Greetings from Guy
By Guy Sims
Washington provided plenty of drama last week both political and personal. I would like to spend a few minutes discussing the horrific shooting at the congressional baseball game practice.
While the political rhetoric has been red hot for an extended period, it took this terrible event to produce some civility among our political leaders. It is my hope this is an inflection point for our political leaders where the rhetoric can be toned down and issues can be debated in a civil manner.
Politics should not be a zero-sum game where the winner takes all and the loser is excoriated for his or her position. Our country and our industry face large problems that need to be addressed by Congress.
I’m a firm believer reasonable people can arrive at reasonable solutions. I also believe “together we are stronger!” Bankers must simply come to realize how important it is for the ABA, ICBA, the OBA and the CBAO to all be pushing in the same direction, advocating for the same result.
Let’s hope this terrible event is a turning point for our country and a catalyst for civility and honest debate in Washington.
Friday, President Trump announced that banking lawyer James Clinger is his choice to serve as chairman of the FDIC.
“As I understand it, Clinger will first fill the current vacancy on the FDIC Board,” OBA President and CEO Roger Beverage said. “When the current chairman’s (Marty Gruenberg) term ends in November, Clinger will then be nominated to serve a five-year term as FDIC chairman.
“I’m a little disappointed. I had hoped that (State Banking) Commissioner (Mick) Thompson would be appointed. He has all the requirements and then some to make an incredibly good chairman.”
Beverage noted Clinger served as chief counsel to the House Financial Services Committee for 10 years. He also served as a deputy assistant attorney general during the term of President George W. Bush. Before that, he was a staffer on the Financial Services Committee for 10 years.
This makes the second top regulatory vacancy that President Trump has appointed. Earlier this spring, President Trump announced he would appoint Joseph Otting as comptroller of the currency.
Several vacancies currently exist on the board of governors of the Federal Reserve. We are told that nominees will soon be named for at least one of those posts.
Click here to read about this and other presidential appointments last week.
The federal agency (Housing and Urban Development, or HUD) asked for comments and suggestions about some of the agency’s outdated or ineffective rules and regulations. Your OBA joined ABA and the other 49 state bankers associations asking for changes to the agency’s rule implementing the Fair Housing Act discriminatory effects standard. This rule, the associations said, is “outdated and legally wrong.”
The rule is in direct conflict with a Supreme Court decision which held that “disparate impact” analysis to demonstrate discrimination claims is recognized under the FHA, but the decision also included key limitations that placed the burden of proof in disparate impact cases with the plaintiffs. In addition, the groups pointed out that the rule provides no real-world guidance to promote compliance with the FHA.
The decision is Texas Department of Housing and Community Affairs v. Inclusive Communities Project. The groups pointed out that:
The direct conflict between the rule and Inclusive Communities deprives regulated entities of certainty as to how disparate impact will be defined and applied under the Fair Housing Act. A rule that creates, rather than eliminates, confusion undermines its own purpose and is entirely ineffective.
These same Associations have asked federal bank regulatory agencies to include the Supreme Court’s reasoning in formal guidance and exam procedures. They also noted in the letter that they are willing to collaborate with HUD to develop a rule consistent with the legal precedent set by the Inclusive Communities decision.
Last week, the Department of the Treasury issued its long-anticipated report that deals with proposed regulatory changes in an effort to streamline the regulatory process in a way that promotes economic growth. This 150-page report responds to President Trump’s executive order outlining core principles of financial regulation and calling for a comprehensive review of the regulatory structure.
The Treasury report notes that economic and loan growth have been depressed for the past eight years, in part due to the volume and structure of current regulations. The report agrees with the directive we have received from your association’s board of directors.
The OBA’s top legislative priority is to begin the process of “bifurcating” the regulatory system for banks: creating a separate regulatory system for Wall Street and a different regulatory system for community banks. The applicability of different rules would be based on and defined by the bank’s business operating model and its risk profile.
As it turns out, this is also one of the Treasury report’s key provisions: tailoring of regulatory requirements based on an institution’s size and complexity.
The report also makes numerous other recommendations on capital, liquidity, mortgage lending and structural regulatory reform. Importantly, more than 70 percent of Treasury’s suggestions can be accomplished without legislative changes.
Click here to view a summary of the report.
Last week, the U.S. Supreme Court ruled a bank that collects on debts it buys and holds “for its own account” is not a debt collector under the Fair Debt Collection Practices Act. The Court’s unanimous opinion in Henson v. Santander was written by Justice Neil Gorsuch, President Trump’s recent appointment to the high court.
Justice Gorsuch wrote: “by defining debt collectors to include those who regularly seek to collect debts ‘owed … another,’ the statute’s plain language seems to focus on third-party collection agents regularly collecting for a debt owner — not on a debt owner seeking to collect debts for itself.”
In this case, Santander bought auto loans from CitiFinancial Auto, which had defaulted and then proceeded to try and collect on them. The plaintiffs sued Santander, arguing its activities insofar as trying to collect the debt were concerned fell within the definition of “third-party collector” under the FDCPA because Santander had not originated the loans. The Supreme Court rejected this claim.
Take note the OBA 2017-18 Emerging Leaders Academy is currently accepting applications.
We’re looking for the best and brightest bankers who seek to sharpen their leadership skills. The Academy will help you reach new heights with powerful speakers offering information leaders need for effectively maneuvering in today’s business climate. Each session helps participants become true leaders by understanding those around you through non-traditional methods.
Additionally, in 2018, the OBA Board of Directors will add a voting seat for an Emerging Leader. Academy graduates will be given preference for this seat.
The OBA extends an invitation to any employee of a bank that is a member of the OBA to apply. A panel of bankers will review the applicants and choose those accepted into the Academy. Participants must attend all sessions to successfully graduate from the program.
There are six sessions to the Academy: Sept. 29, Oct. 13, Nov. 9, Jan. 26, Feb. 20, March 16.
Summer is officially here for the OBA education department, and while that means things might slow down a bit, it sure doesn’t mean they stop! Take a peek at the upcoming events:
- Legal Issues of Checks, June 22, webinar — Learn about many legal aspects of checks, and the compliance issues of Reg CC and BSA. This webinar will serve as the annual training requirement for both these regulations.
- FinTech Trends, June 23, webinar — We will explore current and emerging threats that target mobile devices and FinTech solutions.
- Commercial Real Estate Lending: Property Types, Lease Structures, June 27, webinar — Learn to assess the important qualitative or non-financial factors that influence CRE performance over time.