Richard's Rapid Fire - May 10, 2019

CFPB Debt Collection Town Hall Event: Following the CFPB’s release of the debt collection proposal, Director Kathy Kraninger spoke at a town hall event, and CBA was there. Director Kraninger highlighted the need to address developing communication channels we use today. She noted the debt collection rulemaking process takes into account much effort and collaboration with stakeholders.

 

CBA has met frequently with the CFPB over the years on this issue, most recently in February of this year.

Cajun Thoughts: YES, CFPB SHOULD OVERSEE CREDIT UNIONS As you may have seen, large credit unions ($10 billion and above) are trying to be exempt from the CFPB. Not so fast, my friend. CBA members have always welcomed competition as long as it is on a level playing field, especially when it comes to consumer protections. The CFPB was created to regulate and supervise ALL depository institutions over $10 billion and large credit unions should not be treated differently than other lenders. Speaking of the CFPB, CBA sent a letter to Director Kraninger thanking the Bureau for their updated Civil Investigative Demand (CID) policy, available here.… SANDERS & OCASIO-CORTEZ PROPOSE 15% CAP ON USURY RATES This is crazy! Last time this proposal was voted on, it garnered 30 votes. Interest rates reflect the risk of a loan and some loan types carry higher risks. Arbitrary, one-size-fits-all caps might be good headlines but are bad policy because they would make loans harder for Americans, particularly those with lower credit scores or non-traditional sources of income, to receive. Their plan also calls for postal banking. Former Postmaster General Patrick Donahoe said banking should be left to banks because the Postal Service ‘doesn’t know anything about banking’ … TALK ABOUT STAMINA … Max Homa, who won last week’s Wells Fargo Championship, had missed the cut for 15 out of the last 17 tournaments. He woke up every single day saying “Today is my day.” Talk about perseverance … STARBUCKS When many of you visit CBA HQ, you make a trip to Starbucks downstairs. Unfortunately, that location recently closed a few months ago. It is interesting to note I have only been to Starbucks ONE time since that closure. What does that say about bank branches and other retail establishments? … BOEING 737 As we all know, Boeing is experiencing a reputational problem concerning their 737 Max Airlines. A recent Wall Street Journal article stated even if the airplane is repaired, many may not fly this airplane for over a year … CHAIRWOMAN WATERS DEMANDS BB&T/SUNTRUST DELAY In a letter to the FDIC and Fed, Chairwoman Maxine Waters urged regulators delay a final decision until the House Financial Services Committee reviews and investigates the merger deal.

 

 

CBA, BPC, ASPEN JOINT EVENT

 
 

Student loan debt—which now tops $1.5 trillion and is held by nearly 1 in 5 American adults—is making headlines. With reauthorization of the Higher Education Act on the horizon, now is the time to consider strategies to help those currently struggling with debt and achieve more equitable outcomes for future students.

This Tuesday, May 14, join CBA, the Aspen Institute Financial Security Program and the Bipartisan Policy Center as we explore solutions that could better-support existing borrowers, as well as reforms to improve the system moving forward. You can join the conversation online with #BPCLive. 

Register today here and learn more about CBA’s work to help students finance their higher education goals here. 

 

 

D.C. DOWNLOAD

 
 

CFPB Releases Debt Collection Proposal: The CFPB released Tuesday its much anticipated 3rd party debt collection rules proposal, dealing with disclosures, new communication methods, and contact frequency. CBA has been long-involved in this issue, commenting on the CFPB's various rulemakings on debt-collections over the years as they have been released. This awaited proposal seeks to address many of the issues CBA has raised with the CFPB and looks to be a positive first step in modernizing decades-old debt-collection rules.

 

A copy of the Bureau's press release, which links to the 538-page proposed rule, is available here.

 

Key Takeaways:

 

The proposal seeks to modernize the communication channels debt-collectors can use when attempting to collect a debt, examining the effectiveness of text and emails throughout the collection process.

 
  • CBA has long-stated modernization to the channels debt-collectors can use are much needed, as the rules were completed in 1977, well before the invention and adoption of cell phones and modern computers.
  • Customer trends indicate these channels are sufficiently more efficient to establish contact and, most importantly, less intrusive than a standard phone call.
  • CBA looks forward to examining this issue further with the Bureau and is encouraged by its inclusion in the proposal.

 

The CFPB also looks to different consumer disclosures that should be made; another issue CBA has advocated for in the past.

 
  • CBA feels clarity and certainty about the specific language that must be included in consumer communication is needed to better allow for debt-collectors to communicate with customers.
  • We plan to seek the Bureau's help in establishing model language for certain disclosures, as well as using the Bureau's education functions to better inform consumers about the nature of their debt.

 

Finally, the CFPB looks to introduce limits on contact frequency to seven contacts a week.

 
  • CBA knows that limits on contact frequency are not appropriate as different customers with different products have different needs.
  • We will strongly advocate against "one-size-fits-all" contact caps and stress contact caps lead to less informed and financially secure customers.
  • CBA believes while rules are needed around how often debt-collectors communicate with a customer, establishing a hard limit for collectors does not serve either the collector's or customers' best interest.

