Richard's Rapid Fire - June 29, 2018

Senate Hearing Set for Kraninger’s BCFP Nomination – Late yesterday the Senate Banking Committee announced Kathy Kraninger’s confirmation hearing had been scheduled for Thursday, July 19. This is the first of several steps in the Senate. After the hearing, the Committee will schedule a vote on her nomination before sending it to the full Senate for final confirmation. Senate rules require a simple majority for confirmation and Vice President Mike Pence can break a tie, if needed. As a refresher, President Trump nominated Kraninger last week to be the next full-time Director of the Bureau of Consumer Financial Protection.
Regulatory Wheel of Fortune – Pat Sajak always started with R, S, T, L, N, E but this week CBA focused on B, C,E, F, G, P, V, X, Z and DD. Those are the inherited regulations the Bureau’s latest RFI asked about. In our comment letter, we discussed the need for the Bureau to ensure rules reflect changes in technology and the way consumers bank. Using your input, we were also able to comment on rules ripe for reform and re-examination.
You can read more about our letter and catch up on the Bureau’s full RFI process using our version of the BCFP RFI Cliffs Notes. The next comments, on guidance and implementation support, are due next week. 
CBA Crystal Ball – 2019 might seem like a long time away, but the team at CBA World HQ has already started looking into our crystal balls to plan for FY’19 and beyond. We had a full-day, off-site meeting this week to examine our budget, potential goals, examine the regulatory and legislative landscape as well as look for opportunities. Everyone had to list their own top takeaway. Here is mine: Because of our dedicated membership, CBA enters our 100thyear from a position of strength. A lot of associations cannot state such and, since we can, I want to say: “THANK YOU!”
M&A Assumptions put to the Test – With the new systemically important threshold being lifted by Congress and the Administration, many assume a tidal wave of bank mergers is on the horizon. The four largest acquisitions this year have all happened since May, when the threshold was lifted. But, if you look at the entire year, M&A activity is 8 percent below last year’s rate and the lowest since 2013, according to data compiled by Keefe, Bruyette & Woods and S&P Global Market Intelligence. The data also shows the aggregate value of the deals is also down from 2017.
Before making a move, some analysts suspect bank executives are watching future regulatory changes, like BSA/AML, or looking at other factors, like the interchange fee cap that kicks in at $10 billion or earlier capital investments which might not have taken the SIFI increase into effect. 
So, will 2018 start a period of increased mergers? Only time will tell. 
If It Looks Like a Bank… – Aaron Klein, a fellow at the left-leaning Brookings Institution and policy director at the Center on Regulation and Markets, recently wrote an interesting piece in American Banker. He proposed credit unions more interested in becoming national financial institutions – like banks – instead of fulfilling their original mission of providing financial services to a set community should follow the same regulatory guidelines as banks. In other words, if it looks like a bank, it should play by the same rules as a bank – regardless of if it is a credit union, fintech, ILC or other financial service institution. Whatever you think about the rules on the book, we should all agree on the need for a level playing field. 
Home Equity Update - The tax law Congress passed and President Trump signed last December made some significant changes to the treatment of home equity loans. In the latest edition of CBA’s podcast, Suite 550, CBA's Home Equity Lending Committee Chair Tom Parrish, Head of Retail Lending Product Management with BMO Harris Bank, sits down with CBA's Senior Vice President of Congressional Affairs Sam Whitfield for a deep dive into the recent changes to the tax treatment of these loans as well as the benefits of home equity lines of credit and how rising interest rates impact the product’s use. Tune in here
Inflation and Common Consumer Loans – As most of you know, I am a big Twitter junkie. The AEI think tank tweeted out a chart showing how much prices have changed for consumer goods, services and wages over the last two decades. Some of the goods you help your customers purchase – like cars and trucks – have decreased in cost while others have increased dramatically compared to overall inflation (+55.6%). Hospital services led the pack with a more than 200% increase. College textbooks and tuition were in a close second, up just a little less than 200 percent. 
Consider this, the New York Fed found for every additional dollar in federal student lending available, tuition can increase as much at 67 cents. The nearly 200 percent increase in college is pretty predictable when you compare that stat with the fact the federal government currently originates 90 percent of all student loans annually. CBA’s Education Funding Committee has been focused on ways to inject more private lending into this marketplace as a way to help bring tuitions down. Check out the full chart here.
Frost’s People-First Square Deal – Frost Bank surprised some observers by being among the first regional banks to raise deposit rates. When people started asking why the 49 percent loan-to-deposit ratio bank would try to lure new deposits it seemingly did not need, the answer from Chairman and Chief Executive Phil Green was simple, it is all about providing Frost Bank’s famous “square deal” to its customers. Just another reason why Frost is not only one of Texas’ oldest banks but also so well respected. Read the full articlein American Banker.
Eastern Bank Dance Party –The grand opening of Eastern Bank’s newest branch, located in Roxbury Crossing outside downtown Boston, broke out in a dance party. Eastern Bank President & Vice Chairman Quincy Miller said it was the most lively branch opening he has ever seen and the community support was overwhelming. Prior to this week, the community’s financial options were dominated by check cashers and Boston Mayor Marty Walsh told the community, “You’ve waited a long time to get the services and support that people downtown get.” Always humbling to see the great work CBA members are doing across the country. Keep it up!
This week, CBA member Eastern Bank celebrated the opening of its newest branch in Roxbury Crossing outside of downtown Boston with a community block party.


Risk Committee Chair David Mehrle – CBA is lucky to have Huntington Bank’s David Mehrle, SVP Retail & Business Banking Risk, as the chair of our Risk Committee. David was instrumental in developing the Risk Working Group into a full-fledged standing committee. He also brings a fount of knowledge to his work, having spent more 20 years in the Risk function and his specialties include: all facets of credit, fraud and operational risk; MIS/data solutions and BI; Finance, strategic planning and analysis; Program Management and leading large scale technology related solutions. When David isn’t overseeing the first line of defense at Huntington, he’s cheering on his Ohio State University Buckeyes and training for the multiple marathons and races he does each year.
Hear directly from David and the immediate past chair of the Risk Committee, Maria Leonard with Citizens, in Episode 4 of CBA’s Suite 550 podcast


Happy Birthday! – Best birthday wishes to Rich Gold, CBA Board Member and President of M&T Bnk; CFPB / BCFP Committee Chair Cindy Reeves with Frost Bank; and, former CBA Team Member Bill Hulse!
Fitting Way to Celebrate Independence Day – One of my favorite days at CBA was when Mitslal Girmay, Accounting Manager, took her oath of citizenship. Last week, our Vice President of Finance, Danni Lu, watcher as her father, Yimin Lu – along with more than 100 others – became a U.S. citizen. I cannot think of a more fitting lead up to Independence Day than reflecting on how lucky we are to be born here and remembering all the sacrifices so many have made to guarantee our freedoms. 
Capital One a Great Place to Work – This week The Washington Post named Capital One in the top 20 great places to work in the D.C. area. The Post noted Capital One “has spent the past decade transforming itself into a financial technology company. In recent years, the company has set up seven employee-led ‘business resource groups,’ designed to support specific employee groups as the company becomes more diverse.” Those investments have paid dividends. Kudos to Capital One and all our members for being great places to work!