Change: You Can Bank On It

Transcription

1 Change: You Can Bank On It Community Bankers of Oklahoma September 15, 2016 Neil Milner CSBS Industry Relations

2 Dual Banking System Developed Over Time Early America Exclusive process for bank charters resulted in crony capitalism 1838 Unlimited state bank charters via N.Y. Free Banking Act Birth of the community bank 1863 National bank charters via National Bank Act Created the OCC 1913 Monetary control/stability via creation of Federal Reserve system 1933 Deposit insurance for all chartered banks via creation of FDIC 2

3 Dual Banking Today 3

4 Among State-Chartered Banks, Three-Quarters Are Community Banks 4

5 The Role of State Regulators? Goal Ensure that every community has access to credit and banking services Strategy Tools Enable regulated financial institutions to best serve their communities Broad scope of regulatory authority Regulations that support credit access, consumer protection AND economic growth Activity Leadership on innovation, research and public policy 5

6 CSBS-Federal Reserve Research Conference Provides Insight into Community Banking 6

7 Community Banks Source Mostly Qualified Mortgages, but TRID Has Been Slowing You Down 7

8 More than Half Are Active in Small Business Lending, While Vast Majority See A Self-Sustaining Future 8

9 Understanding Which Rules Apply and Which Ones Don t Can Get Complicated 9

10 CSBS Policy Priority: Right-Size Regulation One approach: Establish common definition of community banking Some have suggested a single metric such as capital levels Instead, activities approach better captures business model Locally-held assets Locally-focused lending Locally-oriented governance CSBS common definition similar to FDIC research approach Add an appeals process 10

11 Additional Policy Priorities Bank de-risking Fintech CFPB proposal on small-dollar lending Capital simplification Community bank call report (FFIEC) Accounting standard for Current Expect Credit Losses 11

12 Carefully Evaluating and Monitoring: Congressional Effort for Sweeping Regulatory Reform Financial CHOICE Act House Financial Services Comm. Chairman Tom Hensarling (R-Tex) Creates path for banks to opt out of Basel III and certain Dodd-Frank provisions Substantially changes federal banking regulators Repeals FSOC s authority to designate 2B2F Repeals Volker Rule Redefines CFPB Replaces single agency heads with commissions Subjects federal regulators to appropriations process Contains regulatory relief for community banks 12

13 All This Is Occurring During A Time of Transition For Democratic majority: +30 House seats + 4/5 Senate seats Senate D/I 46 R 54 D 188 House R

14 Even More Transition Agency/Committee Leadership Term Expires Treasury Jack Lew Senate Banking Committee Richard Shelby 2016 FDIC Marty Gruenberg 2017 OCC Tom Curry 2017 CFPB Richard Cordray 2018 House Financial Services Jeb Hensarling Through 2018 Federal Reserve Seats Chair Janet Yellen (Term as Chair ends in 2018) (2024) Vice Chairman Stanley Fischer (2020) Vice Chairmanship ends 2018 Daniel Tarullo (2022) Jay Powell (2028) Lael Brainard (2026) Vacancy Vacancy 14

15 Time of Transition = Time of Opportunity Oklahoma community banks Don t stand still Set priorities important to you Be heard at the national level of ICBA Have a roadmap in place to open conversation with new officials CSBS Be the voice of state regulators in Washington Remain strong advocate for dual banking system Provide research and analysis on prospective legislation and rule changes and emerging trends Seek input from our Bankers Advisory Board 15