Richard's Rapid Fire - March 1, 2019

Join us April 1-3, 2019 in Washington, D.C. for CBA LIVE 2019: The Currency of NOW to experience 90 hours of programming, powerhouse speakers and unprecedented networking with senior bankers.


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Cajun Thoughts: BILL PAY SOLUTIONS I read an article this week about the company ClickSWITCH which offers an automated account transfer solution for banks to offer new customers. The product streamlines the process of switching direct deposits or bill payments from one bank to their customers. I wonder if this will have a major effect on “stickiness” …CONGRESSIONAL HEARINGS NOW & ON THE HORIZON For those Republicans who may be in denial about the power Speaker of the House Nancy Pelosi possesses, look no further than the several hearings that took place this week in the U.S. House of Representatives. Summaries of the key hearings are available in D.C. Download. Topics ranged from privacy to diversity and inclusion in addition to Michael Cohen’s testimony against President Trump. CFPB Director Kraninger will make her first appearance before the House Financial Services Committee next Thursday and I predict Chairwoman Waters will press her on the agency’s actions under the Trump Administration. Look out for other upcoming high-profile hearings in March and April where big bank CEOs will testify … ECONOMIC TROUBLE IN 2020? As Chairman Powell reiterated to Congress this week, the U.S. economy is reporting steady growth, low unemployment and little inflation in January 2019. However, the ability of Congress to pass sweeping reform for financial services legislation remains low due to partisanship and political division between the two chambers and President Trump. Compounding an already tense political environment for big banks are the increasing number of Democratic Senators running for President that will provide great political theater, but lessen the ability of meaningful bipartisan legislation to become law.



Retail banking's premier event CBA LIVE will take place in D.C. this year and we have a great speaker lineup, including: CEO of Chase Consumer Banking Thasunda Brown Duckett, Chairman & CEO of Bank of America Brian Moynihan, FDIC Chairman Jelena McWilliams and OCC Comptroller of the Currency Joseph Otting.


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CBA Writes Ed, CFPB to Improve Federal Student Loan Disclosures: Currently federal student loan disclosures do not offer a clear, personalized, plain-language overview of key loan terms specific to each borrower. These specific disclosures are already provided to borrowers for all private consumer loans, including bank-offered student loans.


CBA has long advocated for the best possible information to be provided to students and their families before they borrow large sums of money for higher education. We recommend the array of current federal loan disclosures be condensed and improved by requiring disclosures similar to the Truth in Lending Act disclosures required of private lenders.


While we recognize some improvements to current disclosures may require amendments to the Higher Education Act, we hope the Department, either on their own or in partnership with theCFPB, will develop an overarching and meaningful disclosure of key loan terms so borrowers can more clearly understand their loan obligations before signing on the dotted line.


A copy of CBA’s letter, along with supporting material demonstrating the lack of transparency on federal student loans, is available here.


CBA also called on the CFPB and Department of Education to work together to replace school-issued “Award Letters” with a standardized and more aptly called “Financing Letter” which clearly distinguishes between loans and aid that does not need to be repaid like grants or scholarships.


CBA recommended an initiative similar to the CFPB’s Know Before You Owe initiative on mortgage disclosure documents as a way to improve transparency and help prevent overborrowing. Among the improvements, CBA suggested including the following disclosures:

  • Include the key terms of the loan, such as the interest rate, fees, projected monthly payment and projected total cost of the loan, and provide a clear view of the true cost of the loan by displaying the APR (which accounts for the origination fees of 4.3 percent for PLUS and 1.1 percent for Direct Loans). Private student loans already include this information and would allow borrowers to compare federal loans with private student loans on an equal basis;
  • Provide these improved disclosures at application and in coordination with the financing letter; and
  • Specify that parents are responsible for Parent PLUS loan repayment regardless of whether the student completes their program of study.


ICYMI: CBA last week released new polling data showing Americans strongly believe federal student loans should carry clear, personalized, plain-language disclosures about the loan’s total costs, according to a poll of registered voters.


More information on CBA’s student lending poll is available here.


This Week’s Congressional Hearings: Both the House of Representatives and the U.S. Senate were in session this week. The House Financial Services, Small Business and Energy and Commerce committees held hearings along with the Senate Banking Committee.


An overview of completed hearings as well as links to more detailed summaries prepared by CBA is below:


Senate Commerce Committee Hearing on Privacy

Policy Principles for a Data Privacy Framework in the United States"


The hearing sought to examine what Congress should do to address risks to consumers and implement data privacy protections for all Americans. Topics covered are discussed below:


