On Tuesday, Feb. 5, FDIC Chair Jelena McWilliams joined nearly 300 Wisconsin bank leaders in Milwaukee during the WBA Bank Executives Conference at The Pfister Hotel. After speaking with her on stage, WBA President and CEO Rose Oswald Poels thanked McWilliams for bringing "a breath of fresh air" to the FDIC, and many bankers in attendance agreed.
Before addressing the gathered bankers, McWilliams conducted a media scrum with a select handful of local Milwaukee reporters, answering questions on a variety of topics, including de novos, consolidation, and regulatory treatment of brokered deposits. First, McWilliams emphasized that while many industry pundits seem to think that you need $20 million in capital to open a new bank, that is not the statutory requirement. In fact, what's required is 8 percent capital based on your business model and geography. She said the applicants need to demonstrate how the business plan justifies the amount of capital raised, rather than reach a specific number. Regarding consolidation, McWilliams stated that while it's important that banks that are better off merging should be able to merge, it is critical that rural and underserved areas still be served. Finally, McWilliams indicated she would like the agency to take another look at brokered deposits. "Some of those rules are 20 years old," she explained.
Next, McWilliams joined WBA Chair Dave Werner, president and CEO of Park Bank, Milwaukee, and Oswald Poels on the stage for a casual conversation. One of the first topics she spoke about was her new Trust Through Transparency initiative. With this exciting initiative, McWilliams is attempting to break the FDIC away from keeping information behind closed doors simply because that's the way it's always been. She will also conduct listening sessions in all 50 states (and some territories) during her five-year term.
The conversation turned to regulatory relief. McWilliams told the gathered bankers that her policy priorities are targeted to help community banks because she understands that when the lone community bank in a town goes away, many other local enterprises follow. One concrete way she is trying to do this is by removing community banks from the Basel framework. "Basel should be something you use when you're cooking," she joked. "If you're a true community bank, you're not systemically important. So, you shouldn't be regulated like you are. My whole approach at the FDIC is that community banks are not complex, so we should not regulate them in a complex way."
Another concrete goal McWilliams has set for the FDIC is to improve its communication with banks, particularly in identifying and removing rules that have been superseded. "It's not in the nature of regulatory agencies to declutter," she said. "We're Marie Kondo's worst nightmare!" The goal is to simplify the regulatory environment without sacrificing safety and soundness. This also includes the recently announced Call Report changes, which should result in about 15 fewer pages for community banks which qualify.
Regarding regulatory changes, including recently proposed new capital ratio rules, McWilliams encouraged bankers to submit comments, either on their own or through the WBA. "This is your opportunity to engage in the process," she said. "It's highly useful to us to hear your anecdotal examples of how the proposal would impact you and your community."
Watch for more information about this year's Bank Executives Conference in the March issue of the Wisconsin Banker.