Richard's Rapid Fire - July 20, 2018

Back to School: CBA Banking School Kicks Off - CBA kicks off our Executive Banking School this weekend at Furman University. We strive to make CBA EBS the go-to place for banks’ rising stars and word is out. The freshman class is nearly 140 strong and we will have close to 100 graduates this year. Traveling to Furman to meet with our banking “students” is an annual highlight as is our Bank Dinner Night tradition – where executives with each bank take out EBS students from his or her bank. Wells Fargo and PNC will need big tables – both sent more than 35 students to EBS this year. 
In addition to our outstanding faculty, led by Paul Leventhal, we are excited to have special guest speakers, including: Mary Mack with Wells Fargo, Chad Borton with USAA, Jerry Salinas with Frost Bank, Mark Rendulic with KeyBank and guests from CBA Premier Sponsor Novantas. 
We are honored by your support and hope our faculty – many bankers themselves – have equipped EBS graduates with the tools necessary to help their banks thrive and grow. 
Congratulations to the soon-to-be graduates – 15 from Wells; Best of luck to our freshman and juniors; and THANK YOU to everyone who sent students this year or in the past. 

You can listen to Paul talk about EBS in Episode 5 of our Suite 550 podcast



Kathy Kraninger Hearing Recap - The Senate Banking Committee yesterday held Kathy Kraninger’s confirmation hearing to be the next full-time Director of the Bureau of Consumer Financial Protection. 
The hearing largely stuck to the expected script. 
Republican members of the Committee focused on Ms. Kraninger’s background and experience at the Office of Management and Budget, where she oversees the budget development and execution for several executive branch agencies, including: Commerce, Justice, Homeland Security, HUD, Transportation and Treasury. 
Democratic members questioned Ms. Kraninger about many of President Trump’s policy positions – particularly those at the agencies whose budgets she managed at OMB – as well as the Administration’s oversight of hurricane recovery in Puerto Rico, immigration policies, tax reform and federal housing programs. Democrats also focused on the role the Bureau plays in protecting consumers and holding financial institutions accountable, saying the Bureau must not be led by a handpicked ally of Wall Street.
I was most interested in Ms. Kraninger’s views on how she would run the Bureau. She outlined the following principles and, in that regard, I think she hit all the right notes:
  • Fairness and transparency for consumers and the market, as well as the use of cost-benefit analysis for proposed regulations and rules.
  • Work closely with other financial regulators.
  • Protect the sensitive information the Bureau possesses and limit data collection to just that required by law. 
  • Accountability to the American people.
Ms. Kraninger, when asked about specific regulations or staffing decisions, said she would not prejudge any actions the Bureau would undertake prior to taking office as Director. But she did give her general thoughts on several issues ranging from 1071 Small Business Data Collection and Small-Dollar Lending to Student Lending and the Bureau’s accountability (of lack thereof, depending on who you ask).
A detailed summary of the hearing, prepared by CBA’s government relations team, is available here.
Next Steps for Kraninger - The Banking Committee will now have to schedule a vote on Ms. Kraninger’s nomination before the full Senate can vote on her confirmation, which could happen in August.
Hearing Highlight - When talking about the Bureau’s vast power and rulemaking authority, Sen. Jerry Moran (R-Kan.) restated the need for a bipartisan commission and Ms. Kraninger said she would support structural reforms to increase transparency and accountability. Good news! 
Speaking of a Commission - I wanted to flag for you a ruling by the U.S. Court of Appeals for the Fifth Circuit in Texas. The court ruled the leadership structure at the Federal Housing Finance Agency was “unconstitutionally insulated from executive control.” The structure of the FHFA at issue – including a single director who can only be removed for cause – is similar in many ways to the structure of the Bureau. You can read about the ruling in American Banker.  
Of note, the Fifth Circuit agreed in April to hear a case challenging the constitutionality of the leadership structure at the Bureau. Brett Kavanaugh, President Trump’s nominee to the Supreme Court, in an earlier opinion found the Bureau’s structure unconstitutional as well. 
These challenges to the structure of the Bureau will undoubtedly continue. A bipartisan commission heading up the agency, as CBA has long supported, would put the matter to rest once and for all, and would create a more stable and sustainable consumer protection agency. It would also help resolve the on-going legal questions surrounding the Bureau’s structure. There is bipartisan legislation in the House of Representatives to do just that. The legislation was introduced by Reps. Dennis Ross (R-Fla.), Kyrsten Sinema (D-Ariz.), Ann Wagner (R-Mo.) and David Scott (D-Ga.) and cosponsored by Reps. Blaine Luetkemeyer (R-Mo.), Vincente Gonzalez (D-Texas), Patrick McHenry (R-N.C.), Gregory Meeks (D-N.Y.) and Sean Duffy (R-Wis.).  
