Richard's Rapid Fire - February 15, 2019

CBA’s Education Funding Committee was in D.C. last week to meet with new members of the House Education and Labor Committee as well as the Senate HELP Committee to discuss the benefits of private student loans, advocate for a ‘Know Before You Owe’ policy and solutions to prevent over borrowing on federal student loans. Our members serve as the primary industry voice for private student loan lenders.


A few members meeting with Senator Mike Braun (From left to right): Gary Schleuger and Harrison Wadsworth, Bose Washington Partners; Tim MorrisonSallie MaeSen. Mike BraunKelly ChristianoSallie MaeMark SmithSunTrust.



Cajun Thoughts: SHUTDOWN Looks like the government shutdown was averted! CBA was working with member banks once again, preparing to help furloughed workers in another possible shutdown … BANKS TO TESTIFY CEOs will be testifying in April before the House Financial Services Committee and it was reported today Tim Sloan will appear solo ... SMELL THE SMOKE With the Democrats taking over the House, we knew more attention would be paid to the business of marijuana throughout the country since it is now legal in some form in many states. The first Congressional hearing helped explore pot banking issues and while there is bipartisan support, not everyone was on board so it remains unclear if the bill has enough backing to pass the House. Definitely keep this on your radar screen! … STUDENT LOAN DISCLOSURE It is embarrassing the federal government does not have a clear disclosure form in place for borrowers. The reintroduction of the Student Loan Disclosure Modernization Act is good for students, taxpayers and a major step toward reining in the federal over lending which has added fuel to skyrocketing tuition rates. Many thanks to our Education Funding Committee led by John Vidovich of Discover for their dedication to this issue …VALENTINES DAY The average American spends about $267 on Valentine’s Day celebrations. Call me cheap, but I am not the average American, I am well below. Even a street vendor was selling roses on the corner for double the normal price. Got to love capitalism in all shapes and forms!

Don’t miss the 100th anniversary of the Consumer Bankers Association and our 10th CBA LIVE.


With 90 hours of content and 13 issue forums, you won’t want to miss the powerhouse programming at CBA LIVE 2019: The Currency of NOW


Our "free to roam" format lets you choose the topics and sessions that interest you most. No matter which forum you choose, you'll enjoy top-notch presenters and info-packed sessions such as:


Leave inspired, connected and prepared. Register here and explore our interactive program here to customize your CBA LIVE experience.



CBA Supports Student Loan Disclosure Modernization Act: This week Reps. Emanuel Clever (D-Mo.) and Jim Banks (R-Ind.) introduced the bipartisan Student Loan Disclosure Modernization Act (H.R. 1161) intended to clarify the costs and terms of federal student loans prior to borrowing, similar to disclosures already provided on private student loans.


Bank-offered student loans help set students up for success, both during college and after graduation. Banks already offer their customers a very clear ‘Know Before You Owe’ disclosure form. It is responsible, empowers students and families to make sound financial decisions and helps prevent the double-digit default and delinquency rates seen on federal student loans.


NOTE: Earlier this year, CBA sent letters of support to Senators Mike Enzi (R-Wyo.) andJohn Curtis (R-Utah) to support their Transparency in Student Lending Act. The legislation would require disclosure on the total cost of federal student loans in the form of an annual percentage rate (APR). This clear disclosure would help borrowers compare federal and private student loans on equal terms.


Need for Bank-Backed Small-Dollar Loans: I recently penned an op-ed featured inAmerican Banker examining the need for bank-backed small-dollar lending products to help Americans facing unexpected financial hardships. Guidance and rules pushed banks out of this space and the FDIC and CFPB are now reviewing those actions.


Just last month, CBA wrote the FDIC in response to their review explaining how existing regulatory guidance has curtailed banks’ ability to help customers by offering short-term, small-dollar products and requested they rescind the 2013 guidance. CBA also commented on theCFPB’s reconsideration of the small-dollar lending rule which is available here.


HFSC Marijuana Banking HearingWednesday, the House Financial Services Subcommittee on Consumer Protection and Financial Institutions held a hearing titled “Challenges and Solution: Access to Banking Services for Cannabis-Related Businesses.” The hearing featured two panels that discussed, among other things, proposed legislation to provide depository institutions a safe harbor from federal prosecution or investigation for providing banking services to a state authorized cannabis-related business and the current issues surrounding the banking of cannabis-related businesses.


This was the first time the committee has held a hearing on cannabis, making this a significant step for proponents of the “The Secure and Fair Enforcement (SAFE) Banking Act of 2019” and those who are in favor of offering banking services to cannabis-related businesses. Based upon the hearing, it is likely the SAFE Act, or a similar bill, could pass through the committee and potentially the full House. It should be noted, however, there is currently no path forward for such legislation in the Senate.


Key Takeaways:

  • Proponents of the SAFE Act, primarily Democrats, stressed repeatedly the bill is not about legalizing marijuana at a federal-level. The discussion instead focused on providing cannabis-related companies safe access to financial services and to avoid the risks associated with all-cash business.
  • The majority of Republicans focused on the Controlled Substances Act and the classification of marijuana as a Schedule I drug, which would need to be addressed before the SAFE Act or any other cannabis banking legislation.
  • Several Republicans also drew attention to Operation Chokepoint, stating the government should not allow banks to service companies that are illegal at the federal level if they will not let them service businesses that are actually legal.


