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CBAI Thanks Congressman Hultgren for Addressing OCC’s Proposed Fintech Charters

In a March 10, 2017, letter to Comptroller Thomas Curry, 34 members of the House Financial Services Committee (HFSC) wrote the OCC regarding its intention to issue special purpose national banking charters to fintech companies without providing details of the charter or an opportunity for comment. CBAI thanks Illinois Congressman Randy Hultgren (R-14th) for taking a leadership position in examining and questioning the OCC’s fintech charter initiative. Read HFSC Comment Letter. Read CBAI Comment Letter.

The HFSC letter stated, “In light of the importance and complexity of the issue, the OCC should not rush this decision. The OCC should provide a full and fair opportunity for stakeholders to see the details for the special charter, solicit feedback, and allow the incoming Comptroller to assess the special purpose charter.” The letter notes that Comptroller Curry’s term of service will expire in April of 2017. It concludes with a warning, “If the OCC proceeds in haste to create a new policy for ‘fintech’ charters … please be aware that we will work with our colleagues to ensure that Congress will examine the OCC’s actions and, if appropriate, overturn them.

”In a January 13, 2017 comment letter to the OCC, CBAI expressed concerns about the OCC issuing special purpose fintech charters and recommended that the OCC:

  • clearly demonstrate it is fully prepared to assume the many new responsibilities of regulating fintechs;
  • resolve the issue of the legality of the OCC issuing fintech charters which has been raised by the Conference of State Bank Supervisors (CSBS);
  • include the other national banking regulators and the CSBS in formal outreach meetings regarding fintechs and joint rulemaking which will be available for public comment;
  • and to not regulate fintechs through operating agreements which lack the transparency and consistency of formal rulemaking.

The comment letter concluded, “CBAI urges the OCC to guarantee that Fintechs will comply with all banking laws, rules and regulations, and be held to the same rigorous safety and soundness, and supervision and regulation standards currently being required of community banks and bank holding companies. These standards must include but not be limited to frequent examination, CRA compliance, compliance with laws to protect consumers, regulatory actions for noncompliance, sanctions and prohibitions, and personal liability for Fintech directors and officers. Fintechs cannot have the advantages of being a national bank with limited requirements, regulations and liability."

CBAI again thanks Congressman Hultgren for his leadership on this issue and stands prepared to work with Congress should action be required to ensure that fintech charters do not gain a regulatory advantage over community banks.

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CBAI Urges FDIC to Support Chartering De Novo Community Banks

In a February 17, 2017 comment letter to the Federal Deposit Insurance Corporation (FDIC) regarding its proposed new Application Handbook for newly chartered banks, CBAI expressed support for Chairman Martin Gruenberg’s recent statement that, “Newly chartered (de novo) community banks are vitally important to maintaining a strong, growing, evolving and vibrant banking profession.”

CBAI stated that the proposed FDIC Application Handbook contains a useful roadmap for those interested in deposit insurance for a proposed new bank charter. CBAI noted, however, that the absence of a useful roadmap was not the barrier to obtaining deposit insurance and the dearth of de novo banks during the past seven years. The lack of new charters was apparently the result of a decision by the FDIC, despite a formal position to the contrary, to require new bank charter applicants to prove they were virtually failure-proof rather than just having a reasonable likelihood of succeeding.

An obvious example was a requirement that extended the de novo period to seven years for examinations, capital maintenance, and other requirements. Last year the FDIC reduced the requirement to three years which, when combined with the Chairman’s recent comments and additional resources (including the Application Handbook), hopefully signals a sincere change in the position of the FDIC towards approving applications for deposit insurance for de novo charters.

CBAI looks forward to a resumption of many new banks being chartered each year to help maintain the community banking profession. Read CBAI Comment Letter to the FDIC.

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CBAI Co-Hosts "Increasing Access to Affordable Mortgage Credit Workshop"

On January 26, 2017, CBAI was pleased to partner with the Federal Deposit Insurance Corporation, Federal Reserve Bank of Chicago, and the Office of Comptroller of the FDICCurrency to co-host the "Increasing Access to Affordable Mortgage Credit Workshop" at the FDIC offices in Chicago.

This day-long workshop provided information on affordable mortgage and refinancing products that may be helpful in meeting the needs of low-to-moderate income and other underserved consumers. Participants learned about federal programs and other resources that can enhance or expand mortgage related lending activities in their local markets. The session highlighted effective ways for banks to make prudently underwritten and sustainable mortgage loans. The event also examined barriers that exist in providing mortgage credit and potential partnership opportunities.

