Richard's Rapid Fire - September 14, 2018



Hurricane Florence: As a southerner and hurricane veteran myself, I know how threatening tropical storms can be. CBA’s thoughts and prayers are with all member banks and communities impacted by Hurricane Florence’s dangerous conditions. I know your banks are preparing to help customers as well as team members in Florence’s path. Please let us know if we can help.


Todd Barnhart Takes CBA Board Gavel & Other Leadership Summit Updates: One of my favorite times of the year has come and gone – CBA’s annual Leadership Summit. I love having our Board of Directors, Committee Chairs and Vice Chairs in town!


Incoming Chairman Todd Barnhart of PNC Bank accepted the gavel from Immediate Past Chair Brad Conner of Citizens. Brad did an outstanding job promoting CBA and we are all excited to build on the strong foundation already in place.


The Board also selected Nitin Mhatre of Webster Bank & Webster Financial Corporation as Chair-Elect and Tim Spence of Fifth-Third Bank as a new Board Member. What a fun-filled two days and exciting time at CBA HQ! Check out our announcement about the upcoming year and listen to Todd in the hot seat on our Suite 550 podcast. Todd also talked with American Bankerabout our upcoming agenda – read that great article here.


During the Leadership Summit we said thank you – but not goodbye – to the following outgoing committee chairs:

  • Peter Kidd, Fifth Third, Auto
  • Tom Fowler, SunTrust, DMC
  • Michael Young, TIAA, Deposits
  • Cindy Reeves, Frost, CFPB
  • Michael Bernard, Webster, Digital
  • Dan Van Sciver, Sallie Mae, Internal Audit

We also welcomed the following new committee leaders:

  • David Hollodick, Bank of America, Vice Chair, Auto
  • Brian Cahoon, BMO Harris, Vice Chair, CFPB
  • Desiree Wolfe, Webster, Vice Chair, Deposits
  • Kristy Brandon, Comerica, Vice Chair, Digital
  • Michael Grossberg, PNC, Chair, DMC
  • Janine Pappas, TIAA Bank, Chair, Internal Audit


In addition to announcing a new leadership team, we met with Federal Reserve Chairman Jerome Powell, FDIC Chairman Jelena McWilliams, Counselor to the Secretary U.S. Department of the Treasury Craig Phillips, Special Assistant to the President for Financial Policy Andrew Olmem and representatives with FinCEN.


Here are key takeaways from those meetings:


  • Federal Reserve Chairman Powell: We had an engaging and wide-ranging conversation with Chairman Powell. Our Board Members led an excellent discussion on the state of consumer and small business lending - noting banks are well capitalized, primed to lend, and ready to help the economy grow. Despite all the positive economic news, we raised one area where there is cause for concern: Student Debt. Student loan debt has grown from $600 billion in 2008 to $1.5 trillion in just a decade with Federal student lending accounts for more than 92% of all new loans. This staggering growth has long-term effects ranging from delayed home purchases to a lack of saving. We also talked about CRA and stressed the importance of modernizing this decades old law. Chairman Powell indicated the Fed understands the need for modernization as well as their desire to be part of the process. Finally we were able to discuss the nation’s workforce shortage and fintechs. I have no problem with competition and will bet on banks every day, but as fintechs continue to enter the financial system, the rules and regulations they follow – especially when it comes to consumer protection – must be on a level playing field.
  • FDIC: Chairman McWilliams confirmed there is coordination on regulatory reform, as the heads of the prudential regulators meet via phone on a weekly basis. She asked board members provide her specific instances of their customers being harmed by lack of access to small dollar lending products.
  • U.S. Treasury: Members praised the Treasury Department on the release of their fintech  report and agreed on many fronts. Members are now looking forward to implementation of many of the suggestions as they relate to innovation. As with all potential new rules, regulatory coordination will be imperative to ensure member banks are able to develop appropriately their new digital products for consumers.
  • Andrew Olmem, Deputy Director for Domestic Policy at the National Economic Council: In his role, Deputy Director Olmem has been instrumental in select nominees for regulatory agencies and said the Senate should confirm the President’s nominees more quickly. Here at CBA we know the importance of having people in charge who understand banking and we stressed the need for regulatory heads to work across agencies to ensure consistency, coordination and certainty for consumers and the industry. We were also able to discuss the implementation of new regulations and noted some of the changes had not yet been implemented by prudential examiners.
  • FinCEN: Much of the discussion revolved around the subject of modernizing current BSA/AML regulations. Members noted that the size and frequency of enforcement penalties appear to be increasing.
Finally, the Board approved a new mission statement for CBA as well as our legislative and regulatory priorities for the upcoming year.
Mission Statement:
  • The Consumer Bankers Association partners with the nation’s leading retail banks to promote sound policy, prepare the next generation of bankers, and finance the dreams of consumers and small businesses.


