improve the Bureau’s approach to information gathering, cost/benefit analysis, comment process, and final rule implementation and support.
 
Bureau Advisory Groups Disbanded – The Bureau is searching for new advisory board members after Acting Bureau Director Mick Mulvaney disbanded the groups. In a blog post, the Bureau has stated they “will continue these advisory groups and will use the current 2018 application process to reconstitute the current advisory groups with new, smaller membership.” CBA Board Member Will Howle of Citi and former CBA Board Member Neil Hall of PNC previously served on the Consumer Advisory Board.
 
 

TRENDING IN RETAIL BANKING

April Showers Brings May…M&A? – The old adage was in need of a little spring cleaning anyway. In May, there were at least 20 M&A deals accounting for about a quarter of 2018’s total activity and 56 percent of its aggregate deal value to date. You may view some of the top deals, which include CBA members Fifth Third and Citizens Financial, in American Banker.
 
Quote of the Week – CBA Committee Member Mary Kate Loftus of HSBC hit the nail on the head with her comments in American Banker this week. She noted, "Digital used to be about coding and IT; now it's becoming a people business.” With the industry undergoing a digital transformation, regulators need to take note of what is driving this change – people.
 
 

CBA LEADERSHIP SPOTLIGHT

CBA Home Equity Committee Chair Tom Parrish – We are fortunate to have Tom Parrish, VP and Head of Retail Lending Product Management for BMO Harris Bank, leading our Home Equity Lending Committee. Before joining BMO, he worked at PNC Bank where he managed a $30 billion home equity portfolio.  He also is a graduate of the CBA Executive Banking School. Tom and his wife live in Chicago, Ill. With their three kids Andrew, Morgan and Max. Unfortunately for Tom, his Pittsburgh Penguins watched the Stanley Cup from home again this year. 
 
 

LAGNIAPPE

Digital Banker of the Year – Congratulations to Tim Spence of Fifth Third on being namedDigital Banker of the Year by American Banker.