April 28, 2022

Reigelsberger Appointed To FDIC Community Banking Committee

Kim Reigelsberger, president of Preferred Bank in Rothville, has been appointed by the Federal Deposit Insurance Corporation to serve on the FDIC’s Advisory Committee on Community Banking. She is among 19 community bankers from throughout the United States serving on the committee.

“It is an honor to serve on the advisory committee to represent community banks across Missouri and our nation,” Reigelsberger said.

Reigelsberger and her fellow committee members provide the FDIC with advice and guidance on a broad range of important policy issues affecting small community banks throughout the country, as well as the local communities they serve, with a focus on rural areas.

Since 2013, Reigelsberger has served as president of Preferred Bank, where she has spent her entire banking career. She joined the bank, then known as the Bank of Rothville, as a loan officer in 1982. Throughout her 40 years with the bank, Reigelsberger has served as executive vice president, chief financial officer, compliance officer and bank secrecy officer.

Reigelsberger currently serves as chairman of the Missouri Bankers Association Bankers Benefit Corporation and previously served on MBA’s Board of Directors. She also serves on the board for the Missouri Independent Bankers Association.

Active in her community, Reigelsberger volunteers with the Brookfield Rotary Club and served as a board member for the Chariton County Community & Economic Development Corp. A graduate of the Graduate School of Banking at Colorado, she also completed MBA’s School of Lending and School of Banking.

Chopra Resists Requests To Define ‘Junk Fees’ With Specificity

Under pressure from Republican lawmakers during a House Financial Services Committee hearing Wednesday to define what he meant by “junk fees” — a term coined by the bureau as part of a media campaign — Consumer Financial Protection Bureau Director Rohit Chopra would not offer any formal definition. Asked by Rep. Andy Barr, R-Ky., if he could offer “any legal or statutory authority that defines ‘junk fees,’” Chopra replied: “No. Junk fees are something that everyone experiences at so many parts of their financial life.”

Elsewhere during the hearing, he said it refers to “a fee for a service that you didn’t ask for and didn’t necessarily want … or a fee that doesn’t feel like it’s subjected to the competitive process.” Chopra offered as examples “pay to pay” fees, where consumers are required to pay a fee in order to complete a payment transaction or “payoff statement fees” where consumers are charged a fee in order to receive the payoff amount on an amortizing loan.

In an op-ed (subscription required) published in American Banker on Wednesday, American Bankers Association President and CEO Rob Nichols slammed the CFPB’s campaign against these so-called “junk fees,” calling it “little more than a PR effort designed to confuse the public about the well-disclosed fees they currently pay and to undercut an industry simply following the regulator’s own rules. The fees the CFPB continues to highlight, including late fees and overdraft fees, are already required to be ‘clearly and conspicuously’ disclosed under existing rules, and banks are watched carefully for compliance.”

Nichols Op-Ed: CFPB Is ‘Regulator Going Rogue’

Shortly before Consumer Financial Protection Bureau Director Rohit Chopra began the first of two days of oversight hearings on Capitol Hill (Senate hearing and House hearing) this week, American Bankers Association President and CEO Rob Nichols challenged Chopra’s controversial practices and “power grab” in a hard-hitting American Banker op-ed (subscription required).

‌Nichols specifically tackled the bureau’s national media campaign to brand “almost any fee associated with banking — even those closely regulated by the CFPB — as ‘junk fees.’” He challenged the misleading way Chopra lumps resort fees and ticket fees — over which the bureau has no jurisdiction — in with bank fees, and he noted that the federal government itself charges a wide variety of costly fees for service and penalties for late payment.

Also addressed in the op-ed the bureau’s stealthy update of its exam manual to expand the use of disparate impact analysis to a wide range of products for which this form of analysis is not authorized by statute — and that Chopra unilaterally revised the bureau’s enforcement process to move more decision-making into the director’s office, possibly depriving participants of due process in enforcement proceedings based on this more expansive exam manual.

“I have had the honor of representing banks of all sizes before four CFPB directors. While we have often disagreed on policy, sometimes significantly so, I found that prior Bureau leaders worked to understand markets in an open manner and sought feedback from all stakeholders,” Nichols wrote. “That is no longer happening at the CFPB, and I suspect many Americans will be troubled to learn that an unelected federal regulator is making major policy changes without public input, even if he claims to be doing so in consumers’ best interest.”

Chopra: Next Step In 1033 Rulemaking Could Occur ‘Within A Year’

Consumer Financial Protection Bureau Director Rohit Chopra told members of the House Financial Services Committee on Wednesday that implementing Section 1033 of the Dodd Frank Act, which addresses consumers’ rights to access and control information about their accounts, is a top priority for the agency. Although Chopra did not give a specific timeline, he noted that the “hope is to get the next step” in the rulemaking process “done within a year.” That next step should be the identification of small banks, credit unions and fintechs that will provide feedback on an outline of proposals the CFPB is considering.