CBA Priorities:


  • Modernize the Community Reinvestment Act (CRA):  Advocate for changes to provide long term benefit to CRA and the communities our members serve.


  • Reform the Bureau of Consumer Financial Protection: Enact legislation creating a bipartisan Commission at the Bureau, and obtain legislative relief for selected policies which harm consumer privacy and frustrate access to credit.
  • Right-Size Federal Student Lending: Promote policies to unleash the private marketplace’s ability to serve students’ higher education goals and ensure the federal government serves those most in need in a responsible manner, and develop a public service “Know Before You Owe” campaign to inform students how much they will owe prior to borrowing.
  • Regulatory Coordination & Outreach: CBA will continue meeting with new leadership at regulatory agencies and their staff to cement our reputation as a valuable source of industry information. CBA will also advocate for regulatory coordination and regulatory reform, while highlighting the retail banking industry’s work to promote economic growth, enhance consumer protections and serve as responsible corporate citizens.

CBA LIVE 2019 – Open for Business: I would be down about CBA’s Leadership Summit coming to a close, but luckily we have kicked off another one of my favorites – CBA LIVE! That is right, registration is open and the theme has been announced. In fact, TD Bank’s Christina Speh was our first registration this year. Join myself, the CBA Team and Christina for CBA LIVE 2019: The Currency of NowLearn more and register today here.


CBA Supports House Reg Reform Bills: CBA encourages the passage of commonsense bills as they will allow our member institutions to better serve their customers and increase consumer access to well-regulated financial service products. This importantly includes H.R. 6743 – Consumer Information Notification Requirement Act – the House data security bill that would pre-empt state-by-state requirements in favor of more uniform federal breach notification rules.

In anticipation of yesterday’s mark-up, CBA wrote a letter to House Financial Services Committee Chairman Jeb Hensarling (R-TX) and Ranking Member Maxine Waters (D-CA) expressing support.


House Dem Says One Way to Save BCFP: During the House Financial Services Committee markup, Rep. David Scott (D-Ga.) again called for Congress to pass legislation creating a bipartisan commission at the Bureau of Consumer Financial Protection. Rep. Scott is a senior member of the House and – along with Reps. Dennis Ross (R-Fla.), Kyrsten Sinema (D-Ariz), Ann Wagner (R-Mo.), Vincente Gonzalez (D-Texas), Blaine Luetkemeyer (R-Mo.) and Patrick McHenry (R-N.C.) – a sponsor of the bipartisan Financial Product Safety Commission Act of 2018 (HR 5266). This bill would create a bipartisan commission at the Bureau and Rep. Scott said it “breaks my heart” the Committee did not consider the bill during this markup. As you know, creating a commission at the Bureau has been a top priority for CBA because, as Rep. Scott put it, “Until we get the CFPB out of the unpredictable winds of political change, we will consistently have to go through” regulatory uncertainty.


