Richard's Rapid Fire - May 11, 2018


Rumor Mill Churns: McWatters as Bureau Director? – There is plenty of buzz in D.C. surrounding President Trump’s potential nomination of National Credit Union Administration Board Chair Mark McWatters as the next Director of the Bureau of Consumer Financial Protection (Bureau). We have had conversations with McWatters, as well as many other potential candidates for the role, and we view him favorably.
Here is Where It Gets Interesting – Mick Mulvaney is able to serve as Acting Bureau Director until June 22, 2018. However, there is a caveat. If President Trump nominates a permanent director before that date, Mulvaney is able to continue to serve as Acting Director until the nomination process runs its course. Set your timers folks: we are six weeks away from June 22, 2018.


Pop Goes the Bureau’s Backdoor Attempt at Rulemaking – In other words, the Bureau is in the process of having its 2013 auto guidance overturned by Congress. Without question, CBA members are committed to ensuring strong fair lending policies and practices are in place at their banks. However, the Bureau’s 2013 Auto Bulletin failed to provide banks with a clear blueprint to ensure compliance. Following passage in both the House and Senate, President Trump is now expected to sign the bill.
CBA-Supported Small Business Lending Bill Emerges from House – Passing the House of Representatives by voice vote, the Small Business 7(a) Lending Oversight Reform Act of 2018 (H.R. 4743) will ensure qualified small business owners have access to needed capital through the SBA 7(a) program. Ahead of the vote, CBA sent a letter to Speaker Paul Ryan and Minority Leader Nancy Pelosi in support of the bill.
Here is what the CBA-supported bill will do:
  • Authorize the SBA Administrator to increase the 7(a) Loan Program's authorization cap by 15 percent during periods of high demand; 
  • Improve the Office of Credit Risk Management (OCRM) lender review process; 
  • Allow lenders to appeal enforcement actions to the SBA directly for timely dispute resolutions; and,
  • Establish a Lender Oversight Committee within the SBA.
Everybody is Working to Memorial Day – In Washington, there is a saying that Congress works recess to recess. And yes, it is true. Before the Memorial Day holiday, Congress is scrambling to get a few items off of its docket, including:
  • McWilliams Confirmation as FDIC Head – President Trump’s nominee to head the FDIC Jelena McWilliams is expected to receive a confirmation vote in the Senate.
  • Two Fed Nominees on Tap in Senate – On Tuesday, the Senate Banking Committee will consider the nominations of Richard Clarida as Federal Reserve’s vice chairman and Michelle Bowman to serve as a member of the Board of Governors. 
  • A House Vote on Senate Banking Bill – The Senate’s regulatory relief bill, which CBA supports, is expected to receive a vote in the House.
Mulvaney Shakes Up Student Loan Office – Acting Bureau Director Mick Mulvaney has decided to fold the Office of Students and Younger Consumers into the Financial Education Office. While the Private Student Loan Ombudsman’s office will remain, this suggests the Bureau’s student lending Ombudsman Seth Frotman will no longer hold dual roles as head of the Office of Students and the office’s Ombudsman. It is unclear if Mr. Frotman will hold a post in the Financial Education Office.  
Spring Brings New Rulemaking Agenda – The Bureau released its spring 2018 rulemaking agenda this week. Here are CBA’s key takeaways:
  • Third-Party Debt Collection: Rulemaking continues but will be pushed to the “proposal stage” in Q1 2019.
  • Small-Dollar and HMDA: Expect these rules to be reopened, but not until late 2018 or early 2019.
  • Small Business Data Collection: No proposal is expected until early 2019 at the earliest.
  • OverdraftRemoved completely from the agenda.
  • Credit Reporting and Credit Cards: Possible regulator action (e.g. review and amendment of CARD Act).
  • Student Lending: Removed long-planned rulemaking effort for student loan servicers. 
Administrative Adjudications – CBA’s second comment in the Bureau’s RFI process dealt with administrative adjudications. Our comments stressed the importance of prompt resolutions and urged the Bureau to look to the Federal Rules of Civil Procedure and the Federal Rules of Evidence as benchmarks for specific timelines, breadth of relevant discovery and other procedural standards. You may read our comment letter here.
Next Up: Enforcement Process – Comments are due on Monday, May 14,2018, and CBA will be commenting.
Thank You, Rep. Sinema – CBA’s VP of Congressional Affairs Tiffany Haas and I met with Congresswoman Kyrsten Sinema (D-Ariz.) to thank her for her leadership on H.R. 5266, the Financial Product Safety Commission Act, which would establish a bipartisan commission at the Bureau. 
While on Capitol Hill this week, CBA's Richard Hunt (left) and Tiffany Haas (right) thanked Congresswoman Kyrsten Sinema (center) for her leadership on a bill aimed at establishing a bipartisan commission at the Bureau.
Big Banks Earned a Competitive Advantage – Many of you subscribe to Second Curve CEO Tom Brown’s newsletters. In a recent note, he mentioned how big banks have earnedtheir competitive advantage over smaller institutions. Tom Brown has not always been a fan of big banks, but he has come around recently and loves the work they do for consumers. 
CBA Requests Flexibility for Members as Challenges Arise with FinCEN Rule – First and foremost, CBA is supportive of Treasury’s efforts to crack down on illegal activities, such as tax evasion, money laundering and fraud, through its customer due diligence rule. The rule requires banks and other financials to collect information about who the true owner of an account may be, whether it be a home mortgage, an auto loan or a credit card. However, unexpected development and delays have surfaced, creating compliance challenges for banks. CBA sent a letter to FinCEN, the Bureau of Treasury responsible for overseeing this rule, requesting flexibility in compliance while these issues are sorted out. The rule went into effect today. 
How Do You Get Your News? – NBC or TMZ? CBA recently sent a brief survey to members so we can better understand where and how you get your news. Thanks to everyone who has already responded. If not, take our quick survey here.


