Richard's Rapid Fire - April 19, 2019

CFPB Director Kraninger offered her first public remarks on Wednesday at a Bipartisan Policy Center event, laying out her vision for the Bureau. Prior to her remarks, several members of the CBA Team attended a breakfast with her.

 

Cajun Thoughts: DIRECTOR KRANINGER’S FIRST PUBLIC REMARKS Many members of the CBA Team attended CFPB Director Kathy Kraninger’s first public remarks as head of the CFPB. I believe she is much more confident in her role versus when she first started back in November. I appreciated Director Kraninger’s emphasis on “prevention of harm,” the commitment to a level playing field for all financial institutions, a transparent rulemaking process and a consistent application of examinations. Also, you may remember she made an announcement at CBA LIVE that she went on her first examination ... EARNINGS REPORTSWe start off another one of my favorite times of the year… earnings reports! Good to see JPMorgan Chase report record net income for Q1 as well as both Bank of America’s and Citigroup’s profits lifted by consumer banking. Many people are now predicting a revival of Wall Street. Time will tell … HOUSE DEMS SUBPOENA BANKS It seems like Chairwoman Maxine Waters is using every single visage of power subpoenaing many of our banks. Usually, the Republicans and Democrats come together when they use this rarely used power … MARCH MADNESS TO MASTERS MADNESS Yes, like many Americans, I watched quite a bit of the Masters. I think the Masters is a terrific event, not just from a competition standpoint, but also from a management standpoint. Granted they have a virtually unlimited budget to ensure the enjoyment of their patrons. We’ve actually implemented many things learned at the Masters, both at our Executive Banking School and CBA LIVE … MUELLER REPORT I wonder how many news dumps will take place today when the Mueller Report is released … EXECUTIVE BANKING SCHOOL We’ve got the shot clock on! We are officially 92 days away from EBS 2019. See you all in Greenville! NFL SCHEDULE The NFL schedule was announced last night and I have already adjusted my calendar accordingly in order to watch the Cowboys. One of my proudest joys in life was educating Janet Pike (Former CBA Team member) about "flex scheduling." I am sure it came in handy for her!

 

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CFPB Director Kraninger Outlines Her Vision: CFPB Director Kathy Kraninger Wednesday morning made her first public remarks as the Director of the Bureau. Prior to her remarks, CBA Team members attended a breakfast with the Director hosted by the Bipartisan Policy Center.

 

Top Takeaways:

 

  • Director Kraninger opened by stating she wanted to create a level playing field for financial institutions but did not discuss if it would apply to fintechs or small vs. large banks.
  • Rulemaking: Director Kraninger focused heavily on UDAAP and Debt Collection.
    • UDAAP: The Bureau is creating a symposium to engage with experts on a variety of topics, with the first being what would constitute "abusive" acts and practices. She noted the CFPB is the only regulator with the authority to regulate yet-undefined abusive acts.
    • Debt Collection: Rule will be released within a few weeks and the main goal is to modernize the rule by accounting for how institutions contact consumers and establishing better disclosures upfront. Director Kraninger did note the Bureauwould set caps on the number of times a collector can contact a consumer.
    • Guidance: While there is a place for guidance, Director Kraninger said if regulators are going to hold a institution accountable there should be a formal rulemaking process.
  • Education: Director Kraninger said the Bureau was uniquely positioned to help offer consumers financial education. She noted the Fed study showing the majority of Americans do not have enough savings to cover a financial emergency and said theCFPB had started a savings initiative called "Start Small. Save Up."
  • Supervision: First and foremost, Director Kraninger noted the need for consistent application of supervisory practices. She said CFPB examination teams need to work with banks to avoid issues instead of waiting for issues to arise, noting the need for a culture of compliance with self-examinations and self-reporting. Director Kraninger also said there is ongoing work to better coordinate with state regulators and Attorneys General.
  • Enforcement: Director Kraninger said enforcement is an essential tool. While she said she did not yet have a metric for defining success, it should be about more than the number of actions taken and that she wanted to focus on supervision first followed by "purposeful enforcement" in order to ensure a just outcome for consumers.
  • Director Kraninger closed by saying she believes the main goal of the CFPB should be the "prevention of harm," instead of going in after the fact to impose penalties.

 

CBA Applauds Dept. of Education for Pro-Student Financial Aid Recommendation: CBA commended the Department of Education on Tuesday for its new recommendations to change the way schools advise prospective and current students about financial aid. The announcement includes many of the recommendations CBA has made over the past few years as part of a “Know Before You Owe” initiative.

 

For many families and students, a higher education will be one of the costliest investments they make. Colleges and universities have an obligation to set students up for success and the Department of Education should be commended for its recommendations to help ensure students know the true cost of their education.

 

Every student should know how much money they are borrowing and how they will be responsible for repaying. For far too long, it seems some institutions of higher education have tried to mask these key factors by combining grants and scholarships with loans, work study programs and parent loans.

 

These recommendations address one problem with our higher education financing system, but Congress must act legislatively to require these recommendations are followed as well as to reform the federal student loan program – the true driver of skyrocketing student debt and tuition increases.

