New ABA Survey Finds Majority of Americans Prefer to Apply for Mortgages In Person June 21, 2017
The majority of American consumers across all age groups -- 60 percent -- say they still prefer to apply in person for a mortgage loan rather than online, according to a new study released today by ABA. Seventeen percent said they would prefer to apply for a mortgage online, while 23 percent were unsure.
“Banks invest billions of dollars to offer their customers the latest technology,” said ABA EVP Bob Davis. “But at the end of the day, nothing compares to sitting across the table, face-to-face with a banker when you’re making the single most important investment of your life.” While most preferred an in-person application, 61 percent said they consider mobile or online services very important for obtaining a mortgage or making payments.
The survey also explored factors holding consumers back from buying a home. Half of all respondents said that down payment funds and homeownership fees such as property tax and maintenance costs were barriers to homeownership. Just over 20 percent of all respondents said that student debt was a factor. Among consumers aged 18-29 years, that figure was even higher -- 39 percent of that particular cohort said that student debt was keeping them from obtaining a mortgage.
Compared to other aspects of the home buying process, consumers say they are least confident in their personal knowledge of the mortgage process; just 34 percent considered their knowledge to be above average or excellent. Read more. View an infographic of the data.
Yellen Signals Greater Transparency in Stress Tests June 20, 2017
In a letter to Rep. Blaine Luetkemeyer (R-Mo.) last week, Federal Reserve Chair Janet Yellen said that the Fed will provide banks with more details on the stress testing process in response to calls from lawmakers and others -- including ABA -- for greater transparency. The results of this year’s stress tests -- which include the Dodd-Frank Act stress tests and the Comprehensive Capital Analysis and Review -- will be published this month.
Along with the results, the Fed will release information on how it approaches the qualitative assessment and offer specific examples of how institutions in the past failed to meet financial stability requirements, Yellen said. In a letter last month, Luetkemeyer and Keith Rothfus (R-Pa.) noted that the Fed’s opacity about the stress testing process forces institutions to overspend and invest excess time in developing models and tests and that the Fed could do more to increase public awareness of what goes into its scenario design for the capital planning exercise. Yellen added that the Fed will release instructions and scenarios for the next testing cycle by Feb. 15.
ABA has strongly advocated with regulators and on Capitol Hill for improvements to CCAR and DFAST that will promote efficiency for participating banks without sacrificing contributions to financial stability.
ABA, Financial Trade Groups Meet with Trump Team on Tax Reform June 20, 2017
As the Trump administration works to advance its tax reform initiative, ABA yesterday took part in a meeting with representatives from the National Economic Council, Treasury Department and other financial industry groups to provide feedback.
ABA President and CEO Rob Nichols, who attended the meeting on behalf of ABA, expressed his support for pro-growth tax reform that includes lower rates and simplification. Nichols emphasized that the administration must carefully analyze the potential direct and indirect effects of certain proposals, such as those that would restrict the deductibility of net business interest expense. ABA continues to engage with the administration and take part in discussions with policymakers as tax reform moves forward. For more information, contact ABA's John Kinsella.
Trump Names Banking Lawyer to Lead FDIC June 19, 2017
President Trump on Friday said he would nominate James Clinger to serve as FDIC chairman. According to the White House, Clinger will be nominated first to fill the long-vacant director position on the FDIC board and then nominated to serve a five-year term as chairman after Martin Gruenberg's term ends in November.
Clinger has been chief counsel to the House Financial Services Committee for a decade. During the George W. Bush administration, he served as a deputy assistant attorney general, prior to which he was a staffer on the Financial Services Committee for another decade. He began his legal career in private practice.
The announcement comes as Trump continues to fill out his financial regulatory team. The president recently announced that he would name Joseph Otting as comptroller of the currency. There are several vacancies on the Federal Reserve Board of Governors, and nominees are expected to be named soon for at least one of those posts. Read more.
CFPB Proposes Further Changes to Prepaid Rule; Issues Compliance Guide June 16, 2017
The Consumer Financial Protection Bureau yesterday proposed several changes to its final rule on prepaid products, whose implementation has been delayed until April 1, 2018. The bureau also invited comments about whether to delay the rule’s implementation date further based on time needed to comply with the latest round of proposed changes.
Specifically, the bureau is proposing to revise the error resolution and limited liability provisions of the prepaid rule to clarify that “financial institutions would not be required to resolve errors or limit consumers’ liability on unverified prepaid accounts.” The CFPB proposed a limited exception to the prepaid rule for credit card accounts linked to “digital wallets” that customers use to store funds, since the credit card accounts are already subject to Regulation Z. The bureau also proposed several minor clarifications and technical adjustments.
