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To Deposit or Not to Deposit: a Question for Fintech Charters

December 7, 2016

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The fintech industry has justifiably greeted the OCC’s announcement of a national fintech charter with optimism. But one area where we have seen significant confusion is the possibility of the fintech charter being granted without deposit insurance, and the implications thereof.

Background.  On December 2, 2016, OCC Comptroller Thomas Curry announced that the OCC is planning to take applications from fintech companies wishing to obtain a special purpose national bank charter.  These banks would be national banks with the same privileges and obligations as traditional full-service national banks, but with specialized business plans and that may or may not choose to have deposit taking authority.

In his remarks, Comptroller Curry expressed his excitement about the great potential to expand financial inclusion and reach unbanked and underserved populations.  At the same time, clearly recognizing that there are some industry players that are worried about new sources of competition from fintech banks, or that these new banks might otherwise have unfair advantages, Curry took great pains to seek to alleviate those concerns in his remarks and in the OCC’s white paper on the proposal.

Curry acknowledged that it will be difficult for the agency to determine the requirements to charter a fintech bank because of the “diversity of approach” among fintech companies. He noted that, for example, a payments model would be different than a marketplace lending one. However, he said that the OCC is a “firm believer in tailored innovation” and has the existing framework to evaluate these issues in the chartering process.  Consistent with existing OCC regulation, the white paper states that a special purpose bank that conducts activities other than fiduciary activities must conduct at least one of the following three core banking functions: receiving deposits, paying checks, or lending money.

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Is the OCC on a Path to Greater Power?

December 6, 2016

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bankthinkIn a recent American Banker BankThink article, Partner Dan Wheeler explores the possibility that the OCC could rise in stature, while the other banking regulatory agencies fall out of favor.  By largely staying out of Congress’ scrutiny and taking a lead on fintech regulation, Dan argues that the OCC is well positioned to obtain greater chartering and regulatory responsibility under a Trump administration.

Some regulatory agencies, such as the Consumer Financial Protection Bureau and Federal Reserve Board, appear ripe for more congressional criticism and even curbs to their authority under the incoming Trump administration. But one may be in relatively good position to have its authority expanded: the Office of the Comptroller of the Currency.

The OCC has stayed under the radar and avoided the political backlash aimed at other regulators while also emerging as a new leader in the fast-growing area of fintech regulation. The OCC’s focus on innovation and its largely pristine image among lawmakers could lead to greater chartering authority and — if the CFPB continues to lose favor — more responsibility to oversee consumer rules.

Continue Reading Dan’s position, OCC Could Gain Power as Other Agencies Fall Out of Favor, on AmericanBanker.com.

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The Financial CHOICE Act

December 2, 2016

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The Financial CHOICE Act

December 2, 2016

Authored by: Robert Klingler

the-bank-accountJonathan and I convened after lunch (a delicious assortment of tacos) 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.

Please click to subscribe to the feed on iTunes, Android, Email or MyCast. It is also now available in the iTunes and Google Play searchable podcast directories.

You can also follow-us on Twitter for updates between podcast episodes @RobertKlingler and @hightowerbanks.

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Data Dilemma

November 28, 2016

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Data Dilemma

November 28, 2016

Authored by: Robert Klingler

the-bank-accountIf 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.

Please click on the link to subscribe to the feed on iTunes, Android, Email or MyCast. It is also now available in the iTunes and Google Play searchable podcast directories.

You can also follow-us on Twitter for updates between podcast episodes @RobertKlingler and @hightowerbanks.

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Trump Rally and De Novo Bank Questions

November 18, 2016

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the-bank-accountWe 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:

Please click on the link to subscribe to the feed on iTunes, Android, Email or MyCast. It is also now available in the iTunes and Google Play searchable podcast directories.

You can also follow-us on Twitter for updates between podcast episodes @RobertKlingler and @hightowerbanks.

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Engaging Your Board with a New Bank Logo

November 11, 2016

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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.

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12 Questions You Need to Answer Before Starting a New Bank

November 4, 2016

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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.

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Reimagining Your Board’s Function

November 3, 2016

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the-bank-accountThey 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.

Please click on the link to subscribe to the feed on iTunes, Android, Email or MyCast. It is also now available in the iTunes and Google Play searchable podcast directories.

You can also follow-us on Twitter for updates between podcast episodes @RobertKlingler and @hightowerbanks.

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Introducing The Bank Account

October 31, 2016

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Introducing The Bank Account

October 31, 2016

Authored by: Robert Klingler

the-bank-accountPrefer 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.

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Supreme Court to Address Whether Collection of Time-Barred Debts Violate FDCPA

October 14, 2016

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Our colleagues at The Bankruptcy Cave, Bryan Cave’s Bankruptcy & Restructuring Blog, recently published a blog post on the Supreme Court agreeing to to hear the issue of whether a debt collector that buys old, charged off debt which is beyond the statute of limitations violations the Fair Debt Collection practices Act when it files a proof of claim on that debt in a Chapter 13 bankruptcy (which they all do, as no one has an incentive to object to the claim, and they often collect far more on the debt than what they paid).

[On October 11, 2016,] the Supreme Court granted certiorari on an issue that (a) is pretty important in the world of consumer debt collection, and (b) makes some folks pretty darn furious. The issue is this:  if you file a proof of claim in a bankruptcy case, and you know such claim is barred by the applicable statute of limitations, are you committing a “misleading” or “unfair” practice under the Fair Debt Collection Practices Act (FDCPA)?

Read more on The Bankruptcy Cave for further insights on the competing interests at play, and how the Court may ultimately rule.  And if you haven’t seen John Oliver’s take on the practice of buying uncollectible medical debt, the post contains a link to the video.

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