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Richard's Rapid Fire - April 26, 2019
Cajun Thoughts: ROBINHOOD IS BACK It appears Robinhood has applied for an OCC charter which means they would have virtually the same rules and regulations all banks face. We are reviewing the application before we fully weigh in. However, we have been very consistent at CBA. If a fintech wishes to enter the banking arena, welcome aboard, so long as it is a level playing field! ... SENATOR WARREN ON STUDENT DEBT It’s not every day the Washington Post disagrees with Elizabeth Warren, but they did just that on her student loan debt payment plan. Basically, Senator Warren wishes everybody in this country to have a free shot at going to college paid for by U.S. taxpayers. Why stop there? Also – why not pay off mortgages and auto loans as well? What we need to do is devote more attention on solving the cost of college and government loan programs which lead to increased tuition and increased debt. CBA's solutions are available here … CONGRESSIONAL HEARINGS In Washington, D.C., most of the focus has been on the Mueller Report and President Trump’s tax returns. For the banking industry, we are watching for upcoming hearings on small-dollar, diversity and inclusion as well as prudential regulators testifying next month … CBA’s NEWEST BOARD MEMBER I visited this week with CBA’s newest Board Member Quincy Miller, the President and Vice Chairman of Eastern Bank! It was great to get his perspective as a veteran of Citizens Bank where he led the Massachusetts region and the bank’s Business Banking division. Quincy is also a graduate of CBA Executive Banking School! … CONGRATULATIONS CURTIS FARMER Congratulations to Curt Farmer who was just named the new CEO of Comerica. I will be visiting Comerica in late May as part of my membership tour. I will be meeting with Farmer, CBA Board Member Mike Aust and CBA committee members … CBA PROGRAMS Please continue to send us feedback from CBA LIVE as we have already started planning for CBA LIVE 2020 in San Diego. Next major event: CBA Executive Banking School (and Top Golf, of course!) I am already planning my Chick-Fil-A and PDQ stops in Greenville, S.C. Please submit your students as soon as possible as we will have a waiting list this year! … SOMETHING THAT CAUGHT MY EYE Banner Bank is selling loans and deposits in Idaho to a credit union and Santander is selling branches to First Commonwealth in Pennsylvania … MERGERS & ACQUISITIONS Are you surprised there have not been any more mergers since BB&T-SunTrust? Huntington, PNC and U.S. Bank CEOs share their thoughts.
Sen. Warren Outlines Student Loan Debt Plan: Senator Elizabeth Warren released a plan on Monday to cancel approximately $640 billion in student loan debt. CBA weighed in with reporters covering the story and several news outlets gave her plan a critical review. Our comment is below:
“Student loan debt has more than doubled in the last decade and more than 92 percent of that debt is held by the federal government. Federal default rates are double-digits and while loan forgiveness or income-based repayment programs may seem like an easy solution for the campaign trail, it would do nothing to help future students or ultimately address the real problem. Virtually unlimited federal lending encourages colleges to raise tuition rates because every dollar in federal aid adds up to $0.63 to the price of tuition, according to the Federal Reserve Bank of New York.
“One actual solution is to reform the PLUS loan programs so colleges can no longer use taxpayers – through federal loans – as a limitless piggy bank, leaving students and their parents with mountains of debt post-graduation.”
CBA Vice President, Congressional Affairs, Director of Policy & Strategy
In Case You Missed It: The weekend before Senator Warren released her plan, I penned an op-ed for The Tennessean discussing CBA’s student lending proposals as well as a recent poll we released. You might be wondering why The Tennessean… Well, Sen. Lamar Alexander, the chairman of the Senate Health, Education, Labor and Pensions Committee who is tasked with higher education reform just happens to be from Tennessee.
Many states and the federal government alike are exploring options to make college more affordable. The federal government should abide by the same disclosure standards as private lenders, and responsible caps are needed.
CFPB Releases Remittance Rule RFI: The CFPB issued Thursday a request for information on the Remittance Rule. The basis of the RFI is to state the Bureau does not believe it has the authority to extend temporary exception in the Rule that allows certain insured institutions to estimate the exchange rate and certain fees required to be disclosed to the remitter.The CFPBis stating Congress will need to act, or remittance providers will need to suggest some possible solutions i.e. exempting specific countries from the requirement. Comments are due 60 days from publication in the Federal Register.
The RFI is available here.
CFPB Announces Policy Change for CIDs: On Tuesday, the CFPB announced policy changes regarding how it handles Civil Investigative Demands (CIDs) to ensure they provide more information about the conduct under investigation. The Bureau states moving forward, CIDs will provide more information about the potentially applicable provisions of law that may have been violated and will specify the business activities subject to the Bureau’s authority. In instances where the Bureau must determine the extent of its authority over the activity as one of the purposes of the investigation, the Bureau may include that issue in the CID in the interest of further transparency.
This new policy is one CBA has been advocating for and is a vital first step in combatting the historic trend of "regulation by enforcement" practiced under previous CFPB administrations. This was brought about partly due to the Bureau's "Call for Evidence" the CFPB conducted in the summer of 2018. CBA responded to the Bureau’s RFI on the CID process and noted that CIDs are often emblematic of the jurisdictional overreaching that has resulted in regulation by enforcement, where the Bureau issues CIDs in pursuit of an expansive theory of UDAAP. We also noted the opaque and burdensome nature of many CIDs, something this new policy seeks to address as well.