  • Consumer Transparency and Control: Several members expressed concern about the volume of privacy policies and decisions consumers must make about privacy use, stating that the status quo is unmanageable.
  • Preemption: Chairman Wicker inquired about the importance of preemption. Mr. Leibowitz commented that a potentially conflicting patchwork would be confusing for consumers and could cause consumer fatigue on privacy and breaches. Mr. Hartzogcommented that a patchwork is not insurmountable as it is the current standard. Ranking Member Maria Cantwell (D-WA) expressed her skepticism of federal preemption. 
  • Federal Standard: In response to a question from Senator Richard Blumenthal (D-CT)on whether the California privacy law should be the floor for a federal standard, all witnesses responded that it should. Senator Shelley Moore Capito (R-WV) used her time to inquire about the interoperability of a U.S. standard and GDPR.
  • NeutralitySenator John Thune (R-SD) inquired whether there should be a technology, industry sector neutral standard. Ms. Espinel commented that there should be strong standards across the board, but mentioned in her earlier comments there should be different requirements for “controllers” and “processors” of data. A controller makes decisions about how to use data and should have primary responsibility over privacy and security. A processor should have obligations, such as security, but they should not be held to the same standard as a controller. 
  • EnforcementMs. Espinel stated that she believed the FTC would be more impactful if it had the authority to issue fines on first violations. Mr. Leibowitz and Ms. Espinelspecifically expressed support for enforcement by states’ Attorneys General. Mr. Hertzogexpressed support for private rights of action.
  • FTC AuthorityWitnesses agreed that the FTC should be provided rulemaking authority, with guardrails, in response to questions from Senators Brian Schatz (D-HI) andSenator Jerry Moran (R-KS)Senator Mike Lee (R-UT) questioned whether the FTC is a better cop than rulemaker.
  • Small Business Impact: In response to a question from Senator Todd Young (R-IN)about the impact of a federal privacy law on small businesses, Mr. Leibowtizrecommended thinking about an exemption for small businesses.


Senate Banking Committee Hearing with Federal Reserve Chairman Powell

“Semiannual Monetary Policy Report to the Congress”


  • Federal Reserve Chair Jerome Powell testified before the Senate Banking Committee for the first time since taking the position in February 2018. Topics discussed included monetary policy, cannabis banking, CRA reform, bank mergers, unemployment, and congressional efforts to ease banking regulations under the 2010 Dodd-Frank financial reform law (H.R. 2155)
  • Powell says the Fed will be "patient" in determining when to boost its benchmark policy rate in light of the various "crosscurrents and conflicting signals." He says the Fed's rate decisions will be "data dependent" as the economic outlook evolves.
  • More information from Powell’s testimony is available here.


House Financial Services Committee Hearing with Federal Reserve Chairman Powell

“Monetary Policy and the State of the Economy”


  • CECL: During the hearing, Committee Members expressed concern regarding CECL implementation and the effects it would have on the economy. Chairman Powell did not expect the changes would have a major effect on lending.
  • Stress Tests: Chairman Powell received several questions on the “loosening” of stress test standards. He was adamant their goal is to increase transparency, not give banks the answers. He believes stress tests are the most successful post-crisis regulatory innovation and intend for it to stay that way.
  • Community Reinvestment Act: When questioned on CRA, Chairman Powell noted it would be ideal if all the regulators had one unified view and worked together on a joint rulemaking.
  • DiversityChairman Powell was also questioned extensively regarding diversity (and occupational diversity) at the Federal Reserve and he said he believes the Fed has made substantial progress on diversity, specifically at the B&C Director level.


House Diversity & Inclusion Subcommittee Hearing on Diversity

“An Overview of Diversity Trends in the Financial Services Industry”


  • This was the first hearing of the new Financial Services Subcommittee. The subcommittee heard from one witness, Daniel Garcia-Diaz, Director, Financial Markets and Community Investment with the Government Accountability Office. Mr. Garcia-Diaz summarized the agency’s November 2017 report on diversity in the financial services industry. In particular, he noted the report found little if no improvement in the numbers of women and minorities in senior management roles from 2007 to 2015. 
  • Through the question and answer session, it was clear members desire additional data on diversity in the financial services workforce. Full Committee Chairwoman Waters and others directed attention to creating incentives for diversity, such as tying bonuses to diversity efforts.
  • There was considerable repetition around the theme of recruitment, but the GAO study is limited in its examination of the issue. It is reasonable to assume the subcommittee will seek further data on this topic, but absent this information, the scene seems ripe for a company level review of recruitment programs.
  • A detailed summary of the hearing is available here.


House Financial Services Committee Hearing on Credit Report Agencies

“Who’s Keeping Score? Holding Credit Bureaus Accountable and Repairing a Broken System”

  • The House Financial Services Committee held a hearing examining credit reporting agencies and discussing possible reforms. The hearing featured two panels, the first with the CEOs of EquifaxTransUnion and Experian North America. The second panel included third-party groups, many from consumer advocacy organizations.
  • Prior to the hearing, CBA sent a letter to House Financial Services CommitteeChairwoman Maxine Waters (D-Calif.) and Ranking Member Patrick McHenry (R-N.C.) discussing draft legislation proposed by Chairwoman Waters. A copy of CBA’s letter is available here.
  • Key hearing takeaways are outlined below and an in-depth summary of the hearing, prepared by CBA, is available here.
    • Democrats and Republicans both agree that some overhaul of the credit reporting system is needed, even though they differ on how to achieve such reform. Some Democrats raised questions about consolidation in the industry and the drawbacks of having three credit reporting agencies, raising the possibility of a single federal entity. Republicans largely advocated for more competition and private market solutions with moderate regulatory and legislative changes.  Both sides questioned witnesses extensively about the challenges of protecting consumer data and what Congress could do to help the industry ensure the highest standards of data security.
    • The ability of consumers to better manage their data was of high concern along with maintaining data accuracy and security. The witnesses all explained how additional data and information sources can help consumers bolster their credit reports and reduce the overall credit costs to consumers. Several members of the Committee stressed the need for an improved dispute resolution process for consumers that emphasized ease of access and fast repair times.
    • Members and witnesses on the second panel largely focused on social problems related to credit reporting among low income populations, and the potential for the credit reporting system to be used in unanticipated ways that may exacerbate problems associated with cycles of poverty and societal wealth gaps.  