CFPB Semi-Annual Report to Congress: The CFPB Tuesday released its Semi-Annual Report to Congress, covering the Bureau’s activities from April 1, 2018 to September 30, 2018. This is the first Semi-Annual report submitted by new Director Kathy Kraninger, which she noted will provide “a backdrop and a launching pad for a fresh start at this agency.” DirectorKraninger also highlighted the Bureau-wide listening tour she has embarked on, including visiting the regional offices in San Francisco, Chicago and New York to talk to Bureauexaminers.


Overall, the report illustrates the massive impact Acting Director Mick Mulvaney had on theBureau in a very short time – reducing the overall budget of the Bureau, while attempting to connect better with all stakeholders and work more effectively to implement the Bureau's various rules and regulations. Director Kathy Kraninger seems equally committed to re-examining the Bureau's processes and procedures to best ensure it serves its statutory purpose and protects consumers, and as she noted, this report reflects a springboard for the newBureau to move forward.


The report highlighted the CFPB’s plan for upcoming rules, as enumerated in the Fall 2018 Unified Agenda, including:


  • Payday, Vehicle title, and Certain High Cost Installment Loans (opening a rulemaking to reconsider its 2017 rule)
  • Debt Collection (expected spring, 2019)
  • The Expedited Funds Availability Act (to be issued jointly with the FED)
  • HMDA (reconsider various aspects of the Bureau’s 2015 rule, as well as implementing the Economic Growth, Regulatory Relief, and Consumer Protection Act)
  • Amendments Relating to Disclosure of Records and Information
  • Summaries of Rights under the FCRA
  • Technical Specifications for Submissions to the Prepaid Account Agreements Database


Joint No-Action, Sandbox LetterCBA, along with American Bankers Association, U.S. Chamber of Commerce and Housing Policy Council, collectively commented on the CFPB’s proposal to revise its 2016 No-Action Letter policy and establish a product sandbox.


The letter urges the Bureau to refine further its policy and more closely align it with the well-established and effective programs of other federal regulators including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). To achieve that outcome, the Associations recommend the Bureau:


  • Strengthen liability protections for companies that comply in good faith with the terms of a NAL or Sandbox approval;
  • Coordinate proactively and fully with other regulators;
  • Ensure the confidentiality of data and information;
  • Strengthen and formalize process controls to enhance the transparency, fairness, and predictability of the NAL and Sandbox process; and
  • Commit to amending relevant regulations when program experience demonstrates it is warranted.


A full copy of the letter is available here.



JPMorgan Introduces “JPM Coin”: The first major US bank to create their own cryptocurrencyJPMorgan Chase announced yesterday the rollouts of “JPM Coin”. The bank generated and fruitfully tested the digital currency based on blockchain technology and it will always equal one U.S. dollar. The tool will continue to be developed for business-to-business money transfers in an effort to help clients reduce counterpart risks, capital requirements and enable instantaneous payments. Learn more about the digital token here.


Citi Launches New Personal Loan, Online Savings Account: As part of its new digital bank rollout, Citi recently launched Citi Flex Loan which allows current Citi credit card holders to choose the loan amount and ability to opt for repayment terms up to five years, no requirement for separate loan applications. Citi also introduced an online savings account called Citi Accelerate Savings offered in 41 states that pays a rate of 2.36% with no minimum balance requirement. The savings account must be opened in conjunction with another account i.e. checking or wealth management. Learn more about the digital transformation here.


Fifth Third Launches Dobot: Fifth Third Bank announced Monday the launch of Dobot – a mobile app offering an alternative to general savings accounts. The robot encourages customers to prioritize savings and automatically transfers money from checking accounts to a Dobot savings account based on customer specifications. The app was sold to Fifth Third in early 2018, and relaunched last month. This digital tool is also available to anyone with a checking account with an U.S. financial institution, not just Fifth Third customers. Learn more here.


Citizens Names John F. Woods Vice Chairman: Citizens Bank announced Thursday Chief Financial Officer John F. Woods has been appointed as Vice Chair. Mr. Woods joins former CBA Board Chairman and Head of Consumer Banking Brad Conner in addition to Head of Commercial Banking Don McCree. Congratulations!



Happy Birthday to John Owen, Melanie Duffy & Ryan Blake: Three birthday celebrations on Valentine’s Day! Best wishes to former CBA board member John Owen of Regions, Mel Duffy and Ryan Blake of the CBA Team.


WSFS Bank Receives Key Regulatory Approval to Acquire Beneficial Bank


First Mercantile Trust, a Subsidiary of EdgeCo Holdings, Announces Agreement for Strategic Acquisition of American Trust Retirement


Equity Bank Completes Acquisition of MidFirst Banking Centers in Guymon and Cordell, Oklahoma


Trellance acquires OnApproach


Somerset Trust Co., First Bank of Lilly announced merger agreement





Our State of the Week is RHODE ISLAND, where more than 1 out of every 4 residents banks with a CBA member! CBA members in Rhode Island hold $35 Billion in total assets, employ 6,000 people, provide $800 Million in small business loans and serve 500,000 customers. The nation’s smallest state in size is home to Citizens Bank in Providence. Check out our state by state numbers here.