The CFPB declined to address ABA’s overarching concern that the rule still requires significant adjustment to ensure banks can confidently offer checking and prepaid accounts without liability risk. In its comments in April, ABA urged the bureau to adopt a more objective definition of “prepaid account” as any product marketed or labeled as a prepaid account or card, rather than the more subjective approach of saying it “is not a checking account, share draft account or [NOW] account.”
The bureau released an updated compliance guide for small entities. The latest version reflects the delay of the effective date and several elements of additional guidance. Comments on the proposed rule are due 45 days after it is published in the Federal Register.
Read the proposed rule.
Download the compliance guide.
Read ABA's comment letter. For more information, contact ABA’s Nessa Feddis.
ABA: Regulations Should Be Tailored Based on Risk, Business Model June 16, 2017
Regulations based on asset size are “inappropriate and needlessly burdensome” for many banks with non-complex business models, and ultimately lead to higher costs and fewer choices for consumers, ABA said in written testimony submitted for a Senate Banking Committee hearing on regulatory relief for midsize and regional banks yesterday.
While size-only regulations may provide regulators a simple framework for supervising financial institutions, ABA noted that “thresholds of any type are arbitrary and a poor substitute for effective regulatory policy. Rather than adding more thresholds, what is needed are better overall principles for bank regulation. The best solution is to tailor regulations according to the risks and business model of the bank.”
Voicing support for the recent Treasury Department report which called for proper tailoring of financial regulations, the association encouraged Congress and regulators to apply that approach to both existing rules and new regulatory initiatives going forward. Several bills in the current Congress would help to lessen banks’ regulatory burden and unleash economic growth, ABA noted. These include the Tailor Act; a bill to expand banks’ abilities to count municipal securities as high quality liquid assets under the Liquidity Coverage Ratio; a bill to require a risk-based analysis in order to make SIFI designations; and a bill to provide relief from Dodd-Frank Act stress tests.
Bankers testifying at the hearing described the implications of arbitrary asset thresholds. Robert Hill Jr., CEO of $11 billion South State Corporation in Columbia, S.C., said that in crossing the $10 billion asset threshold, his bank was subjected to heightened compliance requirements which now cost the bank more than $20 million per year.
Banker Harris Simmons, chairman and CEO of $65 billion Zion’s Bancorporation, also questioned the validity of the $50 billion threshold at which banks are designated systemically important financial institutions. He noted that as the smallest SIFI bank, Zions is subject to the same prudential standards as the nation’s largest banks -- including onerous stress testing requirements -- despite the fact that its size and lending portfolio are significantly smaller. Read more.
Treasury Department Issues Sweeping Regulatory Reform Recommendations June 13, 2017
The Treasury Department yesterday issued a 150-page report making dozens of recommendations for how Congress and regulatory agencies can streamline bank regulation in a way that promotes economic growth. The report came in response to President Trump’s executive order outlining core principles of financial regulation and calling for a comprehensive review of the regulatory structure.
As ABA has long urged, the report called for significant tailoring of regulatory requirements. “[N]early seven years after [Dodd-Frank], regulation has proven to be insufficiently tailored to depository institutions based on the size and complexity of their business models,” the report said. The report noted that economic growth and loan growth have been historically depressed during the current recovery, which Treasury attributed in part to the volume and structure of current regulations.
“Today’s Treasury report is an important step to refine financial regulations to ensure that they are supporting -- not inhibiting -- economic expansion,” said ABA President and CEO Rob Nichols. “We applaud Secretary Steven Mnuchin for recognizing that we need regulatory reform to boost economic growth, and we expect this report will serve as a catalyst in that effort.” ABA was an active participant in the Treasury’s process. It submitted 10 white papers to Treasury offering detailed feedback, and delegations of bankers representing all bank sizes took part in in-person meetings. The recommendations of the report are consistent to a large degree with recommendations made by ABA.
The Treasury report included recommendations on capital, liquidity, community banks, mortgage lending and structural regulatory reform. While some of Treasury’s recommendations require congressional action, Mnuchin estimated that “70 to 80 percent” can be put into motion by regulators immediately through their independent rulemaking authority. The report also highlighted numerous mortgage rules that the CFPB could address on its own.
Nichols will discuss the Treasury report, along with legislative efforts on regulatory reform and other topics during a free member webinar Thursday at 2 p.m. EDT. ABA staff will continue to review the report and issue additional analysis for members in the days to come.
Read the Treasury report.
View Treasury's summary of its recommendations highlighted to note ABA-supported ideas.
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