Richard's Rapid Fire - April 12, 2019

April 16, 2019



(Left): In an unplanned, unscripted moment, Comptroller of the Currency Joseph Ottingjoined FDIC Chairman Jelena McWilliams and myself on stage during our Washington Wednesday morning general session. Comptroller Otting announced at CBA LIVE a meeting with the FDICOCC and Fed to review CRA and an agreement in principle on the modernization efforts…


The CBALIVE-Stream recording is available here.


(Right): Bank of America Chairman & CEO Brian Moynihan talks live with CNBC’sWilfred Frost from just outside the CBA LIVE exhibit hall.


Cajun Thoughts: CBA LIVE 2019 RECAP CBA LIVE 2019 was the biggest event in its 10-year history and truly one for the books! We welcomed more than 1,600 attendees, including 775 senior banking leaders, and three of the top banking regulators (featuring two together on stage!). The highlight of the conference for me was welcoming more than 300 past and present board and committee members on stage for our opening general session, to then take official leadership photos marking our centennial. You can watch the CBALIVE-Stream recordings of our general sessions here. Soon, we will share a link to our Flickr album where you can access and download photos. Save the date and get your flip flops ready for CBA LIVE 2020 in San Diego, CA, March 23-25, 2020! … BIG BANK CEOs TESTIFY Wednesday was the first time in over a decade the CEOs of the largest U.S. banks testified as a group before Congress. The hearing was a great opportunity for the CEOs to appear before the public and stress how much different the banking industry is versus the financial crisis 10 years ago. I believe the CEOs did a terrific job representing their institutions and the industry as a whole. I remain very positive about the performance of banking - Watch my interview here … BANKING ON STUDENT LOANS During the hearing Wednesday, Chairwoman Waters challenged the CEOs to do more to tackle the student debt crisis. Ironic – many banks exited student lending because of changes Congress made to expand federal student loans in 2010. Now, taxpayers are on the hook for $1.5 trillion debt. The U.S. federal government controls 92% of student lending market share.




Big Bank CEOs Testify Before Congress: The House Financial Services Committee held a hearing Wednesday examining the nation’s financial system and the changes put in place since the financial crisis. The CEOs from the nation's Global Systemically Important Banks testified. Overall, the hearing was relatively tame without any major revelations or new policy announcements. Committee Chairwoman Maxine Waters did say she intends to have the CEOs testify again next year in separate, individual hearings.


Republicans focused on how regulatory burden is affecting the banking industry and what can be done to alleviate those burdens while many Democrats brought up examples of "consumer harm" violations to paint a picture of ongoing, industry-wide malfeasance and often quoted fines levied on each bank and suggested it was just a cost of doing business for them. A handful of Democrats called for the breakup of large financial institutions claiming they are “too big to fail,”, and posed a threat to the American economy. The CEOs all agreed they are better capitalized and safer institutions post-Dodd Frank.


A hearing summary prepared by the CBA Team is available here.


ICYMI: During the hearing, I discussed the strength of the nation's banking system on Yahoo Finance. I also highlighted the investments banks are making in local communities across the country and the potential consumer harm from nonbank lending institutions. A video and key excerpts from my interview is available here.




CBA Comments on House CRA Hearing: The House Financial Services Subcommittee on Consumer Protection and Financial Institutions held a hearing Tuesday examining Community Reinvestment Act modernization efforts.


A full summary of the hearing, as prepared by the CBA Team, is available here and several key takeaways are below:

