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IBA E-News 11-21-18



New Congressional Leadership Takes Shape

Members of Congress have begun deciding on congressional leaders for the 116th Congress. Senate Republicans elected Mitch McConnell of Kentucky to continue serving as majority leader and John Thune of South Dakota to replace Jon Cornyn of Texas as majority whip.
Among Democrats, Chuck Schumer of New York and Dick Durbin of Illinois will continue as minority leader and whip, respectively.
In the House, Republicans elected Rep. Kevin McCarthy of California for minority leader over Rep. Jim Jordan of Ohio. House Democrats continue debating their leadership options ahead of a vote later this month.

Crapo Expected to Remain Banking Chair

Sen. Mike Crapo (R-Idaho) is expected to remain as chairman of the Senate Banking Committee after Sen. Chuck Grassley (R-Iowa) announced he’ll seek to chair the Senate Finance Committee. Crapo, who would have been in line to chair the Finance Committee had Grassley opted for the Judiciary Committee, championed the major regulatory relief law S. 2155 enacted this year. Crapo has said he will focus on data security and privacy issues during the next Congress.

FDIC Requests Info on Small-Dollar Lending

The Federal Deposit Insurance Corp. is seeking public comment on small-dollar lending by FDIC-supervised institutions. The agency is requesting feedback on consumer demand for small-dollar credit, products currently offered by banks, and what the FDIC can do to better enable banks to offer responsible small-dollar loans to meet demand. Comments are due within 60 days.

Read more from FDIC.

Bowman Confirmed to Community Bank Seat on Federal Reserve Board

The Senate confirmed Michelle Bowman to fill the designated community bank seat on the Federal Reserve Board of Governors. Bowman -- a fifth-generation banker who held a senior role at Farmers and Drovers Bank in Council Grove, Kan., for more than six years prior to assuming her current job as Kansas Bank Commissioner in 2017 -- will be the first person to fill the community bank seat since it was created by Congress during the Obama administration.

Fed’s Quarles Highlights Banking System Health, Fed’s Transparency Initiatives

Testifying before the House Financial Services Committee on Nov. 14, Federal Reserve Vice Chairman for Supervision Randal Quarles notes that “the banking sector remains in strong condition…with lending growth, fewer nonperforming loans and strong overall profitability.” He added that 99 percent of all regional and community banks are currently considered well capitalized.

Quarles also highlighted recent actions the Fed has taken to increase transparency and efficiency of its supervisory operations, including improving the supervisory ratings system for large banks, issuing a joint interagency statement clarifying the role of regulatory guidance, and expanding exam cycles and reducing reporting requirements for community banks. Noting that “our work to improve regulatory efficiency is not done,” Quarles said he expects to see progress in the coming months on a community bank leverage ratio proposal in conjunction with the FDIC and the OCC.

Read Quarles' testimony.

FDIC’s McWilliams Previews Role of Office of Innovation

FDIC Chairman Jelena McWilliams offered additional insight into what an Office of Innovation would look like when up and running. In remarks at a fintech event hosted by the Federal Reserve Bank of Philadelphia, McWilliams said FDIC staff will focus specifically on how the agency can provide a safe environment for innovation that is already ongoing; how it can promote technological development at community banks with limited resources; what policy changes are needed to support financial services innovation; and how the FDIC can transform itself to enhance financial system stability, ensure consumer protection and reduce regulatory burden.

“[I]nnovation can introduce safe and reliable products and services that will bring more Americans into the banking system,” McWilliams said. “It is my goal that the FDIC lay the foundation for this next chapter of banking, encouraging innovation that meets consumer demand, promotes healthy and successful banks, and reduces compliance burdens.”

Read McWilliams' remarks.

Fed Approves Amendments Simplifying Reg J

The Federal Reserve Board approved final amendments to Reg J to better align the rights and obligations of parties with the Board's 2017 amendments to Regulation CC, given the evolution of the nation's check collection system to a largely electronic system. The amendments also clarify and simplify provisions of Regulation J, remove obsolete provisions, and improve consistency between Regulation J and Regulation CC.

Read more.