House Small Business Subcommittee Hearing on the Government Shutdown’s Impact 

“Shutdown Lessons: SBA Capital Access Programs”


  • The House Small Business Subcommittee on Investigations, Oversight, and Regulations held a hearing titled “Shutdown Lessons: SBA Capital Access Programs.” The hearing, which was originally scheduled for February 12, focused on how the 35-day partial government shutdown affected the operations of the Small Business Administration (SBA), the Office of Capital Access, and the SBA loan programs. The hearing also examined the challenges the agency faced in processing the backlog of loans upon the government reopening. 
  • During the shutdown, CBA wrote Congressional Leadership and the Administration requesting “all options be explored to reopen” the SBA’s 7(a) and 504 loan programs.
  • A detailed hearing summary is available here


House Energy and Commerce Hearing on Consumer Privacy

“Protecting Consumer Privacy in the Era of Big Data”


  • The House Energy and Commerce Subcommittee on Consumer Protection & Commerceheld a hearing examining the current state of privacy in light of recent breaches and security questions and opened the dialogue on the creation of a federal privacy standard.
  • Subcommittee Chairwoman Jan Schakowsky (D-IL) called for aggressive enforcement of privacy violations and data breaches by the Federal Trade Commission (FTC) and committed to providing the FTC and other regulators the tools and funding necessary to protect consumer privacy. 
  • Ranking Member McMorris-Rodgers (R-WA) laid out four privacy principles: 
    1. Develop one national standard;
    2. Increase company transparency and accountability;
    3. Improve data security; and
    4. Provide flexibility for small businesses.
  • The hearing emphasized the fact the future of a national privacy standard is dependent on successfully navigating the politics of states with or in the process of adding privacy laws and those in favor of a national standard with federal preemption.
  • A full summary of the hearing is available here.


FDIC Prepaid Accounts Rule: FDIC examiners will use updated interagency examination procedures to evaluate financial institutions' compliance with amended Regulation E and Regulation Z for prepaid accounts, effective April 1, 2019.


On October 3, 2016, the CFPB published its Final Rule for Prepaid Accounts to create comprehensive consumer protections for prepaid accounts. Specifically, the Rule expanded coverage of Regulation E to apply to prepaid accounts, established disclosure standards for prepaid accounts, and classified prepaid accounts that offer covered credit features as "hybrid prepaid-credit cards" subject to Regulation Z.


Subsequent amendments to the Final Rule were made addressing error resolution and limited liability on prepaid accounts where the bank has not completed its customer identification and verification; application of the rule's credit-related provisions to digital wallets that are capable of storing funds; and other clarifications and minor updates. The effective date for the Final Rule is April 1, 2019.


The FDIC and other member agencies of the Federal Financial Institutions Examination Council developed the new procedures to ensure consistent application of these regulatory changes. The updated interagency examination procedures reflect the 2016 Final Rule and all subsequent updates.



BB&T Winston-Salem Visit: This week I visited with BB&T in Winston-Salem, NC, for probably the last time before the BB&T/ SunTrust merger is finalized. I met with CBA Board MemberBrant Standridge and former Board Member Clark Starnes as well as CBA committee members Carlos GoodrichErnestPiccioli and a CBA EBS student Cassie Duke




Former CBA Board Member Clark Starnes representing my Dallas Cowboys! Next year is our year!





From Left to Right: Carlos GoodrichSmall Business CommitteeErnest PiccioliRisk Committee and Cassie DukeCBA EBS.


Will Howle to Leave Citi: Former CBA Board Chairman and current Board Member Will Howle, who led Citibank in efforts to build new branches and implement technology, is retiring in April.Mr. Howle has been with Citi for nine years and has led the U.S. retail bank since 2014. Will was an indispensable member of the CBA family and we are thankful for his longtime commitment to the industry. Wishing you all the best!

Obituary for Grace A. Otting: Comptroller of the Currency Joseph Otting’s mother Grace A. Otting passed away on Sunday. The CBA Team extends our deepest condolences toComptroller Otting, his family and friends during this time.

Our State of the Week is MONTANA, where about a third of all Big Sky residents bank with a CBA member! CBA members in Montana hold $13 Billion in total assets, employ 4,000 people, provide $300 Million in small business loans and serve 300,000 customers. Montana is also home to CBA member, First Interstate Bank. Check out our state by state numbers here.