IBA E-News 5-24-19
STATE GOVERNMENT RELATIONS
IBA Regional Meeting Dates
Don’t miss out on this summer’s IBA regional meetings! Make plans to join your banking peers and local lawmakers for lunch and conversation at one of eight regional meetings. The IBA is delighted to host this important grassroots advocacy series once again in the cities of Bloomington (July 31), Evansville (June 3), Fort Wayne (July 9), Indianapolis (July 10), West Lafayette (June 11), Merrillville (July 18), New Albany (July 29) and Richmond (June 19). For more information click here or contact Michelle Long at 317-333-7148.
Topics assigned for study include “Revisions to the Uniform Consumer Credit Code,” which will be a topic of focus for the IBA. Click to view a complete list of study topics for consideration this summer.
FEDERAL GOVERNMENT RELATIONS
This month’s court decision allowing New York’s financial regulator to proceed with its legal challenge to the Office of the Comptroller of the Currency’s special-purpose fintech charter is inhibiting applications for the charter, agency chief Joseph Otting told American Banker.
In a May 15 interview with the publication, Otting said he no longer expects to have a fintech firm formally apply during the second quarter of this year.
On May 2, U.S. District Court Judge Victor Marrero said the OCC failed to rebut the state agency’s claim that the charter poses a threat to its ability to establish its own laws and regulations. A separate lawsuit against the OCC by the Conference of State Bank Supervisors is also pending.
Legislation to raise loan limits on USDA farm loans was recently introduced by Rep. Mike Bost (R-Ill.). The bipartisan Beginning Agriculturist Lifetime Employment Act would initially raise limits to $2.5 million and increase them incrementally to $3.5 million, with levels above $2.5 million slightly reducing the guarantee percentage. The current farm bill limit for USDA guaranteed loans is $1.75 million.
S. 2155 Rule Changes to Be Done by Year-End, Regulators Say
The heads of the banking agencies told lawmakers that they expect to have regulatory changes from the S. 2155 regulatory reform law implemented by year-end. Testifying last week before the House Financial Services Committee, Federal Reserve Vice Chairman for Supervision Randal Quarles said that the agencies are “on track to complete the implementing actions for S. 2155,” adding that they would “have the bulk of the implementing actions completed by the third quarter of this year, and all of them completed by the end of this year.”
Items still outstanding include a final rule on the treatment of high-volatility commercial real estate, a framework for applying enhanced prudential standards to banks with more than $100 billion in assets, an appraisal exemption for certain rural real-estate transactions and the finalization of the community bank leverage ratio.
Regulators also faced questions from several lawmakers who raised concerns about the current expected credit loss standard and its effect on credit availability. When asked about the extent to which the agencies themselves have evaluated the implications of CECL, FDIC Chairman Jelena McWilliams acknowledged that “it’s difficult, because there are so many different ways of implementing CECL.” As implementation moves forward, “our hope is that … we will be able to get the information from the first tranche of banks that are complying,” she said.
Comptroller of the Currency Joseph Otting added that regulators will be closely monitoring the regulatory capital effects of CECL over the three-year phase-in period, noting that “there’s no magic to that number – if there are other issues, we’ll be happy to consider that.” Added Quarles: “As we see the consequences of CECL during the phase-in period, we have the tools to respond on the capital side.”
Trump: Fannie, Freddie Conservatorship ‘Urgent Problem’
President Donald Trump said the conservatorship of Fannie Mae and Freddie Mac is a “pretty urgent problem.” Speaking last week to the National Association of Realtors in Washington, Trump said that taxpayers remain on the hook in case of another crisis and that his administration remains committed to reforming the housing-finance system.
Trump said his administration is working closely with Congress to develop a system that welcomes the private sector and competition, protects taxpayers, and preserves homeownership for future generations.
Trump’s remarks follow an appearance earlier in the week from new Federal Housing Finance Agency Director Mark Calabria, who said he is working with the departments of the Treasury and Housing and Urban Development to develop concrete plans for Fannie and Freddie by mid-summer.
Watch Trump’s speech.
Calabria: Housing-Finance ‘Status Quo is Over’
The housing-finance status quo is over, Federal Housing Finance Agency Director Mark Calabria said. Speaking in New York on Monday, Calabria said that while the new housing-finance model is to be determined, his arrival at the FHFA “should be seen as the opening bell for change.”
Calabria said reforming Fannie Mae and Freddie Mac should depend not on the calendar, but on their ability to raise private capital. He said an important step on that path is addressing the enterprises’ net-worth sweep, though a public offering and additional avenues might be needed to raise sufficient capital.
Calabria was sworn in as FHFA director last month, citing a “sense of urgency” to address vulnerabilities in the housing-finance system.