Mulvaney Shrinks Advisory Board Size - Bureau Acting-Director Mick Mulvaney last month announced his intention to restructure the Bureau’s advisory boards. News broke this week that Acting-Director Mulvaney filed an amended charter to reduce the number of board members from 25 to six, saying the previous board structure was too big. 
Regulatory Changes Coming from Fed - Fed Vice Chair of Supervision Randy Quarles – who was confirmed to a full, 14-year term this week by the Senate – discussed his plans for regulating banks between $100 billion and $250 billion as a result of the bipartisan Dodd-Frank reform legislation Congress passed this spring. He suggested banks in that size range could get a break from living wills and the frequency of stress testing could be reduced. For banks with more than $250 billion in assets, he said banks that were not G-SIBs should also receive a measure of regulatory relief. We will keep you posted – and will stay involved on your behalf – as the new regulatory landscape continues to develop. 
It’s a Wrap on Bureau RFIs - For those of you following the Bureau’s extensive RFI process, the final letter was submitted Monday. CBA’s legal team – as part of the comment letter process – undertook a top-to-bottom review on the Bureau’s enforcement, supervisory, rulemaking, market monitoring and educational activities.
A summary of each submission with a link to CBA’s full letter is available on our RFI pagehere. And, you can read our press releases on each submission at the links below. 
Zions Checks Out - FSOC this week gave a preliminary greenlight for Zions’ to shed Fed oversight after the bank simplified its corporate structure and eliminated its bank holding company. Treasury Secretary Steven Mnuchin said “the Council conducted a careful analysis of Zions’ business and found that there is not a significant risk…” Zions could join non-banks GE Capital and American International Group in dropping SIFI designations. FSOC now has 60 days to issue a final decision, so mark your calendars. 
(R-L) Zions Bank CEO Harris Simmons and CBA President & CEO Richard Hunt stand beside the Bank's massive, double-sided 2015 Comprehensive Capital Analysis and Review report to the Federal Reserve.
Bank of America, Citi, Chase Up Consumer Lending - Whether buying a home, launching a small business, paying for college or getting a new car, CBA member banks partner with 140 million people in all 50 states to finance their dreams. According to earnings reports released late last week and early this week, banks are expanding their consumer lending. Bank of America saw a 6.6% increase in consumer lending in the second quarter compared with the year-earlier period and consumer lending rose about 2.5% at Citigroup and JPMorgan Chase. Retail banks have a great story to tell and everyone at CBA is proud to be part of telling it.
Visits to Chicago, New York & Atlanta - I got to log some frequent flier miles this week with trips to Chicago and New York before heading down to Atlanta next week. One of the best parts of my job is traveling across the country to visit CBA members. Not only is it education, it is a lot of fun. CBA General Counsel Steve Zeisel and I had a great breakfast with Ernie Johannson of BMO Harris. Ernie is new to our Government Relations Council and already having a tremendous impact. In New York, I stopped by PwC and visited Steve Solk, CIT’s president of consumer banking. 
I also had to chance to chat with Second Curve founder Tom Brown while I was in New York. Most of you know I am a religious reader of Tom’s newsletter and always appreciate his take on the industry.
After I leave New York this afternoon, I’m making a pit stop back home in D.C. to see the Washington Nationals faceoff with the Atlanta Braves. I will be following the Braves down south to Atlanta to see CBA Premier Sponsor Equifax. 


Play Ball - In addition to taking in a regular season game this weekend, I got to attend the All Star Game on Tuesday. The outcome was not what I had hoped for but it was still a blast watching the best in the game play America’s pastime. The opening ceremonies were a real treat – with a military flyover, community choir creating an American flag while singing the national anthem and combat medic James McCloughan throwing out the first pitch while standing with 28 other Medal of Honor recipients. Let’s just say I got a few ideas for CBA LIVE and CBA’s Centennial Celebration next year here in Washington. Mark your calendars for April 1-3, 2019. 
Happy Birthday - Happy birthday to CBA Team Members Stephen Congdon, Janet Pike, Jenna Stewart and Sam Whitfield who all celebrated this week!!