Calling the 1033 effort “one of the most important rules that the CFPB can do,” Chopra noted that it “has the ability to open up consumer opportunities” and would “take some important steps toward open banking.” However, he acknowledged that there are “tough issues” related to data privacy and security that will need to be addressed.

“We really all want to think together about: how do we get to a world that is more ‘open banking’ — that people can switch more seamlessly, that people can compare more products across a broader range of participants. I see a lot of upside there,” Chopra said. However, “I do worry about big tech firms really modeling what we’re seeing in China with Alipay and WeChat Pay,” he added. “The fact that you have these dominant providers that have so much data about people’s movements, about people’s geolocation ... it raises a lot of questions about: will there be a fair system and a transparent system?”

The American Bankers Association has long supported consumers’ ability to share their financial data but continues to emphasize the importance ensuring that it is done in a secure way that gives consumers bank-level security, transparency and control.

ABA, Trade Groups: More Clarity Needed In Payments System Access Proposal

As the Federal Reserve continues to consider which entities may become eligible for access to its payments systems, the American Bankers Association and a coalition of trade groups called for the Fed to clarify how it will address problems of institutions with novel charters, such as state-chartered nondepository banks and crypto firms, seeking access. Specifically, ABA and the groups called on the Fed:

• to clarify which institutions are legally eligible to apply for Federal Reserve Bank accounts and services
• to explain how applications will be scrutinized (and what conditions and limitations may be imposed in connection with approval, at each tier
• to explain how Reserve Banks will oversee and monitor institutions in any given access tier on an ongoing basis
• to clarify that decisions about Tier 2 and Tier 3 applicants be subject the Federal Reserve Board of Governors’ approval or nonobjection

“Given the privileges afforded by access to accounts and services and the risks that could be posed to the payment system, the U.S. financial system and the overall economy, the guidelines should ensure that all institutions with access are held to an equally high standard of supervision and oversight to ensure their safety and soundness and compliance with other relevant laws regardless of charter type or business model,” the groups said. “Particularly because access to Reserve Bank accounts and services comes with the extraordinary benefit of being able to clear and settle private transactions in central banks without concern about liquidity and credit risk, such access serves as a linchpin to a safe and stable payments system.”

ABA Viewpoint Calls On Fed To Block Regulatory Arbitrage

In connection with the American Bankers Association’s comments on the Fed’s proposal on eligibility for a master account, an ABA Viewpoint column warned about the risks of “special purpose depository institutions” receiving payments system access without appropriate supervision and oversight.

“Over the past several years some under-regulated entities have sought access to the Fed’s payment system, and that presents a risk we just can’t accept,” wrote ABA Senior Vice President Steve Kenneally, addressing applications from nondepository Wyoming SPDIs. “Currently, there are two SPDI applications for access to the payment system pending with the Fed. This regulatory arbitrage play should be rejected.”

Kenneally also cautioned about state trust banks being for federal trust charters by the Office of the Comptroller of the Currency and thus accessing the payments system. “If these novel charters are allowed access in their current form, we cannot be sure the system will retain that strength and resilience,” he said.

Deadline Extended For Survey On CBDC Implications

As the Federal Reserve weighs the potential benefits, risks, design and policy considerations related to a central bank digital currency, the American Bankers Association has extended its survey deadline for banker feedback to inform its comment letter on the Fed’s CBDC discussion paper. Specifically, ABA is seeking information on how the creation of a CBDC could affect bank deposits and credit supply. The new deadline for the survey is Friday, April 29.

OCC’s Hsu Continues Call For Stablecoin Standards

Acting Comptroller of the Currency Michael Hsu advocated for stablecoin technical standards Wednesday during an event focused on artificial intelligence and the economy.

“Well-designed standards can promote inclusive and responsible innovation,” Hsu said, using the technical foundations and work of standard-setting bodies created during the early days of the internet as an example of a similar process.

“Stablecoins lack shared standards and are not interoperable. To ensure that stablecoins are open and inclusive, I believe a standard-setting initiative … needs to be established, with representatives not just from crypto/Web3 firms but also including academics and government.” Hsu said government agencies like the Commerce Department’s National Institute of Standards and Technology and the Office of the Comptroller of the Currency should work together.

This is not the first time Hsu has pushed for stablecoin standardization. Earlier this month, he discussed establishing an “intentional architecture” for stablecoins that would focus on “stability, interoperability and separability” and consider privacy, security and the need to prevent illicit finance.

