Richard's Rapid Fire - June 22, 2018


Court Rules Bureau’s Structure Unconstitutional – The U.S. District Court of the Southern District of New York ruled yesterday the Bureau "unconstitutionally structured."  The opinion was in the case of CFPB v. RD Legal Funding, LLC et al. 
Whether the decision, which disqualified the Bureau as a plaintiff in the case, will be appealed depends on a number of factors. However, it is not binding and does not affect the PHH decision. The case can continue with the NY Attorney General, who has independent authority to bring the claims. 
This conundrum is just more evidence one person should not have the sole authority over the financial lives of every American consumer. It creates uncertainty, limits opinions and turns the Bureau into a political pendulum, swinging with each new Administration. The only solution is to act on the bipartisan legislation in the House of Representatives creating a bipartisan commission to lead the Bureau.
Luckily, Representatives Dennis Ross (R-Fla.), Kyrsten Sinema (D-Ariz.), Ann Wagner (R-Mo.), David Scott (D-Ga.), Financial Institutions Subcommittee Chair Blaine Luetkemeyer (R-Mo.), Vincente Gonzalez (D-Texas) and Chief Deputy Whip Patrick McHenry (R-N.C.) introduced H.R. 5266, the Financial Product Safety Commission Act, to do just that.
You can read more about the case here.
Kathy Kraninger Nominated to be BCFP Director – Conventional wisdom kept the same two or three names in the media for months as potential nominees to be the next Director at the Bureau of Consumer Financial Protection, but as they say, conventional wisdom is often wrong. It certainly was this time when the President nominated Kathy Kraninger to be the Bureau's next Director.
Here is what we know about Ms. Kraninger:
  • Currently the Program Associate Director for General Government at the Office of Management and Budget.
  • Oversees the budget development and execution for several executive branch agencies, including: Commerce, Justice, Homeland Security, HUD, Transportation and Treasury. 
  • Prior to OMB, clerk on the Senate Homeland Security Appropriations Subcommittee and held positions with the House Homeland Security Subcommittee and the Senate Homeland Security and Governmental Affairs Committee.
  • Was Deputy Assistant Secretary for Policy at the Department of Homeland Security under Secretary Tom Ridge during the Bush Administration.
  • Graduated from Marquette University in 1997 and received a law degree from Georgetown University Law Center in 2007. Kraninger served as a Peace Corps volunteer in Ukraine.

Since a nomination has been made, Acting-Director Mulvaney can continue leading the Bureau until a new director is confirmed by the Senate. 
From what I have heard, she is a straight shooter and unwaveringly fair. I look forward to her confirmation hearings to hear her views on the industry and the role of the Bureau. 
Here is the bottom line: Ms. Kraninger is no doubt qualified to manage a large agency, but the Bureau has been a political pawn for too long. That is why we continue to support a bipartisan commission to provide a diverse set of opinions, wide range of experience and ensure everyone has a seat at the table when key Bureau policies are being crafted.
BCFP Director Nominee Kathy Kraninger
Great Trip to Jacksonville – I thoroughly enjoyed a visit to sunny Jacksonville, Fla., this week to see our premier sponsor Black Knight and the newly branded TIAA Bank.
It was a real pleasure to meet Black Knight’s new CEO, Anthony Jabbour, and spend quality time with the BK team (Michelle Kersch, Shelley Leonard, Sandra Madigan, Joe Nackashi, Chad Powers and Victor Soler-Sala). Thank you for sharing your insights on recent mortgage trends, the work you’re doing in digital with new AI capabilities and what you’re seeing in the marketplace. Lots of great insights!
My arrival in Jacksonville was just two weeks after the official launch of the TIAA bank and it was nice to see the new name at 501 Riverside – not to mention the Jaguars Stadium! It was great to catch up with EBS faculty member Seth Waller, EVP and Chief Credit Officer, and EBS alum Jill Streit, SVP and Treasurer. See you both at school for bank dinner night!
