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Slideshow

'Regulatory relief = manna from heaven': Comments of the week

By Victoria Finkle
September 6, 2018 10:00 PM

Readers debate reforms to the Community Reinvestment Act, weigh in on the fate of Fannie Mae and Freddie Mac, react to Kathy Kraninger's potential confirmation as head of the Consumer Financial Protection Bureau and more.

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On an op-ed from Comptroller of the Currency Joseph Otting calling for stakeholders to get involved in revamping the Community Reinvestment Act:

"I know this will never happen but my dream after 40+ years in banking is to see CRA regulations completely rescinded. CRA regulations are indeed a dinosaur given the proliferation of financial service firms which are exempted, creating an uneven playing field. The dissolution of boundaries due to digital outreach is an additional reason for dissolution. Simplifying and reducing the regs sounds good and is better than nothing but will not resolve the inherent problems with CRA in today's age."

Related: We have a once-in-a-generation chance to revamp CRA. Let's use it.
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House for sale
Monkey Business Images/Monkey Business - stock.adobe.com
On an overview of the OCC's first steps toward reforming the CRA:

"It seems easy to lose sight of the fact that CRA's original purpose was to prohibit redlining, and stem the flow of deposits out of low income neighborhoods and into investments outside those neighborhoods. The requirements of fair treatment for all, regardless of race or neighborhood, and reinvestment in the local area from whence the deposits were gathered were the basis of the Act. Let's not throw the baby out with the bath water, or the purpose out with the paperwork."

Related: Cheat sheet: 5 pressure points in CRA reform debate
Kathy Kraninger
Kathy Kraninger, director of the Consumer Financial Protection Bureau (CFPB) nominee for U.S. President Donald Trump, swears in to a Senate Banking Committee confirmation hearing in Washington, D.C., U.S., on Thursday, July 19, 2018. Kraninger, a little-known official who has worked for the White House's Office of Management and Budget (OMB) since March 2017, is poised to succeed her boss Mick Mulvaney as director of the CFPB. Photographer: Andrew Harrer/Bloomberg
Andrew Harrer/Bloomberg
On a look at how nominee Kathy Kraninger could change the Consumer Financial Protection Bureau if she's confirmed as the agency's director, including cutting the budget:

"It doesn't make a difference whether the director is Kraninger or Mulvaney, changes are coming. If Kraninger doesn't get the nod, it's back to Mulvaney until likely 2020, thanks to the Vacancies Act."

Related: Would CFPB nominee hamstring the agency by slashing its budget?
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American Capital Building in Washington DC at Dusk.
W.Scott McGill - stock.adobe.com
Another reader weighs in on expectations that Kraninger would slash the CFPB's funding if she takes over as head of the bureau:

"Well congress could always exercise its control and oversight by making the budget part of the appropriations process. This is a perfect illustration of 'be careful what you wish for'"

Related: Would CFPB nominee hamstring the agency by slashing its budget?
Federal Reserve Board Chair Jerome Powell
Newly reappointed Federal Reserve Chair Jerome Powell speaks during a Senate Banking Committee hearing in Washington, on March 1, 2018.
Bloomberg News
On an argument warning that the OCC should not move forward on CRA reform without the other banking agencies on board:

"The OCC didn't "enact" anything. It merely began the process of potential reform. It is highly unlikely that a final regulation will occur without the FDIC and Fed on board. The process is not dissimilar to 1995 when President Clinton tasked Comptroller Ludwig with the last CRA revision. As for Congressional involvement, I would welcome it addressing the 1995 regulatory overreach, as the CRA statute addresses only lending performance and NOTHING about services or investment tests!"

Related: Is the OCC becoming a ‘lone wolf’ on bank policy?
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rubber stamps marked with regulations and rules
Wolfilser - stock.adobe.com
Another reader reacts to an argument that the OCC is staking out a position as a "lone wolf" among the banking agencies:

"Regulatory relief = Mana from heaven"

Related: Is the OCC becoming a ‘lone wolf’ on bank policy?
Fannie Mae building
A Fannie Mae logo is pictured outside their headquarters in Washington, DC, on Wednesday, December 29, 2004. Fannie Mae, the biggest provider of money for the U.S. mortgage industry, will sell as much as $4 billion of preferred stock after its regulator said it broke accounting rules and is ``significantly undercapitalized.'' Photographer: Jay Mallin / Bloomberg News
Jay Mallin/Bloomberg News
On a look at where the housing finance system stands 10 years after the government takeover of Fannie Mae and Freddie Mac:

"Don't be gulled by those who claim there a consensus to reform the GSEs. Zandi, Parrot, Stegman, and others, with their Senate R allies--were "banking" on (pun intended) that --but LOST, when their proposal ignored the GSE's affordable housing roles causing no Senate Banking Committee support. That occurred before the FDIC this year it said was the big banks and their poorly underwritten, falsely rated, private label mortgage securities (PLS) which caused the 2008 financial debacle."

Related: Will federal control of Fannie and Freddie ever end?
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On an argument that the banking industry has been unfairly attacking credit unions for growing in size:

"its the community banks that they compete against that is the problem. while CU's operate without paying any federal or state income taxes local community banks step and pay more than their fair share. next time you need a policeman, firefighter or any Govt sponsored help thank a bank NOT a credit union because they don't pay ANY income taxes"

Related: Bank lobbyists’ hollow campaign against credit unions
Victoria Finkle
BankThink Editor , American Banker
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