View from CBA October 4, 2013

October 4, 2013

We are thankful that yesterday’s incident at the Capitol was isolated, and that our first responders reacted quickly to ensure the safety of bystanders.  

Government Student Lending Default Rate Increases

As the federal government's share in the marketplace has grown to 93% of all new originations, theDepartment of Education revealed this week federal loans now have a 14.7% three year default rate. I don't need to tell you what regulators would do to banks with this default rate on any of our products. In addition, the U.S. Department of Education has not released detailed information on the performance of its PLUS loan products, which many have raised concerns with. Calling the CFPB and Sen. Warren…. 

CFPB Goes After College’s Card Affinity Programs

Both the CFPB and Democrats on Capitol Hill went after cards marketed to students by banks and colleges. Students are often afforded low-cost, high-convenience financial products, designed with their needs in mind. Unlike many non-bank providers operating in this space, banks have every incentive to ensure students have a positive experience, as they hope to foster a long-term relationship. We have an obligation to provide this product in a clear and transparent manner as students continue to struggle during these tough economic times. 

Debt Limit Increase and Shutdown Loom over Washington, D.C.

At 12:01 a.m. on October 1, 2013 portions of the U.S. Government shutdown as the 2013 Fiscal Year came to an end without a new funding measure in place. Many regulators, including the CFPB and the Fed remain open as they are funded outside the Congressional budget process. However, consumers may be impacted as loans reviewed by the SBA, VA and HUD are slowed. The real threat to banks and consumers is if the Government fails to increase the federal debt limit on October 17, 2013. 

Membership Visits in Connecticut

Liz Terry and I kicked off the week with Membership visits in Connecticut. It was a great opportunity to touch base with George Seeberger, General Counsel and Senior Vice President, and Gregg Silver, Chief Financial Officer, from 1st Financial Bank USA about the risks banks of all sizes face in today’s regulatory environment. We were also able to meet with the team at Webster Bank and hear about their priorities coming into the new fiscal year. Thank you to Rose Gaidos, Executive Vice President - Consumer Deposits, Bob Guenther, Senior Vice President - Public Affairs, Greg Jacobi, Senior Vice President - Distribution, and Desiree Wolfe, Senior Vice President - Product Management, for taking the time to meet with us!

Committee Action

We were glad to host our Digital Channels Committee to CBA’s headquarters in Washington, D.C. on October 1, 2013. Their meeting focused on attracting consumers online. A great presentation by Novantas looked at how consumers shop for banks. Next week, we are glad to welcome the Small Business and Deposits Committee to Washington. They will keep the momentum of committee meetings going as they tackle industry developments and meet with policymakers. 

CBA Membership News

CBA welcomes J.D. Power and Associates as our 9th new associate member for 2014! We thank Paul Wible of Bank of the West and Chairman of CBA’s Automotive Committee for this referral and his continued support of CBA’s mission. 

CBA Team News

CBA is excited about the addition of our newest team member. Please join me in welcoming Bianca Sabrkhani, Exhibits and Sponsorship Coordinator.