CBA's Richard Hunt and Erin Snyder (center) were in Jacksonville, FL this week where they met with TIAA's Seth Waller (left) and Jill Streit (right).
New Sheriffs in Town – The banking industry has a new set of sheriffs in Washington, D.C. The OCC, Bureau and FDIC all have new leaders and they all made news this week. Here is a quick wrap-up.
FDIC Chairman Jelena McWilliams: From growing up in Yugoslavia and coming to America as a teenager to receiving her law degree, working on Capitol Hill and most recently serving as the chief legal officer at Fifth-Third bank, I am simply blown away by Chairman McWilliams’ life story and amazing success. Each of her experiences has shaped her outlook leading the FDIC and she talked about that this week, noting the need for transparency within government agencies and promising the FDIC under her leadership would have an “open door policy where we solicit feedback on what’s working and what’s not.” She also discussed:
  • Marijuana Banking: “Unfortunately, our hands are somewhat tied and I have asked the staff to take us to the next level and think about what can we do here. It’s not our job as an agency to set our federal policy” on marijuana banking, “but it is our job to help our regulated entities learn how to comply in a way that makes sense.”
  • Community Reinvestment Act: She did not mention whether the FDIC would join the OCC in its advance notice of public rulemaking on CRA. 
Acting Director Mulvaney: During a conference this week, Acting Director Mulvaney addressed some hot industry topics, including:
  • Commission: The Bureau needs to be considered a gold-standard regulator by breaking its political perception and the reason other agencies, like the SEC, do not have wild political swings is because of its five-person commission. 
  • Regulations: The Administration’s “deregulatory agenda” is designed to help the economy and regulations should protect consumers from unfair, deceptive or abusive practices.
  • Fintechs: The Bureau will announce the head of its Office of Innovation next week and there must be a regulatory sweet spot for developing technology, fostering innovations and protecting consumers. 
  • Tenure at the Bureau: He expects Kraninger to be confirmed by late 2018 but said he could theoretically stay as Acting Director until the end of the President’s first term. 
Comptroller Joseph Otting: Like Chairman McWilliams, having someone with banking experience running these agencies matters. The CBA Team and Board have met with Comptroller Otting several times and I am always impressed with his knowledge of the industry. He shared some of his thoughts at a conference in D.C. this week on:
  • AML/BSA: Officials are forming an interagency working group to consider changes to anti-money laundering regulations. Regulators submitted more than a dozen recommendations to FinCEN, which responded earlier this month.
  • Community Reinvestment Act: Comptroller Otting told reporters after his remarks he recently met with FDIC officials and was more confident an interagency agreement on CRA could be reached. 
Stress Relief – Two pieces of news here… First, the Fed has released its first round of stress tests and found the largest U.S. banks are ready to withstand another economic downturn and continue lending during a crisis. Second, because of the recent regulatory reform efforts by Congress and the Administration, banks with less than $100 billion in assets are no longer subject to the Fed’s pass-fail stress test. The Fed has already started to implement the new regulatory guidelines and announced banks below that threshold are no longer required to undergo the Dodd-Frank and CCAR stress tests – a huge investment of capital.  The Fed also said they would not report stress test results for CIT, Comerica and Zions.
Another Week, Another Comment Letter – Like clockwork, we submitted another comment letter to the Bureau this week as part of Acting Director Mulvaney’s top-to-bottom review of the Bureau. This week we commented on adopted regulations and new rulemaking authorities. A lot of members were involved in getting this letter across the finish line and I want to thank them for their valuable input. Our letter focused on recommendations designed to promote consumer access to credit, encourage the use of digital channels and improve regulatory compliance. 
Helping Small Businesses and Local Economies – When most people think about small business loans, they think about small banks. That is not the case. In fact, of the 100 most active SBA 7(a) lenders, CBA members make the most total number of loans. It just goes to show how dedicated each of you are to assisting small businesses and local economies. President Trump this week signed legislation introduced by Representatives Steve Chabot (R-Ohio) and Nydia Velázquez (D-N.Y.) to authorize the Small Business Administration to increase the 7(a) Loan Program’s maximum lending authority during periods of high demand, among other reforms. CBA has been very active in making sure this bill made it across the finish line and you can learn more about the bill in our letter of support or our statement.
