Executive Letter: New Agency Leadership Affords Opportunities for Renewed Dialog
By Rose Oswald Poels
As mentioned in last week’s Executive Letter, many changes are currently underway in Washington, D.C., including changes in key leadership positions within the prudential federal banking supervisory agencies. One such notable change is with the appointment of Travis Hill as Acting Chairperson of the FDIC. I have had the great fortune to discuss the concerns of Wisconsin’s community bankers directly with Acting FDIC Chairperson Hill on past visits to D.C., including that of the need for right-sized regulations and for agencies to act within their scope of authority.
Upon his appointment, Acting FDIC Chairperson Hill issued a statement which outlined matters of focus for FDIC in the near future, including:
• Conduct a wholesale review of regulations, guidance, and manuals to ensure FDIC rules and approach promote a vibrant, growing economy;
• Adopt a more open-minded approach to innovation and technology adoption, including (1) a more transparent approach to fintech partnerships and to digital assets and tokenization, and (2) engagement to address growing technology costs for community banks;
• Improve the bank merger approval process and replace the 2024 Statement of Policy to ensure that merger transactions that satisfy the Bank Merger Act are approved in a timely way;
• Withdraw problematic proposals from the past three years, such as proposals on brokered deposits and corporate governance;
• Improve the supervisory process to focus more on core financial risks and less on process, and to reevaluate the supervisory appeals process;
• Enhance FDIC’s readiness and preparedness for resolving large financial institutions, including the need to be more proactive and nimble, and to improve the bidding process;
• Pursue adjustments to FDIC’s capital and liquidity rules to appropriately balance driving economic growth with ensuring safety and soundness and resilience to shocks;
• Encourage more de novo activity so there is a healthy pipeline of new entrants in the banking sector;
• Work to ensure law-abiding customers have, and do not lose, access to bank accounts and banking services;
• Modernize implementation of the Bank Secrecy Act;
• Study deposit behavior to develop a more sophisticated understanding of the relative stability of different types of deposits and depositors;
• Reevaluate FDIC disclosure practices, and expand transparency in areas that do not impact safety and soundness or financial stability;
• Ensure the FDIC remains within its statutory mandates;
• Pursue internal efficiencies to ensure FDIC is serving as responsible stewards of the Deposit Insurance Fund; and
• Reestablish a strong workforce culture, where misconduct is not tolerated and those who engage in misconduct are held accountable.
I am encouraged by this statement as many of the topics listed are concerns previously shared by Wisconsin bankers and me with FDIC, and Acting Chairperson Hill directly.
I am also encouraged by the nomination of Jonathan McKernan to serve as the next CFPB Director. Similar to previous interactions with Acting FDIC Chairperson Hill, past WBA-led banker meetings with McKernan have been engaging and impactful whereby Wisconsin community bankers were able to share concerns over the impact of Basel III, duplicative regulatory burdens, and of the revised CRA rule. While the industry continues to monitor actions impacting CFPB, the nomination of McKernan as the agency’s Director does afford a continued dialog with someone familiar with concerns held by heavily regulated community banks.
WBA continues to monitor events occurring in Washington, D.C. and will continue our longstanding regulatory advocacy efforts with the new agencies’ leadership. Acting FDIC Chairperson Hill and McKernan as CFPB Director will afford WBA the opportunity to renew past dialog with these key leaders.
