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Timothy Foreman
CFO
Axiom Bank, National Association
Maitland FL
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Original Message:
Sent: 10-16-2019 20:40
From: Barb Rehm
Subject: McWilliams Ready to Move on CRA, Brokered Deposits, and More
FDIC Chair Jelena McWilliams reminds me a lot of the late Bill Seidman.
Like her predecessor from the early 1990s, McWilliams isn't afraid to speak her mind and isn't content with serving the status quo. Of course, it's still early in her term and time will tell if she succeeds, but from a speech she made this week in Washington it's clear McWilliams aims to shake the FDIC up.
"This is not your grandmother's FDIC," McWilliams told the Exchequer Club. "I have asked people (FDIC staff) to hustle. I need to figure out how can we get more agile in our execution. How can we do more offsite work without compromising the quality of the exam? How can we better use data? … How can we just do better as an agency?"
McWilliams said her goal for the FDIC is to be considered "fair," "dynamic," and "transparent." Also, like Seidman, McWilliams has little patience for the "tectonic speed" of government bureaucracies. She joked that four agencies spending can spend months negotiating a joint rulemaking, move three paragraphs, "and call it a success."
That is not McWilliams' style. She is impatient to get things like CRA reform done, calling the current rules too complicated. "The complexity is what surprised me. I was surprised by how complex it is to figure out what qualifies" for CRA credit, she said. "I've never met a banker who doesn't want to do CRA."
While she said she prefers a single rule issued jointly by all the agencies, the FDIC will go it alone on CRA if necessary. Banks can expect to see a final rule "soon," she said. She added that she's working to reduce the amount of time between the end of an exam and the examiner's report. "The bank's ability to do business…depends on what's in that report."
McWilliams also said the FDIC must update its rules governing brokered deposits and promised to release a proposal by year-end.
"Banks have to innovate to stay both current and to be able to retain and attract new customer bases. And as we look at that, the way that people gather deposits is changing. We need to allow banks space – regulatory space – to change with the technological changes," she said. "Our brokered deposit rules are, frankly, somewhat antiquated… Our system shouldn't be that complicated so we are going to have a proposal on brokered deposits by the end of the year."
She noted the FDIC's recent proposal to modernize the national rate cap, too, concluding: "Anything that is…an impediment to innovation and technological development is something we need to take a look at."
McWilliams also wants to wrap up work on the small-dollar lending rule, saying un- and under-banked customers are better off dealing with banks than less-regulated alternatives. The delay, she said, is over whether to issue a rule or guidelines. While she generally prefers the precision of rules, she said guidance is the better option for small-dollar lending.
McWilliams said the FDIC has shifted "into fifth gear" to try and help organizers create new banks. "It important to focus on de novos as a way to replenish the banks we've lost to consolidation," she said. Asked if the FDIC will allow a fintech to get approval for an industrial loan charter, McWilliams didn't miss a beat. "We will approve the application. We have to" because ILCs are allowed under law.