  • There is overwhelming support, both from Members of the Committee and from witnesses, that CRA needs reform, to increase consistency among regulators in their approaches to CRA, and to ensure a more thorough and fair examination process.
  • Democrats on the Committee remain concerned that changes to CRA will leave low-to- moderate income communities in need of crucial bank support, despite many witnesses noting changes could increase support to these communities.
  • Many Republican Committee Members noted the transformation of banking since CRA was last changed and expressed the need for CRA to better reflect advents in mobile and digital banking.
  • Committee members questioned witnesses about CRA requirements applying to nonbank lenders. Chairwoman Waters and some of the majority witnesses said it was a loophole in the law (which was written prior to fintechs) since nonbank activity ultimately had to be channeled through a regulated institution. On the other side, Subcommittee Ranking Member Luetkemeyer suggested compliance costs would rise if CRA was pushed onto non-bank lenders.
Prior to the hearing, CBA sent a letter to full committee Chairwoman Maxine Waters (D-Calif.) and Ranking Member Patrick McHenry (R-N.C.) to comment on ways to modernize and express support for CRA.
A copy of CBA’s letter is available here.
CBA believes any CRA modernization efforts should:
  • Provide clarity and certainty in CRA-eligible activities: There is currently too much ambiguity in CRA compliance and too much need to document detailed compliance requirements. Different examiners and different agencies interpret the same rules differently. Subjective terminology often requires examiners to make determinations on a case-by-case basis, so banks do not know what they have to do to comply. Too much unnecessary documentation is often needed, overly complicating and limiting the ability to reach lower income and underserve populations.
  • Account for digital transformation and customer preference: Modernization efforts should take into account the transformation in both technology and customer preference. CBA wrote, “It is important for both branch and nonbranch channels to be given equal weight, and that banks be able to demonstrate they are serving the needs of their entire communities, including low- and moderate-income customers, by employing channels that fit their model and their market.”
  • Permit more flexibility to invest where there is need:  Modernization should allow CRA-eligible activity wherever it is needed, including areas identified as underserved, while continuing to ensure banks are helping to meet local community needs.
  • Provide optionality for business models and strategies: While clarity is needed, CRA modernization should also avoid an overly strict one-size-fits-all framework. Rules should take into consideration different banks’ unique business strategies, just as they consider the unique needs of each community.
These changes should also reduce costly and time-consuming technical requirements; expand the value of CRA by ensuring the most appropriate CRA-eligible activities receive consideration; and provide for more timely evaluations.
Speaking of CRA… CBA launched a CRA microsite last fall containing comment letters, videos, op-eds, statements and relevant articles. The site is available here.
CBA Writes House Small Business Subcommittee on SBA 7(a) Budget Proposal: CBA sent a letter Wednesday in advance of the House Small Business Subcommittee on Economic Growth, Tax and Capital Access hearing on “SBA 7(a) Budget Proposal and the Impact of Fee Structure Changes.”
The 7(a) Loan Program is a vital source of capital for thousands of small businesses unable to secure financing through traditional lending. The demand for these loans has grown substantially and the performance of the program has remained healthy, closing last year with record-low charge-off rates.
Considering how well the 7(a) portfolio has performed historically, CBA encourages Congress to closely examine SBA’s FY2020 budget request, specifically in regards to the agency’s prediction that the 7(a) program will not be able to maintain a zero-subsidy rate.
A copy of CBA's letter is available here.



Bank of America to Raise Minimum Wage to $20/hour by 2021: Bank of America CEO & Chairman Brian Moynihan announced Tuesday the bank’s plans to raise its minimum wage to $20 an hour over two years. On May 1, the baseline rate will rise to $17 an hour then climb to $20 in 2020.
Citi President Jamie Forese to Retire:  The No.2 executive at CitigroupJamie Forese, is retiring from his position as head of the Institutional Clients Group (ICG) – the sector of the bank that includes investment banking and trading. After 34 years with CitiMr. Foresewill be succeeded by his deputy Paco Ybarra to take effect on May 1.



Suite 550 Podcast: Catch the latest episode of CBA’s Suite 550 Podcast recorded at CBA LIIVE 2019! Citizens Financial Vice Chair of Consumer Banking Brad Conner moderated a student lending discussion with American Enterprise Institute Resident Fellow Jason Delisle and Bipartisan Policy Center Senior Policy Analyst Kenneth Megan – both recognized education policy experts. The three continued the discussion on a special edition of Suite 550 where they take a deep dive into PLUS loans, the explosion of college tuition rates and ways to help improve student lending outcomes for borrowers. Tune inhere!
Happy Belated Birthday to Andy Harmening: Former CBA Board Chairman and longtime CBA Board Member Andy Harmening of Huntington Bank celebrated a birthday last week at CBA LIVE 2019: The Currency of NOW! We’re so happy we were able to celebrate with you (and you’re lucky you escaped an April fools joke!). 






CBA’s State of the Week is MARYLAND where more than half of all residents bank with a CBA member! CBA members in Maryland hold $167 Billion in total assets, employ 29,000 people, provide 3.9 Billion in small business loans and serve 3.3 Million customers.Check out our state by state numbers here.