Jonathan and I convened after lunch (a delicious assortment of Taco’s) to record Episode 4 of The Bank Account. We focused on The Financial CHOICE Act as a potential roadmap for the potential bank regulatory reforms under the Trump administration.
The Financial CHOICE Act represents the the Republican’s 2016 proposal to reform the financial regulatory system. While Republican’s regulatory reforms may vary next year based on the change in administration (and the process of going from a proposal to enacted legislation is likely to create further changes), the Financial CHOICE Act represents a good starting place in looking at potential upcoming reforms. In this episode, Jonathan and I discuss the following aspects of the Financial CHOICE Act:
- A Dodd-Frank Regulatory “Off Ramp” for Well-Capitalized Institutions;
- CFPB Reforms;
- Durbin Amendment and Volcker Rule Repeal;
- Proposed Civil Procedure Changes; and
- Community Bank Relief.
If you missed it as you returned for seconds (or thirds) during Thanksgiving week, Episode 4 of The Bank Account, Data Dilemma, is now online.
In this episode, Jonathan and Ken Achenbach discuss the Consumer Financial Protection Bureau, with a focus on the CFPB’s recent announcement that it would be investigating data sharing of financial records and the CFPB’s decision to appeal the ruling that the CFPB director may be removed without cause by the President.
As mentioned by Jonathan, I’m absent from last week’s podcast I was cruising the Caribbean on the Disney Dream. Unlike Jonathan, I’m certain that I would rather be cruising than recording a podcast… and my kids are even more certain! I’m sure if we were to ask Jonathan’s kids, they would have preferred a Disney cruise to Episode 4.
We took a week off to allow the election results settle in a little bit, but Episode 3 of The Bank Account is now online.
In this episode, Jonathan and I discuss the effects the Trump rally has had on announced M&A transactions, a recent 363 bankruptcy auction whereby Home Bancshares emerged the winner of Bank of Commerce, and questions that anyone considering starting a de novo bank should be prepared to answer.
Two recent blog posts are also mentioned in Episode 3:
- Jonathan’s article on 12 questions you need to answer before starting a new bank; and
- Dan Wheeler’s bold regulatory predictions on life under a Trump administration.
Eight bold regulatory predictions on the direction of U.S. Banking and Fintech regulation in light of the election results.
1. The era of “outside the law” Federal regulation is over. Critics of the CFPB (exclusively Republicans) have criticized and challenged the agency’s structure and tactics. These challenges include criticism of the agency’s broad jurisdiction and rulemaking power as an unconstitutional delegation by Congress of its legislative power. Members of Congress and private litigants have assailed the CFPB’s reliance on enforcement actions instead of true rulemaking as undercutting due process and basic fairness. Republicans have been united in believing that the agency’s existence and actions violated the Constitution, the agency’s grant of power under Dodd-Frank and the Administrative Procedures Act. Increasingly, the courts have dealt the agency significant setbacks. This author believes that Director Cordray only persisted in his aggressive pursuit of policy goals because he believed that pursuit was blessed by the Obama Administration and the Democratic Party. Whatever one thinks of President-Elect Trump and his incoming administration, we can be certain that it will not support or defend an aggressive pursuit of policy goals even when that pursuit is perceived to exceed the scope of the law. If a CFPB official decides to pursue such an enforcement action will be doing so without political cover. As a result, I believe the CFPB will not bring enforcement actions unless the law and the facts clearly support that decision. This is a major change of direction for the agency. Once the agency is limited to strictly enforcing the law and promulgating only regulations that comply with the Administrative Procedures Act, it will be able to obtain many fewer settlements (and for much lower amounts) than it was able to do before when it enforced standards that it essentially made up on the spot.
2. Director Cordray will either resign or be fired by the President. The extent of the anger and resentment towards Director Cordray by Republicans in Congress cannot be overstated. I suspect President Trump does not have a strong personal opinion on the matter, but his advisors are close to Congressional leaders and I think there is zero chance that Republicans will not give the Director what they see as his long-overdue comeuppance. A recent District Court opinion supports the Constitutional authority of the President to fire the Director, but I think President Trump will not hesitate to articulate a “for cause” basis to fire the Director under Dodd-Frank if the Director were to contest the President’s power to fire him at will.