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The workshop was attended by more than 50 bankers and other participants. The FDIC’s Glenn Brewer (Community Affairs Specialist) coordinated the event, and Anthony Lowe (FDIC Regional Director) and David Schroeder (CBAI Vice President Federal Government Relations) provided welcome remarks and comments.

These organizations presented at the Workshop:

  • Federal Deposit Insurance Corporation
  • Federal Reserve Bank of Chicago
  • Office of the Comptroller of the Currency
  • Fannie Mae
  • Freddie Mac
  • Federal Home Loan Bank of Chicago
  • U.S. Department of Housing and Urban Development
  • Illinois Housing Development Authority
  • Chicago Urban League
  • Spanish Coalition for Housing
  • Neighborhood Housing Services of Chicago

The topics covered at the Workshop included:

  • Affordable Mortgage Trends
  • Leveraging State and Regional Resources for Affordable Mortgage Credit
  • FDIC Affordable Mortgage Resources
  • Opportunities for Increasing Access to Affordable Mortgage Credit
  • Using Fannie Mae & Freddie Mac to Support Access to Affordable Mortgage Credit
  • Leveraging Housing Counseling Services to Increase Affordable Mortgage Lending
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CBAI encourages you to visit the FDIC's Community Affairs' Affordable Mortgage Lending Center website.

CBAI appreciated the opportunity to partner in offering this workshop so that participants could learn about affordable mortgages and refinancing products that may be helpful in meeting the needs of low and moderate income customers and underserved communities.

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Hultgren Named Co-Chair of Congressional FinTech and Payments Caucus

Congressman Hultgren has also been named a Co-Chair of the Congressional FinTech and Payments Caucus, an informal group of members dedicated to innovation, growth and education in the emerging fintech arena. The Caucus serves as a resource for members and their staffs to learn how fintech companies are changing the way financial services are delivered to consumers and businesses.

CBAI is keenly interested in fintechs and their impact on the community banking profession. Last week CBAI submitted a comment letter to the OCC on the Agency’s proposal to move forward with considering applications for national banking charters for fintech companies. CBAI’s believes fintechs must compete fairly with community banks and that fintechs approved for national banking charters must not have all of the advantages of being a national bank with limited requirements, regulations, and liability.

CBAI congratulated Congressman Hultgren on being named Co-Chair of the FinTech and Payments Caucus and looks forward to working with him on fintech issues as they intersect with the interests and concerns of community banks.

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CBAI Urges OCC to Delay Moving Forward in Chartering New Fintech Companies

In a January 13, 2017 comment letter, CBAI urged the Office of Comptroller of the Currency (OCC) to delay moving forward with chartering new fintech companies until a number of concerns have been addressed and resolved. Read Comment Letter.

Before chartering fintechs, the OCC needs to demonstrate that it has the requisite expertise and is fully prepared to assume the many new responsibilitiesthat comes with a new charter. There are many related questions that must be answered, not the least of which is who will bear the cost of getting the OCC fully prepared to assume these new responsibilities? Community banks certainly do not want to, nor should they be required to, bear any of those costs.

The legal authority permitting the OCC to charter fintechs has been challenged by the Conference of State Bank Supervisors, on behalf of state banking regulators, and Senator Sherrod Brown (D-OH), the Ranking Member of Senate Banking Committee. The legal authority charter fintechs must be indisputably established before the OCC moves forward with considering applications for fintechs.

Despite being disruptive, Fintechs have the potential to be transformative for the entire financial service profession. A single regulator acting unilaterally in chartering, examining, supervising and regulating fintechs does not appear to be in the best interests of the profession, consumers and the economy. The cooperation and coordination between all of the national and state banking regulators is needed on areas of responsibility so that the collective expertise and unique perspectives of all agencies can be brought to bear on these important issues.

Unfortunately, by the very nature of their limited-purpose business models, fintechs already enjoy a competitive advantage over community banks. This competitive advantage, however, must not be exacerbated through lack of regulation and fintechs; must comply with all banking laws, rules and regulations, regardless of the limited scope of their activities. Fintechs cannot have the advantages of a national bank charter with limited requirements, regulations and liability. Read Comment Letter.