In this era of rapid regulatory updates, intense politicization, and changing requirements, you may feel like you're not sure who the major players are, and what we can expect in the future. If that's the case, this blog post will help.
There are so many changes happening in compliance right now, it can be hard to keep them all straight. CRA modernization? A Dodd-Frank roll-back and HMDA exceptions? Changing regulatory leadership? And this is on top of all of the other daily challenges, like making sure you understand small business lending and whether you have disparities in your lending.
As you try to triangulate what's next in compliance, one factor may unfortunately be missing: who is leading the conversation?
In this post, you'll learn the names and faces of the people leading the banking compliance industry in 2018, and a little about their priorities.
Let's jump right in, starting with the agency leaders...
Randal Quarles - Vice Chairman for Banking Supervision, Board of Governors of the Federal Reserve System
As the Vice Chairman for Banking Supervision, Randal Quarles is an important voice for the Federal Reserve System and the banking industry. He has served on the Board since 2017, when he was appointed by President Trump.
He has actively spoken about the need for CRA modernization and small business access to credit, as well as raising capital requirements, the need for financial stability, and changing the Volker Rule.
He is seen as a prudent and intentional pro-growth regulator, and we expect that he will be a leading force in efforts to update a variety of existing regulations.
"Our economy is stronger when everyone has a chance to contribute fully and share in our national prosperity. And I personally believe that financial inclusion helps us realize a founding notion of our country--that this is a place where opportunity, innovation, and productivity are encouraged and rewarded."
- Randal Quarles, Vice Chairman for Banking Supervision of the FRB, in a speech
Lael Brainard - Member, Board of Governors of the Federal Reserve System
Another Federal Reserve Board member, Lael Brainard was appointed to the Board in 2014 by then-President Obama. She has had a long career in politics, serving since the mid-90s, always with a focus on finance.
Dr. Brainard is very active in the discussion around CRA modernization. She has released two different statements - one in May 2018 and the other in April 2018 - about the importance of updating the Community Reinvestment Act, and of keeping banks and the communities they serve at the center of the conversation.
Her ideas about how to update and modernize the CRA are well worth review, and are in line with other leaders in the space. Her priority seems to be ensuring that banks are empowered to truly serve their communities, by updating Assessment Area definitions and clarifying what can be considered for Community Development credit.
"The time is ripe to modernize the CRA regulations to make them more effective in making credit available in low- and moderate-income areas at a time when technological and structural changes in the banking industry allow banks to serve customers outside of the areas with branches that have traditionally defined a bank's community."
- Lael Brainard, Board of Governors of the Federal Reserve System, in a speech
Joseph Otting - Comptroller of the Currency, OCC
Joseph Otting was appointed by President Trump and became the Comptroller of the Currency of the OCC in late 2017. Before joining the OCC, he had a long career leading banks. Most recently, he was the President of CIT Bank. As a former banker, he has made it very clear that he is a supporter of banks and understands the challenges faced.
Broadly speaking, Otting has expressed the desire to reduce the burdens of regulation, from easing BSA requirements and the Volker Rule to decentralizing bank supervision.
Again, CRA modernization is a particular area of focus for Otting. He does not appear to be approaching CRA conversations from a fairness/discrimination/access to credit perspective; rather, his priority seems to be making the regulation easier for bankers and examiners to understand and comply with.
Grovetta Gardineer - Senior Deputy Comptroller for Compliance and Community Affairs, OCC
Another OCC leader, Grovetta Gardineer became the Senior Deputy Comptroller for Compliance and Community Affairs in 2016. She is also a member of the OCC's Executive Committee and Committee on Bank Supervision and is the Chair of the NeighborWorks® America Board of Directors. A career regulator, she has served at the OCC since 2010, and before that, at the OTS, and the FDIC.
She is responsible for overseeing the agency's compliance exams and CRA examination program. With these responsibilities, it will come as no surprise that she is also a leading voice in the CRA modernization conversation. We anticipate that she will be approaching CRA conversations with the goal of improving access to credit and affordable housing front-and-center.
"Twenty-three years is a long time to go without making any changes in a regulation that has this type of grounding in economic development and meeting financial needs. In the unlikely event that we don’t open this up again for another 23 years, we need to think not just about today, but we need to be looking toward the future.”
- Grovetta Gardineer, Senior Deputy Comptroller for Compliance and Community Affairs, OCC
Steven T. Mnuchin - Secretary, United States Department of the Treasury
Steve Mnuchin is a former investment banker who was appointed by President Trump to be the Secretary of the Treasury in 2017. He is seen to be pro-corporation, as his policy initiatives have been primarily focused on tax reform and reducing the corporate tax rate. However, he is also involved in the CRA discussions.
