Banking News

Senate Banking Subcommittee Chairs, Ranking Members Named January 18, 2017

The Senate Banking Committee yesterday announced subcommittee chairmen and ranking members for the 115th Congress.

  • Dean Heller (R-Nev.) will be the new chairman of the securities, insurance and investment subcommittee. Mark Warner (D-Va.) will remain ranking member.
  • Pat Toomey (R-Pa.) will remain chairman of the financial institutions and consumer protection subcommittee. Elizabeth Warren (D-Mass.) will serve as ranking member.
  • Tom Cotton (R-Ark.) will chair the economic policy subcommittee. Heidi Heitkamp (D-N.D.) will serve as ranking member.
  • Ben Sasse (R-Neb.) will chair the national security and international trade and finance subcommittee. Joe Donnelly (D-Ind.) will serve as ranking member.


ABA Supports Consistency, Oversight in Proposed Fintech Charter January 18, 2017

ABA yesterday offered its support for the OCC’s proposal to grant special-purpose national bank charters to financial technology firms, as long as existing rules are applied evenly and fairly and with effective oversight. In a comment letter, ABA recognized the OCC’s efforts to facilitate responsible innovation within the banking system, emphasizing that the implementation of the new charter will be critical to ensuring a level playing field for banks and fintech companies. “The OCC must ensure that the appropriate regulations apply consistently to all national bank charters and that no regulatory gaps emerge,” ABA said.

Specifically, ABA said that fintech companies applying for a limited-purpose charter must be held to the same standards as national banks in terms of governance structure, capital and liquidity requirements, compliance risk management and financial inclusion, among other things. The association urged the OCC to work with other agencies “carefully and cooperatively to assure that no current policy lines are directly or inadvertently moved as a consequence of this action.”

ABA added that in addition to granting a limited-purpose charter to fintech firms, the OCC must also remain focused on empowering traditional banks to innovate. “Banks are the original fintech companies and have a long history of bringing innovative services to customers in a responsible manner,” said ABA VP Rob Morgan. “There are a number of steps that the OCC can take to help facilitate this. These include enabling banks to undertake limited-scale tests of innovative products and making it easier for banks to partner with fintech companies.”

ABA will continue to provide feedback to the OCC as the agency works through the details of the fintech charter in the weeks and months ahead. The association will host a webinar today at 3 p.m. EST with President and CEO Rob Nichols and a panel of ABA’s fintech and regulatory experts to discuss ABA’s response to the proposal and answer questions from bankers. Tim Scott (R-S.C.) will remain chair of the housing, transportation and community development subcommittee. Robert Menendez (D-N.J.) will continue to serve as ranking member.

Read ABA’s comment letter.
Register for the webinar.
Read ABA subsidiary BAFT's comment letter.
For more information, contact ABA's Rob Morgan.



OCC: Fintech Charter Has ‘Very High Bar’; Few Applicants Expected January 13, 2017

During an ABA member webinar yesterday, senior OCC officials provided more details about the agency’s proposed special purpose national bank charter intended for innovative fintech firms. The officials noted that the charter is not a different kind of charter; it would be a national bank charter, with all of the privileges and responsibilities that entails.

The agency will hold applicants to a “very high bar” on par with existing national bank charters, said OCC Acting Chief Innovation Officer Beth Knickerbocker, adding that this would limit the interest.

As the OCC has previously noted, fintech charter applicants that do not hold deposits would not be subject to the Community Reinvestment Act and other laws specific to FDIC-insured banks. However, OCC Deputy Chief Counsel Karen Solomon noted that “a firm that gets a national bank charter should have obligations related to community investment or financial inclusion.” She said the OCC would design ways that firms can meet financial inclusion obligations and that the OCC was preparing a written policy for applications.

Solomon also emphasized that the agency is very conscious of the need to avoid regulatory gaps with respect to the entities that the agency charters. To avoid gaps, as they do with uninsured national trust banks, they would condition approval on compliance with an operating agreement that spells out particular conditions that must be met and would be subject to supervision and enforcement.

ABA has expressed support for the OCC’s approach to innovation, provided that any charters granted to fintech firms maintain a level playing field -- with high standards for compliance and consumer protection -- and do not breach the line separating banking and commerce. ABA will formally comment on the proposed chartering process next week.



