Richard's Rapid Fire - December 21, 2018

BCFP Back to CFPB: Kathy Kraninger’s first move as fulltime Director of the agency formerly known as the Bureau of Consumer Financial Protection was to change the name back to its original title, the Consumer Financial Protection Bureau. I am still pushing for CFPC…Consumer Financial Protection Commission.  

FDIC Board Approves 2019 Operating Budget: The FDIC’s 2019 Operating Budget marks the ninth consecutive year of lower annual operating budgets and staffing levels for the FDIC. The proposed budget provides for increased examination resources in the information technology area, creating 23 new positions for IT examiners and specialists. This would also allow us to add 23 new positions for large bank supervision.

Today, 40 FDIC-supervised institutions have assets greater than $10 billion. 10 years ago, only 23 institutions were that large; 20 years ago, only seven. The additional staff will help us address the unique challenges these big banks present. Chairman McWilliams’ statement is available here.

ICYMI: On Wednesday, CBA issued a joint financial trades statement with ABA, BPI, CUNA andNAFCU ahead of the FSOC meeting to discuss CECL accounting standards. In the statement, we urge FSOC to seek a delay in CECL implementation until a transparent quantitative impact study is performed and shared with the industry. The statement is available here.

Rep. Luetkemeyer Introduces Supervisory Guidance Bill: On Thursday, Rep. Blaine Luetkemeyer (R-MO) introduced legislation requiring federal regulators to clarify that guidance outside of the rulemaking process is not legally binding and does not take the effect of law. Regulatory guidance helps financial institutions better understand and comply with existing rules on the books. In recent years, however, this guidance has often been used to circumvent the formal rulewriting process. Rep. Luetkemeyer’s bill is a positive step and allows regulators to continue providing clarity to supervised financial institutions about rules and regulations while protecting the rulewriting process, which is designed to allow regulators to carefully vet different points of views.

Fintech Deposit Account Consumer Protections: On Tuesday, CBA wrote a letter to the FDIC, the Fed, FTC, OCC and SEC, encouraging the agencies to help ensure customers know the difference in protections on accounts offered by non-bank financial institutions and accounts offered by well-regulated, Federally-insured deposit accounts offered by banks. The letter followed Robinhood Financial pitching “checking and savings” account services to its roughly six million customers as being akin to a traditional checking or savings account.

We see Robinhood as a prime example of blurring the lines.  

A copy of the letter is available here and CBA’s statement on fintech accounts is available here.

Record High Student Loan Debt: Right-sizing federal student lending is a top 2019 priority for CBA.Federal Student Loans account for about 92% of the nearly $1.5 trillion in outstanding debt, which would make the Department of Education the nation’s fifth largest bank. The analysis from Bloomberg also noted the delinquency and default rate of student loans. According to the Federal Reserve Bank of New York, one in five borrowers in repayment is seriously delinquent or has defaulted on their student loans. Given that 98% of private loan borrowers are successfully repaying their loans, it’s clear where the real problem is.

I recently penned an op-ed, available here, discussing student loan debt and ways to tackle it. As noted in the op-ed, “CBA’s Education Funding Committee – which is comprised of every national bank in the student lending space that together make about two-thirds of all private education loans – believes the federal government has a critical role to play in helping finance higher education goals for many families, but we also believe students should know all the facts about the education financing options available.”

Banks issuing private student loans conduct responsible underwriting and provide plain-language disclosure forms before the loan is made. These are the strongest forms of consumer protection, help prevent over borrowing and similar “Know Before You Owe” disclosures are necessary for federal loans.

A quick student loan fact sheet, which includes CBA’s recommended reforms, is available here.

Bill Rys to Lead Citigroup Federal Government Affairs: On Thursday, Citigroup Inc. named Bill Rys as head of the Federal Government Affairs team in Washington, D.C. He has been with Citi since 2013 with a focus on tax policy, and has been acting head of the Federal Government Affairs team for a few months now. Congratulations! 

Colony Bankcorp Signs Definitive Agreement to Acquire LaGrange, Georgia-Based LBC Bancshares, Inc.

Ameris Bancorp and Fidelity Southern Corporation Announce Merger Agreement

Independent Bank Group Merger with Guaranty Bancorp Receives Regulatory Approval

ABNB Announces Merger with Hampton Roads Catholic FCU

Wintrust Acquires Chicago Deferred Exchange Company

Virginia Partners Bank, Delmar Bancorp Announce Merger