View from CBA May 23, 2014

This Memorial Day, please take a moment and remember all of those brave servicemembers who have given their lives in service to our nation. Without their commitment, we would not have the freedoms we enjoy on a daily basis. From all of us at Team CBA, we wish you and your family a Happy Memorial Day.

CFPB to Open Meetings to the American Public

The CFPB has announced it will open up meetings of its Consumer Advisory Board, Community Bank Advisory Council, Credit Union Advisory Council and Academic Research Council to the public, following repeated calls for more transparency. The new policy takes effect beginning with the Consumer Advisory Board’s June 18, 2014 meeting in Reno, NV. The public may attend the meeting in person or watch a livestream online, “the same way most other agencies allow under the Federal Advisory Committee Act,” according to the CFPB.
We agree with Director Cordray – “Sunlight can be the best disinfectant, and electric light the best policeman.” Opening these meetings to the public is a natural decision to help meet this goal. Transparency is the hallmark of good government and is vital to securing the trust of the American people.

CFPB to Pay $5.5 Million to Employees over Disparate Job Evaluation Impact

The CFPB has announced it will pay $5.5 million to employees who may have been wronged by the Bureau’s internal evaluation program. The program has been the subject of media coverage and bipartisan Congressional hearings since American Banker broke the story. Specifically, media reports revealed the Bureau gave higher ratings to white employees than minorities. Under Director Cordray’s direction, any employees who received a rating of 3 or 4 in 2012 or 2013, will be compensated as though they had received the highest rating of 5. By one estimate, compensation will be rewarded to 82 percent of CFPB employees. Moving forward, employee evaluations will be replaced with a “pass, fail” style system.

CBA/AOL Index Finds Slight Uptick in Consumer Finance Optimism

The CBA/AOL monthly Finance Optimism Index has found consumer’s finance optimism rose slightly in April to -4.8. The uptick is related to a decrease in concern surrounding their current financial situation, with 62 percent of all survey respondents in April stating they were concerned with their current financial situation. This is an improvement of 2 percent.
In addition, the latest survey results found positive news Americans have been hearing about the economy is generally low. Only 33 percent of respondents stated they had heard positive news about the economy. This would help explain why 79 percent of Americans surveyed say they are worried that the current economic and political situation will impact their personal finances.

FDIC Publishes Study on Rural Banking

The FDIC published an article this week in its FDIC Quarterly on the trends in rural depopulation and the impact on rural community banks. According to the article, banks in areas affected by declining population are performing relatively well due to their concentration on lending to the agricultural sector, but achieving long-term growth remains a significant challenge. Currently, more than 1,000 banks with $150 billion in assets are headquartered in rural counties where depopulation is occurring. Not only is it a challenge to sustain growth, but banks in these areas are having trouble attracting qualified executives to fill vacancies in bank management. This is an area of opportunity for CBA’s members to reach rural consumers via mobile and web platforms. Expanding banking access into rural areas is much different today than it would have been even five or ten years ago.

Meeting our Bankers

It was off to the Windy City this week to see a number of our bankers. I was glad to kick off my visit by heading to Rosement, IL to meet with former CBA Board Chair and First American President John Ward, where we talked about the impact of the Target data breach on his institution, as well as the state of regulation. In 1998, John testified before Congress against legislation which would have outlawed ATM fees – has anything changed? I also visited with BAI CEO Debbie Bianucci and GSRBM Faculty Member Bill Hippensteel to touch base on the upcoming session of GSRBM.

Next up was BMO Harris Bank where I was able to spend time with a number of CBA Committee members, including CBA Board Member Chris McComish, Jeff Jamison, Kevin Miller, Kathleen Deane, Daniela O’Leary-Gill, and Pete Singer to follow up on a wide range of issues. I also huddled with Manuel Chinea, CMO & SVP – U.S. Retail Banking Operations at Banco Popular North America and Frank Davis. Finally, I rounded out my Chicago visits with Discover to talk about student lending amongst other items with David Nelms, Carlos Minetti, and Mary Dwyer Pembroke.
Melissa Cabocel, Senior Vice President of Education and Director of GSRBM was in Cherry Hill, N.J. on Thursday, where she met with CBA Board Member Nandita Bakhshi and Chris Ainsworth of TD Bank, to discuss executive education at the GSRBM. She also met in Washington with the Chairman of CBA’s Faculty Advisory Committee, Kurt Treu of U.S. Bank, to discuss the upcoming GSRBM session.

CBA Committee News

CBA welcomed the Community Reinvestment Committee to our world headquarters in Washington, D.C. on May 19, 2014 for an in-person meeting. Their meeting included a briefing by regulators from the FDIC, Federal Reserve and OCC, along with discussions on the Community Reinvestment Act and the consideration of minority census tracts.


CBA Community Reinvestment Committee
In-Person Meeting in Washington, D.C.
May 19, 2014

We were also glad to host the Education Funding Committee on May 21, 2014, which featured a strong lineup of meetings with the CFPB and at the Capitol with offices from both the House and Senate. In addition, the Committee discussed expanding the recent MeasureOne report on the student lending market and negotiations surrounding the Title IV rulemaking process.

CBA Education Funding Committee on Capitol Hill
May 20, 2014

Greg Imm is departing the Fair and Responsible Banking Committee, and retiring from Fifth Third. Greg joined the committee a decade ago with WAMU and later rejoined when he was at OneWest, and most recently with Fifth Third. CBA has counted on Greg as an avid and active member of the committee. We will miss his humor and commitment to the industry, but wish him well in his retirement.

Education Update

We were proud to undertake our first 4-day iteration of BankCom this week, where it was run for 30 Frost Bank executives in San Antonio, TX. Previously, we have not used the BankCom simulation in less than a 10-day format. This one-of-a-kind top-down, overall bank simulation highlights all-important risk management considerations through the principals of economic value. BankCom participants learn to weigh complex strategic decisions for the bank against risk ramifications and analyst reactions to maximize shareholder value.