Tuesday, June 18, 2024

Executive News: Looking back on busy 52 weeks …

As we turn the corner to 2024, it’s always good to look back at the previous year and see what was accomplished and to set a road map for the next year.

It was an interesting year – like many years in this industry it was an absolute roller coaster. Along the way, we had victories, frustrations, great events and everything between.
While the calendar and life doesn’t give you much time

Adrian Beverage, OBA President and CEO

to pause, let’s take a few minutes to look back at 2023.

There has never been a year where we didn’t feel like Washington was a total mess. This year was no different. Washington is more divided than ever, and to add to the chaos, some of our regulators are contributing to the mess.

The Consumer Financial Protection Bureau was incredibly busy this past year and Section 1071 was its shining star for 2023. On March 30, the CFPB issued a final rule under Section 1071.
A little history behind this rule: Section 1071 of the Dodd-Frank Act amended the Equal Credit Opportunity Act and required financial institutions to collect data on small business loans. The final rule is 888-pages long.

On March 30, we had no idea of the crazy ride Section 1071 would deliver in 2023.

In late April, the Texas Bankers Association sued to block the CFPB from implementing its final rule under Section 1071. The plaintiffs in this suit claimed the CFPB violated the Administrative Procedure Act because the CFPB acted on more than its authority by expanding 13 data points of the Dodd-Frank Act to 81 in the final rule, and showed failure to consider and respond to significant comments raised by affected parties in the notice and during the comment period.

On July 31, U.S. District Court Judge Randy Crane granted the plaintiff’s motion for a preliminary injunction from TBA and American Bankers Association members from having to devote time and resources complying with the rulemaking until the Supreme Court resolved a separate case involving the CFPB.

The final installment of Section 1071 excitement happened late in 2023, on Dec. 19. Earlier, on June 13, Sen. John Kennedy (R-La.) introduced S.J. Resolution 32, a joint resolution that would nullify the final rule issued by the CFPB titled Small Business Lending under the Equal Credit Opportunity Act. The measure passed the Senate by a vote of 53-44 and then passed the House 221-202.

It was, however, vetoed by President Joe Biden on Dec. 19. Just in case you didn’t see the president’s veto message:.

The CFPB’s final rule would provide small business owners, lenders, and the public with critical information about the $1.7 trillion small business financing market. It would bring much needed transparency to small business lending and improve the ability of lenders and community organizations to meet the most critical needs of America’s small businesses. This rule implements a long-overdue piece of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It is also central to the effective implementation of the Community Reinvestment Act, which helps ensure that the needs of all borrowers – including low- and moderate-income borrowers – are met. But this Republican-led resolution would hinder the Government’s ability to conduct oversight of abusive and predatory lenders, make it harder for 33 million small businesses across the country to assess lending opportunities and access capital, and make it more difficult for lenders and community groups to address the most acute gaps in capital access for minority- and women-owned businesses.

If enacted, this resolution would harm all those that stand to benefit from expanded transparency and accountability. By hampering efforts to promote transparency and accountability in small business lending, Republicans are siding with big banks and corporations over the needs of small business owners. Small businesses are the engines of our economy, and my Administration will not support policies that hurt their ability to thrive and grow.

Therefore, I am vetoing this resolution.

• • •

While 1071 occupied a lot of time and energy in 2023, there are several other issues that are just as important that kept us all busy.

For example, while the preliminary injunction regarding 1071 was huge, it wasn’t the biggest court case for the CFPB in 2023. We should soon have a decision from the U.S. Supreme Court regarding CFPB v. Community Financial Services Association of America. This case challenges the constitutionality of the agency’s independent funding structure.

Oral arguments were heard in early October of 2023 and it is setting up to be a very close vote.

• • •

Access to Credit for our Rural Economy is a bill we’ve been working on for several years, and this past year was a great year for ACRE and gives us lots of momentum headed into 2024.
ACRE excludes from gross income the interest received by a qualified lender on all loans secured by farm real estate.

Additionally, ACRE would exclude from gross income the interest received by a qualified lender on home mortgage loans of $750,000 or less in rural communities of no more than 2,500 people.
In previous years we were only able to secure Republicans on this bill. Last year, though, there was a change in feelings toward this bill and numerous Democrats have signed-on to be a co-sponsor.