HUD Nominee Carson to Take ‘Holistic’ Approach to Housing January 13, 2017

Testifying before the Senate Banking Committee yesterday, Housing and Urban Development secretary nominee Benjamin Carson said he would take a “holistic” approach to affordable housing if confirmed, noting that many factors -- such as healthcare and education -- must be considered when tackling issues affecting low-income Americans.

During the hearing, Carson affirmed his preference for de-regulation and his desire to bring efficiency to the department, but promised to advocate for HUD’s budget as he works to craft “a world-class plan on housing in this country.” One of his first actions if confirmed as HUD secretary would be to embark on a “listening tour” to seek feedback from regional HUD officials and consumers to understand the issues facing individuals and communities across the nation, and determine the effectiveness of various HUD initiatives, he said.

When talk turned to Fannie Mae and Freddie Mac, Carson noted that “we do have to have a mechanism, a backstop of some type” in place, but expressed concern over excessive taxpayer liability, adding that he supports introducing more private entities into the market to reduce the exposure of taxpayers to risk. He also said that the rental assistance programs offered by HUD were “essential,” and that he would not move to abolish those programs without having an alternative in place.



ABA Backs Mnuchin Nomination in Letter to Finance January 13, 2017

ABA expressed support for the nomination of Stephen Mnuchin as Treasury secretary in a letter to Senate Finance Committee leaders yesterday. The letter was sent in anticipation of a soon-to-be-scheduled confirmation hearing on Mnuchin’s nomination.

“Among the many responsibilities of the Treasury Secretary, foremost is the Secretary’s responsibility to encourage and promote the economic strength of the United States,” ABA Chairman Dorothy Savarese and President and CEO Rob Nichols wrote. “[Mnuchin’s] public statements as well as his career in finance bring us optimism with regard to the outlook for public policies focused on growth and prosperity,” they said.

One such statement came in a Nov. 30 interview on CNBC during which both Mnuchin and Commerce Secretary nominee Wilbur Ross discussed Dodd-Frank Act reforms and his background as a banker.

“We've been in the business of regional banking and we understand what it is to make loans. That's the engine of growth to small- and medium-sized businesses,” Mnuchin said. “So, as we look at Dodd-Frank, the number one problem with Dodd-Frank is it's way too complicated and cuts back lending. So we want to strip back parts of Dodd-Frank that prevent banks from lending. And that will be the number one priority on the regulatory side.”

Mnuchin added the need to revisit the Volcker Rule, which he called “too complicated.” “The number one priority is going to be make sure that banks lend,” he concluded. Read the letter on Mnuchin.



Hill Named to House Financial Services Committee Leadership Team January 9, 2017

WASHINGTON – House Financial Services Committee Chairman Jeb Hensarling (TX-05) has announced that Congressman French Hill (AR-02) has been selected to the Committee’s leadership team to serve as Whip.

“Over the past two years, Congressman Hill has proven to be a tremendously valuable asset to the Committee, and I am looking forward to working alongside him in his new capacity as Committee Whip,” said Chairman Hensarling. “Congressman Hill will play a vital role in helping the Committee craft proposals to increase access to capital, grow the American economy and help create jobs.”

For the two decades prior to serving in the House of Representatives, Congressman Hill was actively engaged in the Arkansas business community as a commercial banker and investment manager. He was founder, chairman, and chief executive officer of Delta Trust & Banking Corp., which was headquartered in Little Rock.

Congressman Hill also served as a senior official in the administration of President George H.W. Bush. President Bush appointed Hill to be Executive Secretary to the President’s Economic Policy Council (EPC), where he coordinated all White House economic policy. From 1989-1991, he was Deputy Assistant Secretary of the Treasury for Corporate Finance.

In the 114th Congress, Congressman Hill served on two subcommittees of the House Committee on Financial Services: the Subcommittee on Capital Markets and Government Sponsored Enterprises and the Subcommittee on Oversight and Investigations. Congressman Hill was also a member of the Committee’s Task Force to Investigate Terrorism Financing.

“In the coming Congress, we have an opportunity to build off the good work the Committee has done under its first four years of Chairman Hensarling’s leadership,” said Congressman Hill. “I am excited to be able to continue to use my three decades of work in banking, finance, and public policy to help the Committee reverse the negative effects of Dodd-Frank and give American families and businesses of all sizes the opportunity to once again flourish.”



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FS-ISAC Security Update

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