Tuesday, June 18, 2024

Executive News: Annual Washington Visit went smoothly, successfully

In late September, the OBA made its annual trek to the nation’s capital for the Annual Washington Visit.

It was a record-setting trip as there were 100 individuals registered for the visit. This is a record for us and is one of the largest crowds for any state banking association ever.
While there were lots of laughs, fellow

Adrian Beverage, OBA President and CEO

ship and catching up on the trip, we were still there to accomplish our goals. The main reason for this trip is to meet with our federal regulators, agencies and members of our delegation. We have limited time with each of them to make our case, but I believe we accomplished our mission.

The discussions we had were persuasive, using numerous examples of how proposals would impact our bank customers. In addition to the discussions, the leaders of these agencies also were able to see how many bankers took the time and expense to travel to Washington to make their points heard.

We hear it all the time in Washington: numbers matter! I would say that our group took that to heart

Our agenda in Washington was packed and, following, you will find a brief summary of each meeting.

We had a good meeting with Graham Steele, the assistant secretary for financial institutions. The majority of this meeting was spent discussing implementation and concerns of the beneficial ownership registry.

A main focus was taken upon FinCEN’s reporting rule, which takes effect on Jan. 1, 2024. This rule will create a registry of “beneficial ownership” information, which will require 32 million small businesses to report information about the persons who own or control greater than 25% of them, or have substantial control of the business.

Several bankers talked about the burden this rule would impose on all small business owners. In addition to the burden on customers, it was asked what type of access banks would have to this information. While the banks would be obligated to follow strict rules in gathering the information, would they even have access to what was collected?

Graham talked about how banks would have limited access to the information for highly restricted purposes such as compliance for the yet-to-be-revised CDD rule, but not for BSA/AML compliance.

Federal Reserve
The meeting with the Federal Reserve was good as we had the opportunity to cover a lot of ground in a short amount of time.

We shared our concerns regarding the beneficial ownership registry to just get those on the record with this agency. Todd Vermilyea, senior associate director with the division of supervision and regulation, wanted to spend some time talking about the events from March regarding SVB and Signature Bank.

What Todd wanted to hear was how it impacted banks in Oklahoma. Several of our bankers gave examples of working with customers, and how some customers left but eventually came back to the bank. These comments led to a discussion on FDIC insurance and potential change to the system.

The conversation then turned to CRA. Todd said the new rule will come out shortly and should definitely be public by the end of the year.

We spent the last remaining minutes of the meeting bouncing around several topics; third-party fintech’s, commercial real estate and social media.

This meeting is usually one of the more-anticipated on the schedule, mainly due to the fact no other agency goes after community banking more than the CFPB.

Several issues were on the agenda, including credit card late fees, overdraft and small business lending (Section 1071). The only issue that was discussed at length, though, was 1071. Unfortunately, due to ongoing lawsuits with the CFPB, they still weren’t able to dive as deep into this issues as we would have liked.

Several bankers took the opportunity to voice their concerns with 1071, and one of our bankers was quoted as saying “this is nothing but a gotcha moment.” Others shared feelings about how the ridiculous amount of data points required is going to serve no purpose other than arming the Bureau with information to go after banks.

Other comments were centered around the impact it’s going to have on the banks’ relationships with their customers.

Even though the rule was changed for the good at the last minute in that it allows banks to accept the information provided by the customer, making the banks no longer responsible to retrieve it, it won’t prevent customers from still being frustrated with their bankers over it.

All in all, this was a good meeting as it gave the bankers an opportunity to voice their concerns and frustrations directly with the CFPB.

The meeting with the FDIC was another anticipated meeting as it was the first time we’ve been in front of it since the events in March.

Travis Hill, vice chairman of the FDIC, wanted to hear from the bankers regarding the three options for deposit reform: status quo, limited coverage and target coverage.
Several bankers in attendance shared their opinions on what they think would work best. The common denominator of the entire conversation was community banks had nothing to do with the failure of those banks, and we shouldn’t have to pay for their gross mismanagement.

Travis also talked about CRA and echoed what others have said in that the final rule will be out soon, and he can’t talk about it at the moment.

One would’ve thought that re-presentment would’ve been discussed, but thanks to the hard work from Oklahoma State Banking Commissioner Mick Thompson, and Chris Finnegan from the FDIC, that particular discussion went away this past summer with the changes made in the revised guidance.

Acting Comptroller Hsu joined us for this meeting.

Hsu spoke for several minutes and talked about what is going on at the agency and what they are focused on right now. The conversation then turned to FDIC insurance since Comptroller Hsu is on the board of the FDIC and will have an input on what happens moving forward.

He did make it clear any major changes to deposit insurance reform would have to have congressional approval. Hsu also spent some time talking about all the vacancies in commercial real estate and how this is going to definitely be an issue going forward.

This was our final meeting with our regulators, and with all the talk regarding beneficial ownership, you knew that it was going to be a lively discussion.

Zaib Rasool, policy advisor, was the lucky one who got to take all the questions, and she did a very good job. The questions from the bankers were more focused on the implementation of the rule since questions at earlier meetings focused on the rule itself.

The first question was how will all of the businesses be notified and educated? FinCEN is going to be reaching out to states and others with the usual government vehicles to get information out to the public.

What are the penalties if a company doesn’t comply with the reporting requirement? Any company that fails to file a beneficial ownership report or amendment by its filing deadline is subject to a fine of $500 per day, up to a maximum of $10,000. Willful failures or intentionally filing inaccurate information is a felony, punishable by up to two years in prison.

As soon as we got home from the visit, we received notification FinCen issued a Notice of Proposed Rulemaking to extend the deadline for certain companies to file their beneficial ownership information. The change was for reporting companies to have 90 days to file their initial report instead of the original 30 days.

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You can tell we had great meetings with our regulators and agencies while on our Annual Washington Visit, but it’s only half the work we have to do while there. The other half is spent meeting with members of the Oklahoma delegation to make sure they are aware of our issues.

We have found over the years the best way to make sure all of our bankers see everyone is actually for the delegation to come TO us since it would be impossible to take this large-size group of bankers to each individual office. So, we had a meeting room at the Capitol Hill Club, which is close to the Capitol and easy to access for the members.

We were fortunate to have several of our members stop by to chat with us, although, some weren’t able to join – so we met with their staffs. While we were there, Washington, D.C., was being consumed by the deadline to keep the government open. Since Oklahoma is blessed to have congressional members in leadership positions, they simply couldn’t get away. Still, we were able to hear from Rep. Hern, Rep. Brecheen, Rep. Bice and Sen. Mullin.

After our meetings, Rep. Bice made arrangements for the entire group to take a tour of the Capitol and sit in the gallery to watch a vote.

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We had a great trip with a great group of bankers from across the state, but we have already started to make arrangements for next year’s visit! Please plan on joining us in 2024, where we expect to set another attendance record! The 2024 OBA Annual Washington visit will be Sept. 22-24.