Earlier this year, Treasury released a brief outlining their recommendations for updating the Community Reinvestment Act. It was comprehensive, non-partisan, and considered. It was also one of the earliest documents to provide real details on what a modernized CRA might look like; if you're looking for an introduction to CRA modernization, it's a good place to start.
“Forty years since the passage of CRA, it is time for modernization to fit today’s banking landscape and community needs.”
- Steve Mnuchin, United States Secretary of the Treasury
Mick Mulvaney - Acting Director, CFPB
Amid some controversy, Mick Mulvaney became the Acting Director of the CFPB in 2017. He is also currently serving as the Director of the Office of Management and Budget.
Mulvaney is no great fan of the Bureau; in the past, he has expressed a desire to "get rid of it." In his time as leader, the Bureau has not brought any enforcement actions and dropped cases against payday lenders, but they have finalized a few settlements. In addition, Mulvaney has sought no funding for the second quarter, disbanded multiple advisory and watchdog Boards, launched a review of all of the Bureau's policies, and updated the mission statement to include deregulation.
He has also launched a slight re-brand of the agency. The Bureau is now sometimes styled as the Bureau for Consumer Financial Protection or BCFP (although the logo has stayed the same), and a new seal was released in March.
Although the Bureau only supervises the largest banks, for years they led the compliance conversation nationwide. This is in part because they had a robust, data-driven approach to enforcement, and in part because their media presence was very strong. The change in approach and in focus from former Director Rich Cordray to Acting Director Mulvaney is a stark one.
Into the space left by the Bureau have stepped the other federal and state regulators, and we are expecting this trend to continue.
Kathleen Kraninger - Nominee to be the Director of the CFPB
Kathleen Kraninger is currently serving as an official in the Office of Management and Budget (OMB), overseeing budgets for seven departments including the Department of Housing and Urban Development, Department of Homeland Security, and Department of Justice. Kraninger was recently nominated to be the new Director of the CFPB by President Trump. Since her nomination, some controversy is swirling due to her potential involvement in the decision to implement the zero-tolerance policy at the border that split children from their parents.
Little is known about how she would approach leading the CFPB, as she has little financial policy experience. However, she may have the management experience and fresh perspective needed to achieve President Trump and Acting Director Mulvaney's shared goal of shrinking the agency.
As her approval process proceeds, we're expecting a tough political battle. Senator Elizabeth Warren (D-MA), who was responsible in large part for establishing the CFPB, has expressed some concerns over the nomination and indicated that she would move to block her appointment until she can learn more about Kraninger.
Rob Nichols - President and CEO, American Bankers Association
Rob Nichols is the President and CEO of the American Bankers Association (ABA), and one of the leading supporters of American bankers to Congress. He has served in this role at the ABA since 2015, and is seen as one of the most influential banking lobbyists in the country.
He is supportive of the recently passed Economic Growth, Regulatory Relief, and Consumer Protection Act (S.2155), which was designed to reduce the burden of Dodd-Frank on community and regional financial institutions. He is also a leading advocate for CRA modernization and other legislative efforts to help banks grow, innovate, and better serve their communities.
"There are many factors beyond the Dodd-Frank Act that have caused the closure and consolidation of banks, but the sheer weight of more than 24,000 pages of proposed and final rules of this law has become a key consideration for many institutions in determining their future. That is why ABA is calling on the Administration, Congress and bank regulatory agencies to work in a bipartisan manner to pursue legislative changes that will keep financial institutions strong and capable of fulfilling their mission."
- Rob Nichols, President and CEO, American Bankers Association, in a letter to Congress
Aaron Glantz, Senior Reporter at Reveal
There are plenty of excellent journalists who could have been included on this list, but in terms of recent impact, Aaron Glantz is almost unmatched. His in-depth reporting on the impact of Redlining for Reveal sparked dozens of Congressional hearings, and hundreds of spin-off stories.
Reading his stories gives you a sense for the people and communities at the heart of this conversation, and the way that consumers may be thinking about this issue and other access-to-credit concerns. It's also a good reminder of the strength of the media, and the importance of having a good PR and media strategy.
TRUPOINT Partners: Hopefully, this post helps you have a better sense of who is leading the compliance conversation. With these insights, you'll be in a better position to predict and respond to changes in the industry.
As you work to improve your compliance, please know that TRUPOINT is here to help. If you'd like to learn more about how we can help you improve Fair Lending, HMDA, CRA, Redlining, or BSA/AML compliance management, or uncover additional profitability hiding in your branch network, please get in touch.
In the meantime, check out this free HMDA Compliance Checklist!