Executive Letter: Regulatory Advocacy in Action
By Rose Oswald Poels
Last week, 12 bankers joined WBA’s Heather MacKinnon, VP – legal, and me in Washington, D.C. for our annual trip to meet with regulators. This trip is always a productive one, resulting in impactful advocacy and conversations given the smaller group size. In the span of only two half-days, our group was able to meet with senior officials from the Federal Reserve, FDIC, OCC, CFPB, FinCEN, and FHFA. The topics we covered in detail included representment fees, bank capital/liquidity, Section 1071, Section 1033, beneficial ownership, FHLB reform, cybersecurity, and other top examination concerns.
Our conversation with Fed Governor Miki Bowman focused on the Fed’s recent compliance bulletin published last month noting that Fed member banks are now being cited with an unfairness UDAP violation if they are charging representment fees. This retroactive application of the Fed’s new expectation as it relates to these fees is creating results that are unjust and wrong. Furthermore, it is also wrong to be creating new rules for banks to follow through the mere issuance of a compliance publication rather than following the formal Administrative Procedures Act rulemaking process. Governor Bowman was surprised to hear of the retroactive nature of these exam findings and agreed to continue to talk with WBA and affected banks about the matter. If you are a Fed member bank and have received a similar finding in your recent exam reports, please let me know and we will include you in our follow-up conversations with the Fed.
Back in April of 2022 when the FDIC first published its new expectations regarding NSF and representment fees in a guidance document, many bankers and trade associations including WBA advocated against any retroactive application of their new interpretation, among other concerns. This resulted in the FDIC eventually adjusting its focus in exams to be prospective only in nature, and to our knowledge did not cite anyone for an unfairness UDAP violation. In our conversations last week with senior FDIC officials, it sounded as though the FDIC may now begin issuing unfair UDAP violations as well. FDIC Director Jonathan McKernan also shared his thoughts with our group around lessons learned from the bank failures earlier this year, encouraged bankers and WBA to comment on the impact the BASEL capital proposal could have on mortgage operations, and supported the role of community banks in fostering an innovative economy.
Much of the focus of our conversation with OCC Acting Comptroller Michael Hsu was on safety and soundness matters, including the need for banks to stress test their liquidity contingency funding plans and analyze how “sticky” and stable banks’ deposits really are.
With senior officials from CFPB, among other topics, we stressed the industry’s frustration with the Agency’s and Administration’s continued use of “junk fees” to describe fees that are fully disclosed in transparent ways — often on bank websites — in advance to consumers. We discussed beneficial ownership operational concerns at length with FinCEN officials, and learned from the FHFA that their document on FHLB reform will be released “soon.” Overall, the conversations with all six agencies were very productive.
I would like to thank the following bankers for joining WBA this year: Adam Bellmer, Johnson Financial Group; Dave Feldhaus, Federal Home Loan Bank of Chicago; Kristen Gagliano, North Shore Bank; Donna Hoppenjan, Mound City Bank; Corey Hoze, Associated Bank; Caryn Langolf, Bank First; Tom Mews, First National Community Bank; Ryan Kamphuis, Bristol Morgan Bank; Greg Ogren, Security Bank Shares; Dan Peterson, The Stephenson National Bank and Trust; John Udvare, The Equitable Bank; and Theresa Wiese, First Business Bank. If you are interested in joining WBA on this trip next October, please let me know!