Managing third party vendor relationships has always been an important function in banks. More recently it has become a hot topic for state and federal financial bank regulators.
As a result, we have compiled our Seven Part Guide on reviewing third party vendor service contracts into one article. A checklist for reviewing third party vendor contracts is included in the article, and also available separately.
The analysis covers typical elements that should be found in any third party vendor contract, including provisions on the nature of services to be provided, the location where the word is to be performed, breach and termination, as well as provisions related to the potential outbreak of zombies.
From time to time we hear from bank senior management that their board doesn’t seem engaged, or that they can’t get a sustained conversation out of their board. Instead, board meetings consist of routine review of management reports, with motions, seconds, and unanimous adoptions of management recommendations without any meaningful discussion. Years of bank board meetings can go by without a single dissenting vote recorded in the bank’s board minutes. Regulators may being to question, perhaps correctly, that the board has merely become a rubber stamp for management, and that the board is merely “going through the motions” at each board meeting.
Over time, we have found one topic for which no board member can remain silent, and everyone (and I mean everyone) has an opinion.
What color should the bank’s new logo be?
Branch lobby carpet colors can also be quite effective, as can capitalization (grammar, not balance sheet, i.e. Fintech vs. FinTech), a change in mascot or marketing gimmick, or minor tweaks to branch hours.
With paths recently being cleared from a regulatory perspective and the consolidation in the market, we’re hoping to see a pickup in de novo applications (and one that is far greater than the five applications the FDIC has indicated it has received for all of 2015). Because of the recent history of difficulty starting new banks and the extremely limited number of applications this year, we imagine many of the qualified candidates are hesitant to take the first steps. We’d like to make the process easier for you.
In his article, “Thinking of Starting a New Bank? Answer These Questions First,” which was published in The Banking Law Journal today, my partner, Jonathan Hightower (@hightowerbanks), covers twelve questions that organizing groups and individuals should answer as they begin a venture toward a de novo bank.
Please call any member of our Financial Institutions team if you’d like to start talking about the prospect of organizing a new bank, or if your further down the road and would like our guidance with your application – we’re happy to help.
They said we’d never get this far, but Episode 2 of The Bank Account is now online.
In this episode, Jonathan and I are joined by colleague Ken Achenbach to discuss the recent jury verdict in the FDIC vs. Loudermilk case and what impact it should have on community bank boards and committees. We also discuss how board performance can be improved by focusing on strategic rather than individual management decisions.
Prefer getting your banking law news via podcasts? Need something to make your commute more informative? Looking for a way to spend more time (at no cost!) with Jonathan Hightower or me? Wondering what horror will be introduced to the world on Halloween 2016?
The inaugural episode of The Bank Account is online!
Please click on the link to subscribe to the feed on iTunes, Android, Email or MyCast. It is also in the review process for being added to the iTunes and Google Play searchable podcast directories. We’re also working on a home for it on BryanCave.com. Stay tuned (pun intended) for updates.
In episode 1, Jonathan and I summarize the bank M&A market for 2016, along with prognostications for what we believe we’ll see as we head into 2017.
Banks and credit unions are among the most recent targets of a wave of demand letters and lawsuits alleging violation of the Americans With Disabilities Act of 1990 (the “ADA”). The most common allegations concern inaccessible ATMs and websites, despite the fact that the ADA and its implementing regulations do not yet address website accessibility.
Title III of the ADA prohibits discrimination against individuals “on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages or accommodations of any place of public accommodation,” 42 U.S.C. § 12182(a), which includes banks and credit unions.
In 2010, the federal regulations implementing the ADA were revised, and expressly addressed ATMs for the first time. Banks and credit unions were given until March 2012 to become fully compliant, and most litigation targeted institutions that failed to comply by that date.