MONDAY MAY 10, 2021 VOL. 186 No. 88 AMERICANBANKER.COM Follow us on Twitter @AmerBanker Trade groups call on 5 OCC to withdraw CRA rule Organizations representing banks and other Building a buffer financial services firms said implementing Shareholders' equity and loan-loss allowance at Pacific the Office of the Comptroller of the Mercantile have risen over the past year. The company must Currency’s overhaul of the Community keep them above Dec. 31 levels to complete its sale to Banc of Reinvestment Act could be wasteful as California. regulators discuss a new interagency plan to modernize the law. Page 5 See story on page 4 Shareholders' equity Loan-loss allowance Banking groups to 6 Congress: Don’t throw out ‘true lender’ rule $200M Critics say the regulation issued by the Office of the Comptroller Currency is a $17.5M $17.4M $17.1M $150M $17.5M $18.2M gift to predatory lenders. But the trade $155.1M $158.7M $161.3M $147.5M $149.9M organizations warned lawmakers that invalidating it will make it difficult for the $100M agency to create an improved framework in the future. Page 5 $50M Five policy challenges $0 7 awaiting next OCC chief 1Q 20 2Q 20 3Q20 4Q20 1Q 21 The Biden administration may finally be close to naming an acting comptroller of the currency. Source: The company Whoever gets the interim job or is confirmed to run the agency over the longer term will have a lengthy to-do list. Page 6 After crackdown on Chime, Banks seek Biden’s dailybriefing 3 Green Dot trumpets bank status 8 aid after Trump’s It’s “powerful … to be able to use the word 1,000-sanctions-a-year pace Do Wells Fargo, U.S. Bancorp ‘bank’ in our marketing because we are a Wall Street firms have urged the Biden ad- 1 investigations signal legitimate financial institution,” CEO Dan ministration to ease the industry’s burden in a new era at CFPB? Henry said Wednesday. Its rival Chime complying with a flood of financial sanc- The banks disclosed this week that they recently agreed to stop referring to itself tions the U.S. has levied in recent years as a are under scrutiny for conduct that may as a bank in a settlement with California primary tool of foreign policy toward Russia, have harmed consumers. The timing regulators. Page 3 China, Iran and other adversaries. Page 7 raises questions about whether the Consumer Financial Protection Bureau The credit-quality kicker Small businesses under President Biden is poised to bring 4 in the Banc of California- 9 fueling Zelle’s growth more enforcement actions against large Pacific Mercantile deal First-quarter transaction volume rose 61% banks than it did under Trump-appointed About 13% of Pacific Mercantile Bancorp’s from a year earlier as merchants began using Director Kathy Kraninger. Page 2 loans are tied to high-risk sectors such the bank-backed network to accept and as entertainment and food services. The make more payments. Page 8 CFPB investigating company must build shareholders’ equity 2 U.S. Bancorp over or its loan-loss allowance above last year’s As fintechs develop consumer sales practices levels to make sure the sale goes through. 10 ‘super apps,’ are banks The probe is the latest example of the (See chart above.) Page 4 partners or rivals? consumer bureau scrutinizing sales tactics PayPal, Square and other companies are at big banks following the Wells Fargo fake- building multipurpose apps that can access accounts scandal. U.S. Bancorp said it is traditional bank accounts — or make them cooperating fully. Page 3 obsolete. Page 9 MONDAY MAY 10, 2021 AMERICANBANKER.COM PAGE 2 highest total in the bureau’s history, the complaints, internal fraud and sales practices LAW AND REGULATION penalties that it collected were less than 20% conduct, according to regulatory filings of those collected in the agency’s peak year, by the company. The $553.8-billion asset in large part because many of the companies company also has a sales practices oversight Do Wells targeted were relatively small. policy that is designed to ensure a unified But the agency’s recent enforcement approach across the company to prevent or Fargo, U.S. record is nuanced. Sales practices, which otherwise detect sales misconduct, it said in landed Wells Fargo in trouble starting in 2016, a report published last year. are one area where the agency’s scrutiny of The CFPB declined to comment on the Bancorp big banks has spanned both Republican and investigation. Democratic administrations. In 2019, the CFPB opened a civil investigations In a securities filing on Tuesday, investigation into Bank of America to U.S. Bancorp revealed that it is under determine whether the Charlotte, North investigation by the CFPB regarding “certain Carolina, company violated federal law signal a new of the company’s consumer sales practices.” by opening credit card accounts without The