View from CBA June 20, 2014

Whistleblower Sheds Light on CFPB Issues

On Wednesday June 18, 2014, the House Financial Services Subcommittee on Oversight and Investigations held a hearing entitled: “Allegations of Discrimination and Retaliation within the Consumer Financial Protection Bureau, Part Three.” While this hearing mainly focused on whistleblowers’ allegations of employment discrimination at the CFPB, testimony by Mr. Ali Naraghi, an Examiner with the Southeast Region’s Division of Supervision - Enforcement and Fair Lending at the CFPB, raised significant issues outside of discrimination. According to his testimony, over a five-month period beginning in October 2011, he raised concerns to superiors on a number of issues, including: 


  • No risk model to ensure equitable assessment across institutions;
  • Inexperienced exam managers;
  • Enforcement Lawyers on exams (a practice the CFPB has now ended); and
  • Results-oriented examinations in which the Bureau at the headquarters appears to have decided at the outset to find a violation even if none was identified. For example, after working on an examination for three weeks reviewing 52 mortgage modification applications, and not find any violation, Mr. Naraghi was told he must not have done his job right because he did not identify any violations.

These revelations are not new to CBA or many of our bankers. In fact, CBA has raised concerns one-on-one with Director Cordray and others at the CFPB regarding examination completion times, as well as the CFPB bringing enforcement lawyers to examinations. We plan on continuing to closely follow this issue.

CBA’s Board Meets in Washington, D.C.

CBA’s Board of Directors convened in the Nation’s Capital on June 17-18, 2014. While in town, our Board met with Paul Nash, Senior Deputy Comptroller and Chief of Staff at the Office of Comptroller of the Currency, as well as with Amias Gerety, Acting Assistant Secretary for Financial Institutions at the Department of the Treasury. We covered a number of topics in these meetings including: interagency regulatory collaboration, small business lending, consumer data protection, and small dollar lending. Following our meetings at the Treasury Department, Neil Hall and Mark Pregmon of PNC Bank were gracious enough to host as we watched the Nationals take on the Astros.
Wednesday’s schedule for the Board was packed in the morning, and included updates on the state of CBA, consideration of new committees as well as reports from CBA’s councils. We were also glad to have former Comptroller of the Currency John C. Dugan in attendance. He is a partner at Covington and Burling LLP where he serves as chair of the firm’s Financial Institutions Group. Former Comptroller Dugan shared his unique insights and road-map for navigating the current regulatory environment with our Board.

New Board Members Elected

This week CBA’s Board of Directors approved three new members to join the Board: Mike Aust of Comerica Bank, Nitin Mhatre of Webster Bank, and Maria Tedesco of Santander. Our 25-member Board of senior retail banking executives is absolutely vital to the strength and knowledge of CBA. Their keen insights, developed over many years as senior executives at their institutions, and guidance has positioned our organization as the voice of the retail banking industry. We are proud of the caliber of the additions of Mike, Nitin, and Maria, as well as their commitment to the industry and consumers.

In additional Board news, Nuno Matos of Santander will be departing CBA’s Board of Directors. We would like to thank Nuno for his support of and service to CBA. While he is departing our Board to return to Santander’s headquarters in Spain, his contributions will remain for years to come.

Goldman Sachs Examines the Cost of Bank Regulation

Recently, Goldman Sachs issued a report entitled: “Who pays for bank regulation?” The report found low-income consumers and small businesses, which generally have fewer or less effective alternatives for bank credit, have paid the largest price for increased bank regulation, mainly in the areas of mortgages and credit cards. Interestingly, auto loans - which are largely untouched by post-crisis regulation - are one of the few markets where funding is less expensive than pre-crisis. Furthermore, larger companies have greater access to alternative sources of funding, while small and mid-size firms that are more dependent on bank financing pay higher rates. Meaning small businesses are still struggling post-recession in terms of financing.

CBA Travels

CBA participated in a multi-trade summit in St. Michaels, MD this week to discuss the future of payments.  CBA's David Pommerehn facilitated a discussion on Operation Choke Point and co-moderated a panel of experts concerning all things payments.


HSBC Holdings’ Irene Dorner will retire as chief executive of its U.S. banking unit and will be succeeded by HSBC executive Patrick Burke.
Regions Financial Corp. has realigned its business units and geographic leadership to create a "General Bank" and a "Corporate Bank." The Regions General Bank will cover retail, wealth management and small business customers. John Owen, the Head of Business Lines at Regions, has been named the Head of the General Bank. John serves on CBA's Board of Directors.
Todd Hammond, Senior Vice President - Loss Prevention at KeyBank, has been promoted to Senior Vice President - Regional Commercial Credit Director overseeing commercial lending.