Happy Holidays everyone! I’m gonna cut to the chase because for a non-election year, things have been more than a little wild in Washington, DC as it relates to community banking.
Let me start with the circus we call the Consumer Financial Protection Bureau (CFPB). Richard Cordray finally decided to step away from his role as director of the agency prior to his term being up apparently to run for Governor of Ohio. But, not before he flung one last arrow to the current administration. In an 11th hour move on the Friday after Thanksgiving (when generally nothing happens!), Cordray left office abruptly and placed a staffer in charge who was seemingly unfit by any measure of experience with the agency, the law or financial service related issues. The move seemed typical of the former director’s mantra that he answered to no one.
Hours later, President Trump appointed Mick Mulvaney, director of the Office of Management and Budget, as the acting director of the CFPB. Chaos ensued, particularly within the agency. Thankfully, not for very long as Federal District Judge Tim Kelly blocked the moves by Cordray affirming that Mulvaney is now legally the acting director. Mulvaney has long been a critic of the CFPB’s maverick independence and will be good for community banking.
At the same time, there’s hope for community bank regulatory relief! Even after Senate Banking Committee Ranking Member Brown divorced himself of negotiations with Chairman Crapo on a proposal, other moderate Democrats (both on and off the committee), including Senator Heitkamp, worked in bipartisan fashion to help craft a regulatory relief bill that is meaningful for community banks.
For banks under $10 billion, QM relief for portfolio mortgages, escrow requirement exemptions, capital simplification and Volcker Rule exemptions reside in the provisions. For banks at or below $5 billion, the bill calls for short form call reports in the 1st and 3rd quarters. For banks $3 billion or less, the Fed’s Small Bank Holding Company Policy Statement threshold is increased from $1 billion to $3 billion. For all banks, the deal holds some TRID relief by removing the 3 day waiting period when a 2nd offer of credit is extended with a lower APR, certain reciprocal deposits will not be considered brokered deposits, and exempts banks that originate fewer than 500 closed-end mortgages or open-end lines of credit from the dreaded new HMDA data fields that are on the near horizon.
A mark-up of the bill is scheduled for next week in the Senate. The House has said they will take up the bill when it comes to them. But it’s unlikely that anything will get enacted until after the primary deadline filings in spring. Politics again!
Have a wonderful and safe holiday season!