Rapid Fire - August 17, 2018

* This week's guest author is Nick Simpson, CBA's Vice President of Public Affairs


Congressional Scheduling Update: August Recess is a time-honored tradition in D.C. as well as a great incentive for Congress to act on must-pass legislation – after all, in Washington the smell of jet fumes is a powerful tool for compromise. The House of Representatives is sticking with precedent and back home visiting constituent s until they reconvene after Labor Day. The Senate, however, adjourned August 1 for an abbreviated break and came back to town mid-week. Working through nominations, appropriations bills and addressing the opioid epidemic are all on the agenda. 
Kraninger Committee Vote Set: In addition to the items mentioned above, the Senate Banking Committee has announced an executive session for Thursday, August 23 to vote on several nominees, included Kathleen Kraninger to be the full-time director of the Bureau of Consumer Financial Protection. The Committee had originally scheduled her vote for August 2, but the Senate adjourned before the vote was held. Once the Committee acts on Ms. Kraninger's nomination, the full Senate will have to vote on her confirmation. It is likely both the Committee and full Senate votes will break down along party lines.
OCC Releases CRA Bulletin on Double Downgrades: Comptroller of Currency Joseph Otting late Wednesday clarified a previously released OCC bulletin related to the Community Reinvestment Act. The earlier bulletin, from last fall, noted OCC policy would be to downgrade banks one rating level at a time. The clarification issued this week noted the OCC would still perform a double downgrade in “particularly egregious” cases but “general policy is to downgrade the rating by only one rating level.”
The bulletin is available here
CBA believes this was done in advance of the upcoming release of the CRA ANPR to more correctly express the policy of the OCC in taking into account evidence of compliance violations in CRA evaluations. 
Speaking of the ANPR:  CBA’s Community Reinvestment Committee has been busy laying the groundwork and is ready for a quick comment period on ways to modernize a 40-year old law last updated some two decades ago. We expect the OCC to issue the ANPR within the next few weeks. Stay tuned for updates.
Annual Privacy Notice Changes Implemented: Late last week the Bureau of Consumer Financial Protection finalized amendments to implement legislation exempting some financial institutions from sending annual privacy notices to their customers.
In December 2015, Congress amended GLBA as part of the Fixing America’s Surface Transportation Act (FAST Act). This amendment to GLBA provides financial institutions that meet certain conditions an exemption to the requirement to deliver an annual privacy notice. A financial institution can use the annual notice exception if it limits its sharing of customer information so the customer does not have the right to opt out and has not changed its privacy notice from the one previously delivered to its customer. The rule issued by the Bureau implements this legislation and establishes deadlines for institutions resuming annual privacy notices if their practices change and they no longer qualify for the exemption.
CBA commented to the Bureau about needed updates to the privacy notice, Regulation P, during the Bureau's "Call for Evidence" this past summer. In our comments, CBA noted the annual privacy notice should be eliminated where there is no sharing under GLBA or Fair Credit Reporting Act that would require institutions to offer customers an opt-out. 
Remembering Tom Frost: Everyone on the CBA Team is thinking about the Frost Bank family. Tom Frost, the chairman emeritus of Frost, passed away at 90. As CBA President and CEO Richard Hunt noted, Tom epitomized leadership from the top. That was evident by the close-knit team at Frost, where everyone knew their team members’ roles and responsibilities. Read more about his legacy here.
Zelle to Enter the Small Business Business: While a launch date has not been set, Bloomberg reports Zelle users will soon be able to use the peer-to-peer payment system to pay local businesses. The move will make the bank-backed Zelle more competitive with other P2P systems on the market. In the second quarter of this year, the app developer said Zelle’s network handled 100 million transactions totaling $28 billion. There are currently close to 30 institutions using Zelle and another 119 are under contract. Zelle continues to grow and gain transaction. This newest feature will only fuel that growth as the app will be able to tap into the $17 billion P2P payments sent to businesses this year. 
FBI Warns of ATM Heist: The FBI warned financial institutions this week cybercriminals were preparing to hack into ATM machines around the world. The confidential alert, reported by the website Krebs on Security, says “The FBI has obtained unspecified reporting indicating cyber criminals are planning to conduct a global Automated Teller Machine (ATM) cash-out scheme in the coming days, likely associated with an unknown card issuer breach and commonly referred to as an ‘unlimited operation’ … The cyber criminals typically create fraudulent copies of legitimate cards by sending stolen card data to co-conspirators who imprint the data on reusable magnetic strip cards, such as gift cards purchased at retail stores. At a pre-determined time, the co-conspirators withdraw account funds from ATMs using these cards.”
Small-Dollar Lending No Small Matter: The issue of small-dollar lending has received a lot of attention recently now that the Bureau of Consumer Financial Protection is reexamining the payday rule from last fall and the OCC and Treasury have encouraged banks to reenter the space. CBA has been working the issue and our President and CEO talked with Bloomberg Law about why consumers need the product as well as what banks need from a regulatory standpoint to fully commit to the space. 
Richard noted while regulators today might be in favor of banks making these loans, regulators tomorrow might see things differently. We all know there is serious need for short-term lending to help people make ends meet during financial emergencies and regulators should ensure consumers can access these products in the well-regulated banking space – instead of forcing customers to turn to less regulated and more expensive lending sources.
Bank of the West Embraces CSR Lending: American Banker caught up with Bank of the West CEO Nandita Bakhshi on the bank’s unified strategy – along with its parent company BNP Paribas – to focus on renewable energy, female entrepreneurs and underserved communities. Nandita is a former CBA Board Member and spoke on a leadership panel with Citizens’ Bruce Van Saun at this year’s CBA LIVE. It was one of my favorite presentations of the entire conference.
Watch Nandita’s session here and listen to the AB podcast here.
How Important is Zions:  Well, it depends on who you ask. Pretty soon Zions might not be systemically important for prudential regulators but, as discussed in a Harvard Law article, that makes the CBA Member bank even more important as a case study in regulatory burdens. 
Last month FSOC gave a preliminary greenlight for Zions to shed its SIFI designation and, as the Harvard article notes, “banking institutions should seriously consider the relative costs and benefits of entering into [bank holding company]-shedding transactions. Given the willingness of the OCC to approve the Zions transaction, and of the FDIC to approve similar BHC-shedding transactions for Bank of the Ozarks and BancorpSouth, which were completed last year, each BHC should evaluate – and indeed, has a fiduciary duty to evaluate – its structure to consider whether having a BHC justifies the regulatory burden that comes along with it.” 
Time for an Update – BBVA App Adds Budgeting: BBVA Compass is updating its mobile banking app by integrating BBVA Compass Financial Tools. The new upgrades, which are already available on BBVA’s online banking customers, will help customers track their spending and manage their household (or business) budgets. It is just another way CBA Members are working to meet customers where they are. You can read about the specific features of the financial planning tools here.



