STATE GOVERNMENT RELATIONS
New Albany Regional Meeting
One regional meeting remains in New Albany, rescheduled for Oct. 17. Join us to facilitate grassroots communication between the bankers we serve and the legislators who serve our state. The meeting will include an hour-long update on the IBA, including legislative information and advocacy opportunities. Following the update, local legislators from the Indiana General Assembly will join bankers for lunch. The meeting will begin at 11:00 a.m. local time.
New Albany – October 17
The Exchange Pub
118 W Main Street
New Albany, IN 47150
FEDERAL GOVERNMENT RELATIONS
GAO Recommends Agencies Better Prepare for Bank Exam Disruptions
A recent review of how federal regulators handled COVID-caused disruptions to bank examinations has led the Government Accountability Office to make two recommendations for how those same regulators could better prepare for future disruptions.
In a report last week, the GAO noted that regulators couldn’t examine most banks and credit unions in person during the pandemic, so they implemented workarounds such as rescheduling exams and reviewing scanned copies of loan files. Of the five regulatory agencies reviewed that have risk management programs, three had updated their programs to reflect pandemic-related changes in risk and also reviewed pandemic lessons learned. The other two had done one or the other, but not both.
GAO singled out the two regulators that had not taken both steps. The agency recommended that the Federal Reserve develop and document specific action steps and time frames for completing the components of its enterprise risk management framework related to identifying and assessing risks to its supervisory mission. The Fed has neither agreed nor disagreed with the recommendation, GAO indicated. The agency also recommended the Office of the Comptroller of the Currency review potential lessons learned related to how it managed adjustments to supervisory activities during the COVID-19 pandemic. The OCC indicated its review would be completed by March 2023.
GOP Senators Accuse CFPB of ‘Highly Politicized’ Agenda
The 12 Republican members of the Senate Banking Committee have accused the Consumer Financial Protection Bureau under Director Rohit Chopra of pursuing “a radical and highly-politicized agenda unbounded by statutory limits.” In a letter to the agency, the senators singled out CFPB’s “relentless smear campaign” against banks that offer overdraft services. “Charging fees that customers chose to pay should not be disturbing or illegal, and yet, the CFPB appears to have developed a particular disdain for banks charging their customers for services, pejoratively calling overdraft protection ‘junk fees,’” they said.
The senators accused CFPB of changing its rules so it could publish previously confidential information about financial institutions to make it easier to threaten them with reputational harm. “The one-sided nature of the CFPB’s rule change gives the agency the ability to publicly tarnish an institution’s name without affording the firm the power to defend itself,” they said. The senators also alleged the agency changed its rules of adjudication to make it harder for companies to defend themselves against novel enforcement theories and easier for the agency to engage in regulation by enforcement.
OCC Names Chen Chief Climate Risk Officer
The Office of the Comptroller of the Currency has announced the appointment of Yue Chen as chief climate risk officer. In her new role, Chen will oversee the agency’s Office of Climate Risk and report directly to Acting Comptroller of the Currency Michael Hsu. She previously was executive deputy superintendent of the climate division at the New York State Department of Financial Services and, before that, director of conservation investments at the Nature Conservancy. She has a doctorate in chemical engineering from the Massachusetts Institute of Technology.
Chen is the third person to hold the title of chief climate risk officer. The first was OCC veteran Darrin Benhart, who held the position for about a year. Jonathan Fink has served in the role in an acting capacity since March while also serving as senior advisor to Hsu.
Federal Agencies ‘Reaffirm’ Commitment to Basel III Standards
In a joint statement the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency announced last Friday they had “reaffirmed” their commitment to implementing enhanced regulatory capital requirements that align with Basel III standards and will issue a joint proposed rule “as soon as possible.” They added that implementation of the international standards for large banking organizations “would strengthen the resilience of the domestic banking system.”
The Basel Committee on Banking Supervision originally scheduled 2022 to 2027 as the timeframe over which the Basel III regulatory framework was to be implemented. The U.S. agencies indicated they plan to seek public input on the new capital standards and are currently developing a proposed rule for issuance. They also noted that community banks, which are subject to different capital requirements, would not be affected by the proposal.