SBA: Lenders Need Not Submit Duplicate PPP Loan Review Documentation

The Small Business Administration stated lenders do not need to submit duplicate documentation when SBA seeks documents during the agency’s review of a Paycheck Protection Act loan. SBA’s statement, provided to lenders through the agency’s PPP platform, came after the American Bankers Association expressed concern to SBA with the agency’s request for duplicate documents.

“If you [the lender] receive a request for documentation, and you see that the documentation is already uploaded to the Platform, you do not need to resubmit the documentation,” said the agency. “Instead, you can simply return the request for information to SBA.”

To return the request for information to SBA, lenders are directed to open the associated Platform inbox message and select “Complete – Send to SBA.” For more information, contact ppp@aba.com.

ABA, Trade Groups Call For Increase In CDFI Fund’s FY23 Budget

The American Bankers Association and four other trade groups urged House and Senate appropriations leaders to continue bipartisan support for the Community Development Financial Institutions Fund with $1 billion in funding for fiscal year 2023, including $100 million for the Bank Enterprise Award Program. The CDFI Fund received $295 million in the previous fiscal year’s budget, a $25 million increase from FY 2021. BEA received $35 million in FY 2022.

“The request for the CDFI Fund represents a necessary increase in funding over levels approved in the FY 2022 appropriations act, and it is justified by the significant demand, over-subscription of the programs and dire need of the nation as we recover from the COVID-19 health and economic crisis,” the associations wrote. “The Biden administration’s budget proposes only $331 million for the CDFI Fund, a modest increase, which does not begin to meet the needs of the underserved communities it supports.”

The $1 billion request represents just 0.34% of total CDFI industry assets and is “critically important” now, the associations wrote, noting that the funding would leverage up to 12 times in private capital that will be channeled to local businesses, nonprofits and others to help vulnerable communities.

CFPB To Examine Nonbanks For Consumer Risks

The Consumer Financial Protection Bureau said it would invoke a “largely unused” authority under the Dodd-Frank Act to directly examine nonbank financial services providers.

“Given the rapid growth of consumer offerings by nonbanks, the CFPB is now utilizing a dormant authority to hold nonbanks to the same standards that banks are held to,” said CFPB Director Rohit Chopra. “This authority gives us critical agility to move as quickly as the market, allowing us to conduct examinations of financial companies posing risks to consumers and stop harm before it spreads.”

The bureau also updated a 2013 procedural rule that implements its statutory authority to supervise nonbanks “whose activities the CFPB has reasonable cause to determine pose risks to consumers,” including unfair, deceptive or abusive acts or practices. The updated rule would exempt final decisions and orders from the CFPB director from being considered confidential supervisory information — meaning that they may be publicly released by the bureau. The rule takes effect upon publication in the Federal Register and has a 30-day comment period.

In addition to its authority to examine nonbanks that may pose consumer risks, under Dodd-Frank the bureau has direct supervisory authority over nonbanks in the mortgage, student loan and payday loan industries, as well as larger participants in other nonbank consumer financial product markets, and the bureau has conducted rulemakings to define larger participants in consumer reporting, debt collection, student loan servicing, remittances and auto loan servicing. The bureau also directly supervises banks and credit unions with more than $10 billion in assets.

Anderson: Advancing Women In Banking Leadership Is Everyone’s Business

In a column for the ABA Banking Journal, American Bankers Association Chair Scott Anderson explains why he focuses so much on advancing female leadership in banking and why it's a job for everyone. He also addresses actions that Zions Bank, which he leads as president and CEO, have taken to empower female leaders throughout its market area and within the bank.

"Advancing women’s leadership in financial services is not just a job for women," he writes. "It’s a job for all of us, including male CEOs like me. It’s a job I’ve taken to heart. If we’re going to open opportunities for our female customers and team members — we all need to be fully invested."

ABA Foundation, FTC Release Infographic On Payment App Scams

The American Bankers Association Foundation and the Federal Trade Commission released an infographic with information to help consumers protect themselves when using mobile payment apps and services. The infographic, developed jointly by the ABA Foundation and the FTC, is part of an ongoing series educating consumers about scams.

To avoid being scammed, consumers should not click on links in an unexpected email, text message or direct message asking them to send money or provide personal information, such as their username, PIN or password, the infographic notes. In addition, consumers should confirm that they know the person to whom they are sending money and double check all information before sending funds. The infographic also provides consumers information about how to protect their accounts.

To learn more about the banking industry’s efforts to raise consumer awareness around phishing threats, including additional tips on spotting scams, visit BanksNeverAskThat.com.