Forum for Financial Institution Directors: A View from Washington

Forum for Financial Institution Directors

A View from Washington: Trump Administration's Impact on

Financial Institution Governance and Board Responsibilities

April 28, 2017

Wayne Abernathy, American Bankers Association

Tom Quaadman, U.S. Chamber of Commerce

Chris Edwards, Winston & Strawn LLP

Jerry Loeser, Winston & Strawn LLP

• Winston & Strawn conducts an annual webinar series to assist financial

institution directors in understanding issues, regulatory requirements,

investor priorities and market realities.

• This series complements our weekly Financial Services Update which is

designed to provide quick, readable, and ongoing information about

what Congress, regulators, courts and competitors are doing.

• You can access the PowerPoint and audio for the first webinar in our

series here.

• If you wish to sign up to receive the weekly Financial Services Update,

please visit winston.com/subscribe.


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http://www.winston.com/en/thought-leadership/forum-for-financial-institution-directors-2017-proxy-season.html

MARK YOUR CALENDARS!

Three 75-minute webinars:

• Today – A View from Washington: Trump Administration's Impact on Financial

Institution Governance and Board Responsibilities

• May 19 – The Current M&A Environment: Transactional and Litigation

Perspectives

• June (Date TBD) – The Directors’ Perspective: Financial Institution Directors

discuss their challenges

At the conclusion of the course, we will provide each participant in these webinars with a Certificate of

Completion, certifying the Director has participated in Continuing Director Education courses.


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Chris Edwards

• Chair of Winston & Strawn’s bank regulatory practice

• Nationally recognized expert on corporate governance

• Over 30 years of experience, including as Former

EVP and Chief Legal Officer, of Bank One and of

Morgan Stanley

Jerry Loeser

• Partner in Winston & Strawn’s bank regulatory

practice

• 45 years of bank regulatory experience

• Former Federal Reserve Board lawyer, chief

regulatory counsel at Wells Fargo & Co., and Deputy

General Counsel at Comerica Bank


Today’s Guest Speakers

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Tom Quaadman

• Executive Vice President – Center for Capital

Markets Competitiveness, U.S. Chamber of

Commerce

Wayne Abernathy

• Executive Vice President – Financial Institutions

Policy and Regulatory Affairs, American Bankers

Association

• Overview of Topics

1. The Changing Environment

• Six Pertinent Executive Orders and Memoranda

2. Regulatory Appointment Opportunities

3. Regulation Changes

• FRB Acting Lead Governor for Supervision Jerome Powell

• Bank Regulatory Requirements for Director Oversight and Approval

• Regulatory Reform Opportunities

• Noteworthy Pending Agency Actions

• Views on The Volcker Rule

• SEC/Public Companies: What priorities for the new SEC Chair?

4. Proposed Legislation

• Legislative and Public Policy Pronouncements

• Financial CHOICE Act

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The Changing Environment

Six Pertinent Executive Orders and Memoranda

• Additional layer of review before regulations are finalized

• Temporary hiring freeze (now expired)

• Repeal two regulations for every new one

• Seven core principles for regulating the financial system

• More rigorous regulatory impact analysis

• Make regulations more efficient

• Designate regulatory reform officers and task forces

• Reorganization and streamlining the executive branch

• Q: How should financial institution directors consider Board and

Committee issues in the context of this changing environment?




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Regulatory Appointment Opportunities

• Federal Reserve Board (Board Chair, Vice-Chair, Members, General Counsel, others)

• FDIC

• OCC (Term of Comptroller has expired)

• SEC (New Chair Nominee)

• CFPB (2018 or removal?)

• Q: Which of these appointments will make a difference?




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FRB Acting Lead Governor for Supervision Jerome Powell

• Supports rule adjustments to enhance efficiency without sacrificing safety and soundness or macroprudential goals

• Retain many existing requirements: capital, liquidity, stress testing, living wills

• “Ensure that directors are not distracted from conducting their key functions by an overly detailed checklist of supervisory process requirements. Rather, boards of directors need to be able to focus on setting the overall strategic direction of the firm, while overseeing and holding senior management accountable for operating the business profitably, but also safely, soundly and in compliance with applicable laws.”

• Q: Will the Federal Reserve lighten the burden on financial institution directors?




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Bank Regulatory Requirements for Director Oversight and

Approval

• Review of existing requirements?

• New standards?

• What role, if any, for the Federal Reserve Board in matters of

corporate governance?




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Regulatory Reform Opportunities

• Public Company/SEC

• Supervision

• Enforcement

• Volcker Rule

• Capital

• Cybersecurity

• Bank Secrecy Act / Anti-money Laundering

• Stress Testing

• Q: What are the realistic prospects and timing for any of these

reforms?




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Noteworthy Pending Agency Actions

• All Financial Regulators: Incentive Compensation Rules

• OCC – FinTech charter

• CFPB

• Arbitration Rule

• Payday Lending Rule

• Debt Collection Rule

• Overdraft Rule

• Fair lending enforcement

• Q: Each action affects strategic areas of financial institutions.

How should financial institution directors consider Board matters

in these areas?




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Views on The Volcker Rule

• In combination with other initiatives, the Rule has harmed the ability of

businesses to raise financial resources affordably.

• Examine under the President’s Core Principles.

• The rule interferes with market-making.

• The agencies did not perform a cost-benefit analysis before adopting

the rule.

• Liquidity in bond markets has decreased.




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Actions of Acting SEC Chairman Michael Piwowar

• Possible delay in implementation of pay ratio disclosure rule

• Assertion of authority over fiduciary rule issue




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SEC/Public Companies: What priorities for the new SEC

Chair?

• Facilitate economic growth

• Capital formation

• Proxy Access/Environmental, Social and Governance Proposals

• Regulation S-K concept release

• Materiality of disclosures

• Non-GAAP Disclosures: do we have a President who understands the issue?

• Proxy Advisers: Required to register with the SEC?

• Enforcement: any changes to the SEC’s enforcement approach?




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Legislative and Public Policy Pronouncements

• President - Repeal Dodd-Frank

• President and U.S. Treasury Secretary – Reinstitute Glass-Steagall

• President and U.S. Treasury Secretary – Enact tax reform

• House Financial Services Committee Chairman – Financial CHOICE

Act

• Q: Should Boards be concerned that this legislation will be

enacted? What does this mean for Board long–term strategic

planning?




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Financial CHOICE Act

• Remove Comptroller of the Currency and Director of CFPB from FDIC Board

• Require agencies promulgating significant rules to select least costly alternative or

explain why

• Subject CFPB Director and Deputy Director to serve at the pleasure of the President

• Pare back CFPB supervisory authority

• Pare back CFPB enforcement authority to enumerated statutes, not UDAAP

• Exempt banking organizations with 10% or greater Tier 1 capital from FRB stress testing

• Q: What of the CHOICE Act is likely to become law?

Tax Reform

• Q: Is there a realistic prospect for real tax reform?




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Prognostication: What will the landscape look like six months

from now?




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Questions?

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Jerry Loeser

Bank Regulatory Practice

Chicago

312-558-5985

[email protected]

Chris Edwards

Chair, Bank Regulatory Practice

Chicago

312-558-5571

[email protected]

Forum for Financial Institution Directors: A View from Washington

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Transcript of Forum for Financial Institution Directors: A View from Washington