Education Funding Committee – I hope the Education Funding Committee wore some comfortable shoes while they were in town this week. Committee members stormed Capitol Hill – holding more than a dozen meetings – to discuss the role private student loans can play in helping students achieve their education goals. A lot of people think federal loans are the only answer, but as you know, many banks offer competitive and often more favorable options for college students. With a new school year just around the corner, it is important Congress reauthorize the Higher Education Act and make sure it takes into account the larger role private lenders can – and are ready – to play. 
HR Goes Agile – I came across a fascinating read about talent management this week. It focused on BBVA’s application of SAFE (Scaled Agile Framework) principles to break down silos within the bank. As fintechs and other technology companies enter the banking space, being able to adapt in real time is crucial. Learn more about BBVA’s new approach to achieving their strategic vision and meeting customer needs faster here.
Bank of America Hires 10,000 – Bank of America is planning to open 500 new branches in the coming years and that means new jobs. They just announced plans to hire 10,000 employees from low- to moderate-income communities in the next five years as part of their Pathways initiative. Read more about B of A’s plans here.
A Starbucks on Every Corner? Not So Fast – I just talked about Bank of America expanding and have discussed Chase’s expansion in the D.C. area, but there are also a lot of banks going through consolidation and transformations. Consolidation is not just limited to the banking community. Starbucks announced plans this week to close about 150 stores over the next year – about three times the usual number. In addition to closing stores, they will also offer more low-calorie and health drinks. It just goes to show you that no matter how strong your brand or footprint may be, no one is immune from changing customer demands. 


Fair and Responsible Banking Chair Christina Speh – CBA islucky to have TD Bank’s Christina Speh as the chair of our Fair and Responsible Banking Committee. Christina has more than two decades of experience handling compliance and risk management as a consultant, regulator and banker. Her commitment to fair lending, CRA and HMDA started well before she joined TD Bank, though. Growing up during the height of the Cold War in Berlin, she has a unique understanding of what it means to own a home, pursue your dreams and enjoy the freedoms we too often take for granted. She brings this experience to her work at TD Bank and to leading CBA’s FRB Committee. No doubt countless families have benefited from Christina’s dedication. You can read her thoughts on the role banks play empowering individuals and the work TD Bank is doing to help low- to moderate income families purchase their first home here.


CBA LIVE – Can you believe it has already been three months since CBA LIVE 2018: Beyond the Bank in Orlando? I had a great time, learned a lot about the future of the industry and left energized. We are never ones to rest on our laurels here at CBA World HQ and have already started laying the groundwork for CBA LIVE 2019. It will be our 10thCBA LIVE and coincide with CBA’s 100thAnniversary. We are gathering here in Washington, D.C., on April 1-3, 2019, and this should be the best LIVE yet. Mark your calendars and save the date! 
M&T BSA Officer Testifies – M&T’s BSA/AML officer Tracy Woodrow did a fantastic job explaining to a Senate Banking Subcommittee the lengths banks go to in fighting money laundering and illicit financial activity. She leads a team of more than 300 dedicated professionals at M&T and I know she made them – and all of CBA – proud of the work they do. 
Jim Matthews at World HQ – I love having CBA members in the office and was excited to have Jim Matthew with Capital One stop by this week. Jim and CBA General Counsel Steve Zeisel commandeered a conference room, rolled up their sleeves and did a deep-dive on CRA-related issues. As I’ve written, we expect regulators to begin CRA modernization efforts in the coming weeks and you better believe CBA will be there every step of the way making sure regulators take into account all the ways you work to serve your communities. Thanks for stopping by Jim and thanks for your help. 
Happy Birthday! – Happy birthday to Pace Bradshaw with Visa and Michelle Lee with Wells Fargo, who both have birthdays this month!!
CBA Board Member Michelle Lee of Wells Fargo with Senator Thom Tillis (R-NC).