Cordray Wins Dem Primary for Ohio Governor – Former Bureau Director Richard Cordray won the Democratic nomination for Ohio Governor. He will face Republican Attorney General Mike DeWine come November. 
Financial Committee Member Robert Pittenger Loses Primary – Congressman Robert Pittenger (R-N.C.) lost his primary this week for the Republican nomination in North Carolina’s 9th Congressional District to Mark Harris, a local pastor. 


CBA Committee Chair Tom Fowler of SunTrust – CBA’s Default Management Committee Chair Tom Fowler started his career in banking more than 25 years ago, heading the Mortgage Servicing & Operations space for Wachovia. He now serves as Senior Vice President, Consumer Banking Default Management Executive for SunTrust Bank, where he has been for eight years. Tom has been a constant source of leadership and great insight on CBA’s Default Management Committee, especially as the Committee positions itself to address debt-collection rulemaking with the Bureau. Additionally – and I know Tom is most proud of this accomplishment – he oversaw the most year-over-year forum attendance increase for his committee at CBA LIVE 2017 in Dallas, earning “The Boot Award.”


Retail Banking’s Best and Brightest – CBA Executive Banking School kicks off in just a few weeks! We will be holding class at Furman University in South Carolina July 22 – August 1, 2018. 
Save the Date: CBA’s 100th Anniversary Celebration – CBA will be commemorating our 100th  year anniversary at CBA LIVE 2019 in Washington, D.C., at the Gaylord National Harbor on April 1-3, 2019. 


Manuela Veloso of JPM – JPMorgan Chase has hired Manuela Veloso, Carnegie Mellon University’s head of machine learning, as head of artificial-intelligence research.
Amanda Norton of Wells Fargo – Wells Fargo has named Amanda Norton Chief Risk Officer. She previously served as a retail banking executive for JPM and will officially join Wells Fargo this summer.


Here are some thoughts from my visit to my hometown of Jennings, LA: A small community bank is shuttering its lobby services at several branches and operating ATM and drive thru only services. It may look like they are trying to compete with Capital One and other banks in the area on the technology front. My hunch is they are attempting to decrease their efficiency ratio to be sold… While at a local softball game in Hathaway, a suburb of Jennings, topics of conversation included 401(k) plans and the high fees associated with Parent PLUS student loans. Social media and word of mouth are impacting the flow of information in modern times… I counted 15 payday lenders in my hometown of 10,000 residents. One payday lender for every 667 residents. Consumers need access to small-dollar credit and banks need to be given the ability to serve this market…Oil and gas prices back home must be keeping those in the energy industry happy, but those outside of it are complaining about the rising costs… Which airport – Reagan National Airport in Washington, D.C., or Lafayette Regional in Louisiana – costs $4 per day to park and which one costs $25? Reagan costs $25 and Lafayette costs $4. All four of my flight legs were fully booked… Mr. Gatti’s Pizza is under new management, but it is still a good pizza buffet for $6.99…I will be stopping by the soon-to-open Tractor Supply next time I am home, as they are popping up all over southwest Louisiana.