STATE GOVERNMENT RELATIONS
Representative Woody Burton Announces Retirement
State Rep. Woody Burton (R-Whiteland) announced last Thursday he will retire in 2020 after fulfilling his current term as state representative for House District 58.
Rep. Burton’s retirement will bring to an end 31 years of service as a state representative. Rep. Burton has been instrumental to the financial services industry, acting as the chairman of the House Financial Institutions Committee.
Register for the IBA Legislative Briefing & Reception
Save the date for the 2020 IBA Legislative Briefing & Reception, scheduled for Jan. 15 at the Hyatt Regency Indianapolis. As the first IBA grassroots advocacy event of the new year, this is a prime opportunity to get your bank involved in 2020. The briefing, conducted by the IBA Government Relations Team, will include an in-depth discussion of current legislative issues. The following reception will allow for valuable networking time to connect with your banking peers and Indiana legislators.
FEDERAL GOVERNMENT RELATIONS
CFPB Director Highlights Benefits of AI to Expand Credit Access
The Consumer Financial Protection Bureau wants to spur innovation in the use of artificial intelligence and machine learning in financial services, CFPB Director Kathleen Kraninger said last week. Highlighting the bureau’s innovation programs – its compliance sandbox, trial disclosure program and revised no-action letter policy – Kraninger said that "the bureau is helping companies to spur innovation while being aware of possible risk."
Specifically, she said in remarks at the Clearing House/Bank Policy Institute annual conference, "uncertainty about how AI fits into these different regulatory frameworks may be hindering adoption of this technology, especially for credit underwriting." This uncertainty is particularly acute with respect to the Equal Credit Opportunity Act, which requires explanations in adverse action notices. "We expect more methods will emerge" to explain AI conclusions and results and outputs, Kraninger said.
Kraninger also said that the bureau is identifying ways to improve the process of requesting consent orders be lifted before their termination date and "ensuring consent orders remain in effect only as long as needed to achieve the desired effects." She added that she is reviewing a for regulators to codify that guidance is guidance. "I understand and agree with many of the concerns raised by the petition," she explained. "There will be a formal and public response in the future."
Senate Clears Short-Term Spending Bill, Avoids Government Shutdown
By a vote of 74 to 20 last week, the Senate approved a short-term spending bill to fund the government through Dec. 20. The bill included an extension for the National Flood Insurance Program and the U.S. Export-Import Bank.
Fed General Counsel: FedNow Not Likely to Be Open to Nonbanks
Nonbanks should not expect direct access to FedNow, the 24/7/365 payments system the Federal Reserve is developing, according to a top staffer.
"Congress has more or less clarified who can have an account at the Fed," said Federal Reserve Board of Governors General Counsel Mark Van Der Weide at the Clearing House/Bank Policy Institute annual conference last Thursday: "It’s depository institutions as defined in the Federal Reserve Act, and we will follow that law." Under the Fed’s proposal, FedNow transactions would be funded directly from depository institution master accounts.
CFPB: Small Servicers Have Fewer Delinquencies
The Consumer Financial Protection Bureau has indicated that community banks and other smaller mortgage servicers play an outsize role in rural areas, experienced lower delinquencies during the financial crisis and are less likely to service loans sold to Fannie Mae or Freddie Mac.
According to the bureau, 74% of borrowers with mortgages at small servicers said having a branch or office nearby was important in how they chose their mortgage lenders, compared with 44% of those with large servicers. It also found that while delinquency rates on loans at servicers of all sizes increased in 2008 amid the crisis, peak rates were much lower for small servicers.