 

In the last decade, American student loan debt has gone from $600 billion to $1.5 trillion. About 92% of that debt is from the federal government and those federal student loans have a double-digit default rate compared to a 98 percent repayment rate for bank-issued student loans.

 

To ensure the federal government responsibly serves those most in need while also fully using the capabilities and expertise of the private sector to serve the marketplace, CBA has recommended the follow measures:

 
  • Increasing the availability of Pell Grants.
  • Ending unlimited PLUS loan borrowing to help reduce tuition increases.
  • Implementing “Know Before You Owe” disclosures to clearly explain the terms of federal loans.
  • Renaming so-called “Award” letters provided by colleges to the more accurate “Financing” letters and having them clearly differentiate loans from grants and scholarships.
  • Requiring school certification of private education loans.
  • Utilizing economist-preferred fair value accounting to show the true cost of federal student loans.
  • Requiring detailed public reports on performance of the federal government’s direct loan portfolio.

 

Speaking of student lending…CBA conducted a poll of 1,000 registered voters this year gauging Americans’ attitudes about student loans and student debt. Among the findings, 90 percent believed loans should carry clear, personalized, plain-language disclosures like those already offered on private loans and nearly 85 percent support placing responsible caps on federal loans to offer access to a quality education without setting up a debt trap post-graduation.

 

Learn more about CBA’s student lending reform recommendations here and recent polling data here.

 

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INDUSTRY NEWS
 
 

U.S. Bank Hires Derek White as First Chief Digital Officer: Last Fall, U.S. Bank announced plans to create and fill a Chief Digital Officer role, and the search is over! The bank named Derek White, a BBVA and Barclays veteran, to lead the bank’s recently consolidated digital team. White has been with BBVA in Spain for the past three years and will be relocating to the states when he starts his new position at U.S. Bank this spring. The CBA Team looks forward to learning more about digital strategy and innovation efforts White has in store.

 

SunTrust CFO to Retire Following BB&T Merger: After 20+ years with SunTrust, Chief Financial Officer Allison Dukes will depart after the merger with BB&T is finalized later this year. Dukes is committed to her philanthropic and civic commitments in Atlanta, GA, and revealed staying there is what’s best for her – both professionally and personally. The combinedBB&T-SunTrust bank will be headquartered in Charlotte, N.C., where Dukes had initially been named one of the SunTrust officers to serve on the executive management team.

 

JPMorgan Chase Promotes Marianne Lake, Jennifer Piepszak: Executive leadership shift atJPMorgan Chase! Current Chief Executive Officer of Card Servicing Jennifer Piepszak will succeed Marianne Lake as Chief Financial Officer and join the Operating Committee starting May 1, 2019. Ms. Piepszak will oversee the bank’s finance and business management, the Chief Investment Officer and the CEO of Consumer and Community Banking. Lake was appointed Chief Executive Officer of Consumer Lending.

 

 
LAGNIAPPE
 
 

Suite 550 Podcast: At CBA LIVE 2019Woodforest National Bank was presented with CBA's 2019 Joe Belew Award for its Woodforest Foundry programWoodforest’s Doug Schaeffer, EVP, Executive Director CRA, and Daniel Galindo, SVP, CRA and Strategy Director, sat down with CBA's Maren Colon after receiving the award to discuss the program as well as Woodforest's community investment efforts. You can listen to the podcast here.

 

This year's Joe Belew Award was presented to the CBA member-bank applicant with the most innovative and impactful small business initiatives, highlighting its "Currency of NOW" efforts in the community.

 

You can learn more about the Joe Belew Award and the other entries here and learn more about the Woodforest Foundry here.

 

While working on the OCC’s ANPR for CRA modernization, Doug discussed the importance of CRA. A video recap is available here along with other testimonials from our Community Reinvestment Committee.

 

Women in Housing & Finance Brown Bag: CBA HQ hosted a Brown Bag lunch with Women in Housing and Finance on Tuesday to discuss recent changes to federal appraisal rules and other hot consumer financial services legal topics.

 

The panel of experts included our very own Senior Regulatory Attorney Jenna Stewart, theOCC’s Counsel Joanne Phillips and the FDIC’s Acting Assistant General Counsel Michael Briggs.

 
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Citizens Bank Names Mark Rendulic Pittsburgh President: Former CBA Board MemberMark Rendulic has been named the new Pittsburgh President at Citizens Bank. Mark has been an invaluable member of the CBA family and we are all excited for him to begin his new role.

 

Happy Birthday to Larry Franco: Happy birthday to CBA Government Relations Council member and former CBA Board Member Larry Franco of BBVA Compass!

 
 
MERGERS & ACQUISITIONS
 
 
 
 
STATE OF THE WEEK
 
 
CBA’s State of the Week is MINNESOTA where more than 1 out of every 3 residents banks with a CBA member! CBA members in Minnesota hold $252 Billion in total assets, employ32,000 people, provide 5.9 Billion in small business loans and serve 1.7 Million customers. The North Star State is home to CBA members U.S. Bank and TCF Bank. Check out our state by state numbers here.
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