Minneapolis-based firm disclosed customers’ knowledge. That investigation era at CFPB? that it “has responded and continues began during Cordray’s tenure. to respond to the CFPB.” It added that Last year, the consumer bureau sued By Kevin Wack and Allissa Kline it is “cooperating fully with all pending Cincinnati-based Fifth Third Bancorp May 07, 2021 examinations, inquiries and investigations, for allegedly opening customer accounts Wells Fargo and U.S. Bancorp disclosed any of which could lead to administrative or without their authorization between 2010 this week that they are under investigation by legal proceedings or settlements.” through 2016. That case is expected to go to the Consumer Financial Protection Bureau A U.S. Bancorp spokesperson said in an trial in 2022 or later, unless a settlement is over conduct that may have harmed their email Thursday that the company cannot reached. customers. provide additional information because of Since 2018, the CFPB has reached The disclosures, which came in quarterly the confidential nature of supervisory work. settlements with TCF Financial and TD Bank securities filings, do not make clear whether “It is important to note that due to their Group in connection with the marketing and the investigations began under Presidents complex nature, regulatory exams, inquiries sale of overdraft services. And in November, Trump or Biden, and in Wells Fargo’s case, and investigations often take some time Regions Financial disclosed that it was the probe involves business practices that before they are resolved,” the statement read. responding to a civil investigative demand first attracted public scrutiny in 2019. After the Wells Fargo fake-accounts from the CFPB over certain overdraft policies Still, the timing of the disclosures raises scandal broke in 2016, then-U.S. Bancorp and practices. questions about whether a shift is taking CEO Richard Davis said that the company In Wells Fargo’s latest regulatory place at the agency charged with protecting did not impose sales quotas on its bankers disclosure, the company revealed that consumers from financial abuses. and had “never, ever” looked at cross-sell it is under investigation by the CFPB Legal observers have been expecting the ratios. in connection with past disclosures to consumer agency to focus more attention on U.S. Bancorp has a conduct risk committee consumer deposit customers regarding the enforcement, and particularly enforcement that oversees the risks associated with ethics minimum debit card usage that was required cases against big banks, during the Biden administration than it did under Trump- appointed Director Kathy Kraninger. Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 Cases against large banks have the Phone 212-803-8200 AmericanBanker.com potential to make a bigger impact than those against smaller firms, argued Chi Chi Wu, Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 a staff attorney at the National Consumer Managing Editor Dean Anason 770.621.9935 Law Center. “I think it’s certainly our hope, Reporters/Producers and maybe somewhat our expectation, that Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 the CFPB would not continue Kraninger’s Washington Bureau Chief Joe Adler 571.403.3832 pattern of going after small fish,” she said. Executive Editor, Technology Miriam Cross 571.403.3834 The CFPB delivered more than $10 billion Penny Crosman 212.803.8673 Jim Dobbs 605.310.7780 of relief to consumers in 2014 and 2015, but BankThink Editor Rachel Witkowski 571.403.3857 it collected less than $3 billion over the next John Heltman 571.403.3847, Allissa Kline 716.243.2679 Community Banking Editor Paul Davis 336.852.9496 five years combined, spanning the tenure of Hannah Lang 571.403.3855 both Obama-era Director Richard Cordray Contributing Editor Daniel Wolfe 212.803.8397 John Reosti 571.403.3864, Gary Siegel 212.803.1560 and his Trump-era successors. Digital Managing Editor While the Kraninger-led agency brought Christopher Wood 212.803.8437 Kevin Wack 626.486.2341 48 enforcement actions last year, the second- For up to date and complete coverage go to AmericanBanker.com MONDAY MAY 10, 2021 AMERICANBANKER.COM PAGE 3 to receive a waiver of monthly fees. according to a securities filing this week. Wells stated in 2019 that it was reviewing U.S. Bancorp said that it “has responded FINTECH past disclosures regarding the minimum and continues to respond to the CFPB.” debit card usage that was necessary to avoid The Minneapolis-based company added paying monthly fees, and that it expected to that it is “cooperating fully with all pending After make refunds to affected customers. But it examinations, inquiries and investigations, did not reveal the CFPB investigation until any of which could lead to administrative or crackdown on Wednesday.