Interagency Statement on Guidance: During our meeting with FDIC Chairman Jelena McWilliams, she said supervisory guidance does not have force of law and agencies do not take enforcement actions based on supervisory guidance. Her announcement coincided with a joint statement from the FDIC, Federal Reserve, Bureau of Consumer Financial Protection, NCUA and OCC. The statement helps clarify a ruling by the Government Accountability Office last year that found previous regulatory guidance had been treated as official rulemaking, therefore making it subject to Congressional review.


The full statement outlining policies and practices here.


FSOC Updates: According to reports, Craig Phillips, counselor to U.S. Treasury Secretary Steven Mnuchin, told attendees at the Exchequer Club earlier this week Financial Stability Oversight Council members are looking to release an “activities-based approach to designations” possibly later this year. CBA supported the flexibility given to regulators in S. 2155 and advocated for regulators to have additional flexibility to evaluate financial institutions based on activities as opposed to an arbitrary asset threshold. It is our hope that Congress will establish a bipartisan commission at the Bureau and enact reforms which take a more holistic view of systemic risk based upon individual institutions’ activities.


In other FSOC news, the Council voted to remove its designation of Zions Bank as a systemically important financial institution, making it the first bank to formally lose the label at the council’s discretion. The council concluded that Zions does not pose a significant threat to the nation’s financial stability to be seen as a risk. More here.


Financial Crisis 10th Anniversary: The bankruptcy of Lehman Brothers Holding Inc. in September 2008 resulted in a downward spiral for the U.S. economy which ultimately rippled across global financial markets. While it seems like yesterday to many, the banking industry is a lifetime away from those days. We are better capitalized and constantly working to strengthen our foundations for when another economic downturn hits.


This anniversary prompted me to re-watch one of my favorite movies – “Too Big to Fail” – which chronicles the crisis of 2008 and focuses on the strategy of then U.S. Secretary of Treasury, Henry Paulson. A must watch!


U.S. Bank Launches Simple Loan: U.S. Bank’s new small-dollar lending program offers affordable, regulated loans between $100 and $1,000. Simple Loan is designed to help customers faced with emergency financial needs through a safe, short-term loan. U.S. Bank is filling a critical consumer need with this program in place alongside Fifth Third Bank and Regions Bank. CBA is appreciative that regulators are recognizing the need for small-dollar credit and the necessary role banks can play in this space. Read CBA’s full statement here.


JPMorgan Chase Introduces AdvancingCities: On Wednesday, JPMorgan Chase announced their new five-year, $500 million initiative to drive inclusive growth and create economic opportunity in cities. How? AdvancingCities will develop an investment fund to finance critical projects, benefit more people economically and leverage outside capital in an effort to invest a total of $1.5 billion in cities. Learn more here.


Goldman Names Waldron Next President & COO: Goldman Sachs announced yesterday John Waldron would be its next president and COO once David Solomon takes the reins as Goldman’s CEO.


Increase in Household Income: The Census Bureau reported that median U.S. household income reached $61,400 in 2017 – a 1.8% increase from 2016. The Census took inflation into account, so the evident growth is that much more meaningful.


Bureau Announces New CAB: The Bureau’s Acting Director Mick Mulvaney recently announced the reconstruction of the new Consumer Advisory Board, which as previously indicated include fewer members. This new board includes nine members, down from 25 as well as reduction in terms from three years to one year. I was surprised there is not a banker on the board. The list of CAB members is available here.


Congratulations to Union Bank’s Newest Hire: Maria P. Tedesco will join CBA Member Union Bank & Trust at the end of the month as President out of Richmond, VA. Maria has been on the team of two other CBA Members, BMO Harris Bank and Santander. She is also a former CBA Board Member and served on our Small Business Committee. So, congratulations Maria and we are glad you are still in the CBA family!


Dulles Airport Rolls Out Facial-Recognition Boarding: The digital transformation spans across all industries – not just financial services! With guidance from the U.S. Customs and Border Protection, a new facial-recognition boarding technology went into operation late last week at Dulles Airport. The system scans faces of travelers approaching the gate and is expected to increase security as well as decrease boarding times. Pretty cool stuff – read more here.