Mark Weintraub Moves Up at Wells Fargo: Mark Weintraub, vice chair of CBA’s Internal Audit Committee, will take over as Wells Fargo’s Chief Operational Risk Officer later this month. Mark was Wells’ head of audit for consumer banking and played a huge role in getting our Internal Audit Committee off the ground. Best of luck to Mark in his new role!
Congratulations to Regions’ Kate Danella: CBA Member Regions Bank in Birmingham announced this week Kate Danella would be the head of strategic planning and corporate development. In her new role, she will report to former CBA Board Member and current Regions President and CEO John Turner. Leslie Carter-Prall will take on Kate’s previous role as head of private wealth management.
Mike Allen Goes Back to His Banking Roots: Mike has joked about being a “recovering banker,” but his recovery has hit a snag. Yesterday was Mike Allen’s last day on the CBA Team but he is still with the CBA Family. He is going back to his banking roots and joining First Financial in Cincinnati, a CBA Member. Mike will still serve on the EBS faculty and I am sure be at CBA LIVE – this time as a paying attendee. Best of luck Mike!

Welcome Allison Heimberg to the CBA Team: Big welcome to Allison Heimberg! Yesterday was her first day on the CBA Team. Allison is a recent graduate of the University of Michigan and will be CBA’s coordinator of media relations and communications.