Post on 08-Apr-2022
WASHINGTON UPDATE
Nathan RossDirector – Legislative PolicyConference of State Bank Supervisors
Insights from Washington
Nathan RossDirector, Legislative Policy
Conference of State Bank Supervisors202.728.5753
nross@csbs.org@CSBSnews
CSBS – Who We Are
• State Banking Regulators’ Washington DC “Field Office”
• Legislative and Regulatory Policy Advocacy
• Regulatory Coordination
– Federal Financial Institutions Examination Council (FFIEC)
– Financial Stability Oversight Council (FSOC)
• Training
• Accreditation
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Agenda
I. Industry Composition
II. Washington’s “New World Order”
III. Public Policy Outlook
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U.S. Charters by Authority
77% State
16% OCC Banks
7% OCC Thrifts
• In 1985 there were more than 18,000 active bank charters in the United States. • Of the 5,989 banks in operation as of Q3 2016, 4,654 (77%) hold a state charter.
Source: FDIC
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Industry Composition and Concentration
• There are 5,989 FDIC insured banks in operation as of Q3 2016. o 78 banks left the system in Q3 (202 total YTD) (5 failures YTD)
o 327 in 2015 (8 failures)
o Only one recent de novo (Q1 2015)—New Hampshire.
• Banks with assets less than $10 billion control only 18% of total industry assets.
• 89% of state chartered institutions have less than $1 billion in assets.
• Approx. 60% of National Bank assets are concentrated in 4 institutions.o Those four banks hold 41% of total industry assets
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Consolidation Impacts Diversity
Source: FDIC7
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Per
cen
t
>1T
100B to 1T
50B to 100B
10B to 50B
1B to 10B
100M to 1B
<100M
Community Banks are a Vital Source of Credit
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Small Business Lending as a % of Total
Lending by Asset Group
9
26%
13%9%
4% 5% 3%
74%
87%91%
96% 95% 97%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
<1B 1-10B 10-50B 50-100B 100B-1T >1T
Small Business Lending as a % of Total Lending By Asset Group
SBL Other
Community Banking in the 21st Century
Conference
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• National Survey
• Direct banker
engagement
• Community Bank Case
Study Competition
• Video Series
• Academic Research
Agenda
I. Industry Composition
II. Washington’s “New World Order”
III. Public Policy Outlook
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The Trump Administration
• Donald Trump is the 45th President
• Vice President Mike Pence
– Oversaw transition
– Close to House Financial Services Chairman Hensarling
• Treasury Secretary Steven Mnuchin
– Goldman Sachs
– OneWest
• National Economic Council Director Gary Cohn
– Goldman Sachs
– Close to tech industry
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115th Congress – Balance of Power
• Republicans lost some seats in the House,
but maintain control of both chambers of
Congress.
– House: 238 Republican Seats, 194 Democrat
Seats – 4 races still outstanding.
– Senate: 52 Republican Seats, 46 Democrat
Seats, 2 Independent (Caucus with D’s)
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115th Congress – Committee Leadership
• Senate Banking, Housing & Urban Affairs
– Chairman Mike Crapo (R-ID); Ranking Member
Sherrod Brown (D-OH)
• FI Subcommittee: Chairman Pat Toomey (R-PA); Ranking
Member Elizabeth Warren (D-MA)
• House Financial Services Committee
– Chairman Jeb Hensarling (R-TX); Ranking Member
Maxine Waters (D-CA)
• FI Subcommittee: Chairman Blaine Luetkemeyer (R-MO);
Ranking Member Lacy Clay (D-MO)
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Senate Banking Members & 2018
15Source: New York Times
Agenda
I. Industry Composition
II. Washington’s “New World Order”
III. Public Policy Outlook
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What to do with Dodd-Frank?
• Repeal or Amend?
• Hot ticket items– Financial Stability Oversight Council (FSOC)
• Authority
• Process
– Consumer Financial Protection Bureau (CFPB)
• Funding
• Leadership structure
– $50 billion threshold for Enhanced Prudential Standards
– Orderly Liquidation Authority and Too Big to Fail
– Community bank regulatory relief
– Volcker rule
• 21st Century Glass-Steagall?
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NominationsAgency Leadership Term Expires
FDIC Martin Gruenberg November 2017
OCC Tom Curry (Acting Comptroller)
CFPB Richard Cordray July 2018
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Federal Reserve Board
Chair Janet Yellen (Term as Chair ends in February 2018) (January 2024)
Vice Chairman Stanley Fischer (January 2020) – Vice Chairmanship ends June 2018
Vacancy
Lael Brainard (2026) Vacancy
Jay Powell (2028) Vacancy
• Additional vacancies at the FDIC, Fed Vice Chair of Supervision & Treasury
Regulatory Relief by Executive Order
• “Two-for-one”
• Core Principles for Regulating the U.S. Financial System
• Deregulatory Task Forces
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Congress’s Financial Services Agenda
• Nominations
• Flood Insurance
• Regulatory Relief (aka, “Repeal/Replace Dodd-Frank”)
• GSE Reform
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Financial CHOICE Act (2.0)• HFSC Chair Jeb Hensarling’s “Repeal & Replace” Plan
• Highlights:– Banks holding 10% leverage capital get regulatory relief from Basel
III standards and Dodd-Frank’s Enhanced Prudential Standards
– Repeal FSOC authority to designate SIFIs
– Fundamentally reform the CFPB (shift from single director to commission)
– Make changes to Federal Reserve and FOMC;
– Repeal the Volcker Rule prohibition on proprietary trading
– Make all federal financial agencies operate as bipartisan commissions;
– Eliminate head of CFPB and OCC from FDIC Board;
– Require many regulations to receive congressional approval before becoming effective;
– Repeal the Chevron doctrine;
– Overhaul the “living will” process for SIFIs;
– Expand QM Safe Harbor to all loans held in portfolio
– Repeal DFA Section 1071 (CFPB Small Business Lending Data Collection)
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The Senate and Regulatory Reform
• Crapo-Brown Request for Economic Growth Proposals
• What’s past is prologue?
– Shelby’s “Financial Regulatory Improvement Act”
• Regulatory relief for community financial institutions
• Systemically important BHCs
• FSOC and non-bank designations
• Federal Reserve reform
– Brown’s Democratic Substitute – “Community Financial
Institution Regulatory Relief and Consumer Protection Act”
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Recent Community Bank “Wins”
• Highway bill of December 2015:
– Rural petition process for the CFPB;
– Expanded CFPB Escrow exemptions for rural and underserved
areas;
– QM Balloon Loans held in portfolio for rural and underserved
areas;
– Granted relief from Gramm-Leach-Bliley privacy notice
requirements; and
– Increased from $500 million to $1 billion the threshold for well-
capitalized banks eligible for an 18-month exam cycle.
• More broadly, agency officials talk with more certainty
about the difference in how community banks operate
and the regulatory approach.
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Congressional Review Act
• Alternative path for some regulatory relief
– CFPB prepaid card rule
– Tax inversion
– Swaps rules
– Forthcoming Fed rules
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Also on the “To Do” List
• Flood Insurance Reauthorization
– Must do by September 30
• Housing Finance Reform
– The role of government in the housing finance system
• FinTech
– Banks and innovation – Friends or Foes
– State-federal balance in regulation
– What’s at stake
• BSA/AML Reform
– Rising compliance costs and complexity
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Questions?
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