As we continue to add more members with bipartisan support, the chance of it moving through the process continues to increase.

• • •

The Safe Banking Act is something you’ve heard me talk about for years. While it has passed the House numerous times, it never has received a hearing in the Senate. While the Senate refuses to hear the Safe Banking Act, it did pass the Safer Banking Act in late September. While it isn’t identical to the Safe Banking Act, it’s at least an indication the Senate is willing to take up the issue in a different form.

The bill has passed out of the Senate Banking Committee and has yet to be brought up before the full Senate.

• • •

The other federal issue that was active all of 2023 is the Credit Card Competition Act.

In 2010 we received what is commonly referred to as the Durbin Amendment. The CCCA act is known colloquially as Durbin 2.0 and its equally as bad. In it, they are proposing new credit routing mandates that would give retailers – not consumers – the power to decide which credit card network transactions would be routed over.
All in the spirit of mega retailers making more money.

Consumers, small businesses and small financial institutions will lose big if this happens. I want more information on this bill as we are going to be fighting it all of 2024. The authors know they can’t get this bill passed on its own, so they are constantly attaching it to any piece of must-pass legislation they can.

We will be definitely reaching out to our members throughout the year asking for your help to stop it.

• • •

These are just a couple of the federal issues we were knee deep in this past year. These same issues, and many others that were on our list this past year, will be back in 2024, along with other issues we haven’t seen yet. As I mentioned earlier, 2024 is going to be crazy as it is an election year and we all know what that means.

• • •

We had many successes at the OBA this past year. OBA Chair Bryan Cain has stressed several times we are “better together,” and we saw that on display in 2023.
The OBA Washington Visit was a record outing as we had exactly 100 Oklahomans join us on our annual excursion to the nation’s capital. We had a lot of bankers who have gone before, but we also had a record number of first-time attendees.

This size of group was recognized by our regulators, our delegation and other state associations from across the country. I received numerous calls and emails from my counterparts at other state bankers associations asking how we had so many attendees. I told them it was simple: personal calls and having other bankers reach out to their banker friends and encourage them to attend.
This visit was a testament to Cain’s “better together” message. We are hoping to have even more join us this year in September when we go back to Washington.

• • •

The 2023 OBA Annual Convention was a great success as bankers from across the state met in Norman to hear from regulators and industry leaders on the current status of the banking industry. We had an incredible turnout, which leads to great discussion and networking opportunities. We are already looking forward to the 2024 OBA Convention in downtown Oklahoma City.

• • •

There were many accomplishments at the state capitol during the legislative session. We were able to kill numerous bills detrimental to your industry, while also working to get things passed that will benefit it.

One of the main bills we were involved with dealt in electronic lien and titles. If you remember, about two years ago a bill was passed that made Oklahoma a title-holding state. You had the option to keep the original title at the bank or you could file it digitally with the state.

While that was all good in theory, it really never got off the ground as the state wasn’t able to approve a vendor for the digital side of the equation.

Last year we were able to get legislation passed that would make Oklahoma 100% digital. Changes were made to the state agency handling this program and it’s going to make all the difference. This new program is being developed as we speak and you’ll be hearing more about it in the next couple of weeks.

• • •

I only touched on a few of the items that we were part of in 2023, but there were many accomplishments and it’s a credit to our bankers.

I’ve never seen a group able to adapt to sudden rule and regulatory changes so quickly. The rate environment this past year was a true roller coaster. When I was calling on banks at the beginning of the year, all anyone could talk about was the amount of deposits they had on the books and how they hoped to find a profitable way to reduce that number. By the end of the year, every bank I visited was asking if I knew of anyone that had any excess deposits they would be willing to move.

I don’t think 2024 will be any less eventful. As I mentioned before it is an election year, so I know that it will be incredibly exciting at the very least.

The one thing that I know for certain, we will all survive whatever is thrown our way because we are certainly “better together.” There’s nothing we can’t handle as an industry when we work together.

I want to wish you, your family and your bank a happy new year, and we look forward to working with you and having another great 12 months.