Participation on CFPB Advisory Council Provides Insights, Opportunities

For the past three years, Tom Spitz, CEO of Settlers Bank, Windsor, has served on the Consumer Financial Protection Bureau's Community Bank Advisory Council. The CBAC advises the Bureau on regulating consumer financial products or services and offer the unique perspectives of community banks. They share information, analysis, and recommendations to better inform policy development, rulemaking, and engagement work. Spitz will officially roll off the council in August of this year after serving an extended term (the typical appointment is two years). Overall, the experience was "fascinating and worth the investment of time," Spitz told WBA. 

When he first applied for a position on the council, Spitz wasn't exactly sure what to expect, but wanted to use his compliance knowledge to serve the industry. "I submitted my application thinking the best way to advocate for the banking industry was to be there," he said. "I went in open-minded." That approach paid off. Through his participation on CBAC, Spitz had a front-row seat to the rulemaking process and extended facetime with regulators, including then-CFPB Director Richard Cordray. "The biggest revelation was that the bureau's staff and subject matter experts genuinely listened to everything that CBAC members brought to the table," Spitz said. "Director Cordray spent—in most cases—the entire day with the group. He sat at the table and listened."

While that listening didn't always impact the outcome of the regulations (many still onerous for small and mid-size institutions) Spitz recalled two distinct instances where he feels input from the council made a difference. First was small dollar lending. Spitz says during the discussion CBAC members were very clear that community banks try hard to meet the credit needs of applicants, but the bureau's proposed regulations would make it very difficult. The bureau eventually considered carve-outs to the rule as a result. Second was QM and some of the related mortgage lending rules. After discussing the rules in-depth with the council, Cordray issued an official public statement acknowledging the complexity of the new HMDA reporting requirements and announcing that the Bureau would not penalize banks for minor errors.

While these two instances of visible impact are encouraging, Spitz viewed all of his discussions with CFPB officials—even the ones that did not have much effect on the final outcome—as part of a larger "relationship management" strategy. "The national and state trade associations, including WBA, were very good at communicating and helping CBAC members understand the industry talking points and perspective in order to get the message further reinforced at the table," he said. "CBAC represented one more way to deliver the industry message to the people who make the rules that impact our industry."