We are pleased to see the Bureau act to provide a better, clearer, and more transparent CID process that will hopefully curb the practice of regulation by enforcement and allow for institutions to more comprehensively respond to claims raised by the Bureau, ultimately leading to enhanced consumer protections.
The CFPB took a good first step in addressing regulation by enforcement concerns we have raised with the Bureau about the nature of Civil Investigative Demands (CIDs). CBA last year wrote a letter to the CFPB as part of their call for evidence last year about the burdensome nature of many CIDs noting they were often overbroad, issued with insufficient coordination with non-Bureau law enforcement partners, and often handled without regard to balancing burden on the CID recipient with the needs of the Bureau and the realities of the recipient’s data management systems.
These issues, while important, are secondary to the regulation by enforcement issue we raised in our letter that specified often CIDs are used to pursue an expansive theory of UDAAP to reach conduct that is not otherwise in violation of federal law. Often CIDs were used to then announce new requirements on the industry, something this new policy seeks to address.
FDIC Live Seminars: The FDIC announced this week the agency will conduct four identical live seminars on FDIC deposit insurance coverage for bank employees and bank officers between May 15, 2019, and December 9, 2019.
The live seminars are free, but advance registration is REQUIRED.
Registration instructions are available here with the specific dates and registration deadlines. Registered attendees can attend the sessions remotely, as the FDIC will conduct each session via Cisco WebEx conferencing software between May 15, 2019, and December 9, 2019.
Each identical live seminar will last approximately 120 minutes and include a question-and-answer session with FDIC subject matter experts. In addition to a comprehensive overview of FDIC deposit insurance rules, the seminars include deposit insurance coverage information on signature card requirements for joint accounts, Prepaid Cards, Bank Trade names, Health Savings Accounts, 529 plan accounts, and 529 Achieving a Better Life Experience (ABLE) plan accounts.
Congressional Update: Congress is in the middle of a two-week recess. When they reconvene next week, there will be several hearings of note. CBA will follow these hearings and comment / update members as necessary.
Bank of America Hires 4,700 from LMI Communities: Over the last year and a half, Bank of America has hired 4,700 employees from low-and moderate-income (LMI) communities with the help of its Pathways Career Program. The program connects individuals in local communities to a range of professional opportunities at Bank of America. The bank reported Tuesday nearly 30 percent of the Consumer banking team comes from LMI neighborhoods – and the bank expects to exceed its 2018 pledge to hire 10,000 individuals over five years from the LMI neighborhoods it serves.
U.S. Bank Expands Retail Banking to North Carolina: U.S. Bank plans to expand its retail banking presence to its 26th state – North Carolina – with the opening of its first branch location in Charlotte. The branch will open this coming fall and about ten additional branches will open by the end of 2020. The physical location expansion complements the bank’s pre-existing digital efforts to streamline the customer experience, and new efforts to reinvest in existing markets. U.S. Bank’s customers have many options to be served when, where and how they most prefer.
Comerica Names Curtis Farmer CEO: President of Comerica Bank and its holding company Curtis Farmer was appointed Chief Executive Officer of both entities on Tuesday. Farmer will succeed longtime leader Ralph Babb, who was named Executive Chairman after 17 years as Chief Executive Officer. Farmer had also succeeded Babb in 2015 as President. I look forward to meeting with Farmer soon in Dallas!
Santander Selling PA Branches to First Commonwealth: As part of Santander’s strategy to shift its focus to markets that will drive future growth, the bank is selling 14 of its Pennsylvania branches to First Commonwealth Financial. In turn, the acquisitions will extend First Commonwealth’s footprint in the state by adding approximately 22,000 retail and small business households. The deal is expected to close in the third quarter of 2019.
“We are pleased to reach this agreement with First Commonwealth – a mission-driven community bank that shares our values of providing excellent service to our customers and a great work environment for our team members. We look forward to working with them to provide a seamless transition and service experience for our customers, employees and the community.
Co-President of Santander / Head of Consumer & Business Banking
CBA Board Member
OCC to Host Innovation Office Hours in NYC: The Office of the Comptroller of the Currency (OCC)announced Tuesday it will host Innovation Office Hours, June 11-12, in New York at the Northeastern District Office. The Office Hours offers one-on-one meetings with officials to discuss issues relevant to the evolving fintech space and is relation to responsible innovation in the federal banking system. This is a great opportunity for one-on-one candid discussions with OCC officials!
For those interested, the request form is available here and will be available until May 3, 2019 or until the max number of requests is reached.
MERGERS & ACQUISITIONS
STATE OF THE WEEK
CBA’s State of the Week is DELAWARE, home of CBA member Sallie Mae and where more than half of all residents bank with a CBA member! CBA members in Delaware hold $532 Billion in total assets, employ 8,000 people, provide $11.9 Billion in small business loans and serve 500,000 customers. Check out our state by state numbers here.