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View from CBA May 10, 2013
Last Chance to Apply for Retail Banking School
The “best in class” banks will be in class at GSRBM this July 21-31, 2013. Less than one week remains until the application deadline: Wednesday, May 15, 2013. Check out our new curriculum and read why students, faculty and decision-makers choose GSRBM.
Student Loans - CBA and CFPB Action
The CFPB on Wednesday issued its report on student debt and held a companion field hearing that evening in Miami. The report was a summary of some 28,000 comments it received from various stakeholders. Yet again the CFPB turned a blind eye to addressing the $850 million of the $1 trillion in debt in federal student loans, and the soaring cost of college tuition. More about the hearing may be found below. See our “In the News” section for CBA’s quotes on student debt.
Private student loans play a critical role in making college possible. They are a proportionally small, but critical part of the marketplace and give families good options to make higher education attainable. Private loans are based on an underwriting process that responsibly assesses a borrower’s ability to repay. While private student loans only comprise 7% of the market (and have 5% default rate), federal loans are 93% of the market and have a default rate of 13.4%.
We also know these are historical challenging economic times that have led to high unemployment. As a result, some people are further behind on paying loans than ever before. In order to assist we have asked the Fed, the FDIC and the OCC for flexibility to offer student borrows graduated payment options, including interest only payments within the first three to four years of repayment; and, for existing loans in repayment, more flexibility in offering forbearance options.
We will continue to do everything we can to assist students – our customers.
CFPB’s Antonakes on Exams
In a recent speech in Washington, DC, CFPB Acting Deputy Director Steve Antonakes signaled the continued involvement of enforcement attorneys at exams, despite our concerns. Also, he claimed banks are being appropriately updated with regard to the exam process. His prepared remarks stated:
“Our examinations are intended to be rigorous and heavy on data analysis, with the important goal of also being fair and reasonable. We will focus on substantive consumer harm and, as such, ensure that our response to more technical violations is appropriate. Our examination process will strive for transparency, efficiency, and fairness. It will not be about “gotcha” or issues du jour. We communicate with institutions throughout the examination cycle. In most instances, institutions are advised of upcoming examinations well in advance of the start of our work. We also seek to keep the institution informed of the examination’s status and findings during the course of our review.”
“Finally, our approach of having enforcement personnel involved in the examination process has garnered a great deal of attention. So I will take a moment to address that specifically. Our Division of Supervision, Enforcement, Fair Lending and Equal Opportunity was strategically built to integrate the examination, enforcement, and fair lending functions. We have intentionally developed a coordinated approach to ensure that we get the best results for consumers. We are as efficient as possible. We create consistency in our approach to interpreting legal standards among our offices. And, we reduce unnecessary burden on the entities we supervise by consolidating their interactions with the Bureau.”
I know many of you will not agree with a few of Mr. Antonakes's comments.
Regulatory Radar - What's Next?
- The CFPB will hold a Consumer Advisory Board meeting on Wednesday, May 15, 2013, to discuss challenges and opportunities faced by new Americans in the consumer marketplace.
- Comments are due on the student loan servicing proposed rule Tuesday, May 28, 2013.
CBA’s Liz Terry and Pace Bradshaw travelled to San Antonio this week to visit several of our Texas members. At USAA, they met with CBA Board Member David Bohne, Andy Collins, Deneen Donnley, James Jandrisevits, Grant Skeens and Steven Thompson. At Frost Bank, they met with Cliff McCauley, Paul Olivier, Genny Rakowitz, Cindy Ramirez and Cindy Reeves. Both visits were great opportunities to talk about the latest developments in Washington and how CBA can help our member banks meet their customers' needs.