 

CBA greatly appreciates the CFPB’s proposal to better understand the debt-collection market and protect consumers and looks forward to commenting on these issues moving forward.

 

If you are interested in helping CBA craft their comments, please contact CBA Regulatory CounselStephen Congdon at scongdon@consumerbankers.com.

 

CBA, Financial Trades Write HFSC on Anti-Money Laundering Legislation: CBA, along with eight other financial services trades, wrote House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) and Ranking Member Patrick McHenry (R-N.C.) in support of the Committee’s work to modernize the anti-money laundering and counter-terrorism regulatory system. The letter also states CBA’s support for H.R. 2513, the Corporate Transparency Act of 2019, and urges swift, bipartisan passage of the bill, which would create a secure beneficial ownership directory held by the Financial Crimes Enforcement Network.

 

CBA member banks commit significant resources to stopping illicit financial transactions and believe modernizing the current regulatory framework would allow financial institutions to do even more to combat money-laundering and terrorist financing activities. Modernizing these laws would produce additional useful information for law enforcement, allow resources to be directed where they are most needed, and ensure regulatory requirements appropriately serve as an effective tool in preventing criminals from accessing the financial system.

 

The associations also called for support of Rep. Emanuel Cleaver’s (D-Mo.) legislation, H.R. 2514, to modernize the Bank Secrecy Act regulatory framework, noting the “bill is a strong step in the right direction to facilitate information sharing and feedback from law enforcement to financial institutions and further facilitate information sharing between financial institutions as well as encourage the use of technology and artificial intelligence within institutions’ AML programs.”

 

On H.R. 2514, the letter did raise concerns Section 211 of the bill could be used to politicize and second-guess the judicial process.

 

A full copy of the letter is available here.

 

In addition to CBA, the letter was signed by the American Bankers AssociationBankers Association for Finance and TradeBank Policy InstituteFinancial Services Forum,Institute of International BankersInstitute of International FinanceMid-Size Bank Coalition of American and Securities Industry and Financial Markets Association.

 

CBA & ABA Letter to CFPB Director Kraninger: In a letter to CFPB Director Kathy Kraninger sent late last week, CBA and the American Bankers Association (ABA) urged the Bureau to reject the request to relinquish supervisory authority over the nation’s largest credit unions to the National Credit Union Administration (NCUA). Credit union exemption would defy a Congressional directive and make an uneven playing field even more uneven. The CFPBwas created in the aftermath of the financial crisis to regulate and supervise ALL depository institutions over $10 billion. Large credit unions should not be treated differently than other lenders.

 

The joint-letter is available here.

 

CBA on Need for Bipartisan CFPB Commission: A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit ruled it was not unconstitutional for the CFPB’s director to be first only for cause.

 

The constitutionality of the CFPB’s structure is a separate question than whether the CFPB’s current structure lends itself to long-term credibility and regulatory certainty. Congress should create a bipartisan commission – as the House did originally in 2009 – at the CFPB in place of an unaccountable sole director to ensure the agency is balanced, stable and best prepared to uphold the Bureau’s consumer protection mandate for years and decades.

 

INDUSTRY NEWS

 
 

SunTrust Invests $10 Million, Affordable Housing in D.C. Area: SunTrust announced Wednesday plans to make a $10 million equity investment in JBG SMITH’s Washington Housing Initiative Impact Pool, a program dedicated to improving housing affordability for working families. Over the last three years, SunTrust has invested about $115 million in the initiative, and the market-driven program intends to complete or create between 2,000 and 3,000 units of affordable workforce housing in the D.C. region. Learn more here.

 

Sallie Mae Introduces New Brand Experience: After five years as a standalone bank focused on student loan programs, Sallie Mae has introduced a renewed brand and purpose symbolizing the customer journey. Sallie Mae will continue to offer competitive loans but stands ready to meet additional evolving customer needs. The new brand, which will include updated digital banking, a personal finance blog, innovative products and services, will be implemented over the next year. Learn more here!

 
 
LAGNIAPPE
 

 

Happy Small Business Month: A key priority for CBA has always been serving the needs of American consumers and small businesses. Operating in all 50 states, CBA member-banks provide credit to millions of small businesses, and collectively provide $285 Billion in small business loans.

 

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Of the 100 most active Small Business Administration (SBA) 7(a) lenders, CBA members make the majority (60%) of 7(a) loans. SBA’s 7(a) loan program is a vital source of capital for thousands of small businesses unable to secure financing through traditional lending.

 

ICYMI: CBA’s recent letter sent to the House Small Business Committee regarding the SBA’s 7(a) Budget Proposal is available here.

 
 
MERGERS & ACQUISITIONS
STATE OF THE WEEK
 
 
CBA’s State of the Week is OREGON, where more than 1 out of every 4 residents banks with a CBA member! Home to CBA Board Member Ross Carey of U.S. Bank, CBA members in Oregon hold $82 Billion in total assets, employ 17,000 people, provide $1.8 Billion in small business loans and serve 2 Million customers. Check out our state by state numbers here!
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