Richard's Rapid Fire - May 20, 2016

CFPB’s Proposed Small-Dollar Rule Slated for June 2, 2016

The date is set! The CFPB will hold a field hearing on June 2, 2016 in Kansas City, Missouri to discuss small-dollar lending. The Bureau is widely expected to release their proposed small-dollar rule at the hearing. Let’s not forget, low- and moderate-income American families often need access to short-term liquidity. But here is the problem:  our own government, namely the OCC and FDIC, essentially eliminated a very popular and widely used bank product which helped many working families make ends meet. The result has been extremely costly to consumers who now pay much higher interest rates through payday and other nonbank industries.  Our support remains with sound initiatives which help consumers gain access to credit as they strive to achieve their financial dreams.

CBA’s Dong Hong Testifies on Arbitration in the House

On Wednesday, May 18, 2016 CBA's Dong Hong, Vice President and Regulatory Counsel, testified before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit. The hearing examined the CFPB’s proposed rulemaking on arbitration.  As I told Politico’s Ben White, the math on arbitration is anything but fuzzy. Per the CFPB’s own study, the average consumer recovers $5,400 in arbitration vs. just $32 in a class action lawsuit. However, class action attorneys racked up an astonishing $424,945,451! It seems the CFPB is picking the side of trial lawyers over consumers.

CBA's Dong Hong testifying before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit.

Here are the hearing’s key takeaways:

  • Republicans generally agreed consumers benefit from being able to participate in arbitration.  Also, they were highly critical of the class action bar and the limited benefits of class action lawsuits realized by consumers.  The CFPB's study came under scrutiny for being inadequate at assessing the merits of arbitration and the unintended consequences that would follow from a restriction, including the elimination of certain products and services and decreased credit access.
  • Some Democrats were supportive of the CFPB's proposal.  Others, however, suggested the possibility of a more balanced approach, such as class-wide arbitration for consumers.
  • Republicans also noted the CFPB's broad enforcement and supervisory authority.  Given this authority, several Republicans argued the Bureau should be well-equipped to address marketplace abuses.  The members wondered why there also is a need for private right of action.

*Please see board briefs for deeper analysis on the hearing.

My Q&A with Politico’s Colin Wilhelm

On Monday, May 16, 2016 I talked with Colin Wilhelm of Politico about fintech, the presidential race, and Dodd-Frank. As I told Colin, we are starting to see the shine fade on the fintech star. While banks have learned much from fintech firms, recent turmoil has shed light on their struggles (see “Silicon Valley, Grow Up Fast” from last week’s Rapid Fire). However, I look forward to the growing opportunity for banks and fintechs to partner to meet the needs of consumers.

In talking with Colin, I mentioned my wish for Donald Trump to clarify his position on Dodd-Frank. Well, it looks like Mr. Trump was listening! Later in the week, he pledged to release a plan dismantling and overhauling the law. While parts of Dodd-Frank need reform, I disagree with Mr. Trump. I believe an outright repeal of Dodd-Frank would create uncertainly in the marketplace for consumers and the industry.

Not One, But Two Hearings

Just prior to Dong’s testimony, the Senate Commerce Committee held a hearing on the effects of the Telephone Consumer Protection Act (TCPA) on consumers and businesses. The hearing featured testimony from Squire Patton Boggs’ Monica Desai, who serves as CBA’s outside counsel in an ongoing TCPA lawsuit.

Here are the hearing’s key takeaways:

  • Industry representatives explained desired and beneficial communications are being eliminated as a result of the TCPA. The National Consumer Law Center (NCLC) counsel and Indiana Attorney General indicated "robocalls" are an escalating problem, but did not point the finger at businesses.  Instead, the Indiana AG indicated the calls are often spoofing calls or robocalls from overseas.
  • The Indiana AG and NCLC counsel were very concerned about the Bipartisan Budget Agreement carve out for servicers of debt owed to the federal government.
  • After the hearing concluded, Chairman Thune indicated he wants to investigate a reassigned number database. "I suspect the carriers would push back against that, but I think it's something we ought to maybe take a look at," the senator said. "Clearly having someplace where people can go to find out numbers that have been reassigned makes sense. Whether or not there's a way to do that remains to be seen."

*Please see board briefs for deeper analysis on the hearing.

Always Great to Visit with Our Members!

Hello North Carolina! Casey Dunfey and I flew to North Carolina to meet longtime CBA family member Cal Ratcliff, Senior Vice President, Chief Compliance Officer, and his colleagues at Bank of North Carolina. It was a great to meet with the bankers and CBA committee members to discuss the economy, upcoming legislation, and how to best meet consumer demands in an increasing regulatory climate. Many thanks to Rick Arthur, Michael Bryan, Paul Calhoun, Britt Faircloth, Michelle Ferguson, Kim Graham, Jared Hall, Randy Nicely, Claudia Porter, Helen Prater, Pat Pritchard, and Regina White for your time and input.

I then travelled to sunny Chicago to visit with BMO Harris and Former CBA Board Member Maria Tedesco, Chief Operating Officer, Strategy, Products & Segments, and Alexandra Dousmanis-Curtis, Group Head, US Retail and Business Banking. It was both an interesting and informative conversation about the differences and similarities between American and Canadian banking. Great to see you both!

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George Gresham was named to Green Dot’s board of directors.

Melissa Stevens was hired as chief digital officer and head of omnichannel banking by Fifth Third Bancorp. She will be reporting to CBA board member Chad Borton. Previously, Melissa worked for Citigroup.

Kate Randall Danella was named head of Private Wealth Management by Regions Bank. 

CBA's Richard Hunt and Casey Dunfey meeting with longtime CBA family member Cal Ratcliff, Senior Vice President, Chief Compliance Officer, at Bank of North Carolina.

CBA's Branch Transformation Working Group meeting just prior to their visit to the Federal Reserve.