Washington Perspectives
Mike Stevens Senior Executive Vice President
Conference of State Bank Supervisors Washington Perspectives
Michael L Stevens Senior Executive Vice President Conference of State Bank Supervisors [email protected] 202-728-5701 @CSBSNews About CSBS
• Washington representative of state regulators in DC – Capitol Hill – Federal regulators – Where Interagency work occurs • FFIEC • FBIIC • FSOC • Professional Development • Examiner Certification • Department Accreditation
3 Industry Heatmap: Nation
Total banks: 5,415 State chartered: 79% Banks less than 1B: 4,632 Community banks: 92%
4 Industry Heatmap: Iowa
Total banks: 288 State chartered: 94% Banks less than 1B: 272 Community banks: 99%
5 THE PRESIDENT ESTABLISHES DIRECTION
6 Executive Order: Core Principles for Regulating U.S. Financial System 1. Empower the public to make independent financial decisions and informed choices in the marketplace
2. Prevent taxpayer-funded bailouts
3. Foster economic growth
4. Enable U.S. companies to be competitive within domestic & foreign markets
5. Advance American interests in international financial regulatory negotiations
6. Make regulation efficient, effective, and appropriately tailored
7. Restore public accountability within federal financial regulatory agencies and rationalize federal financial regulatory framework
7 Executive Order Leads to Treasury Reports
• Depository (June 2017) • Capital markets (October 2017) • Asset management and insurance (October 2017) • Non-banks and financial innovation (July 2018)
8 AGENCY LEADERSHIP MATTERS
9 People Are Policy Federal Deposit Insurance Corporation Chairman Jelena McWilliams 6/5/2023 Term as Chair 6/5/2024 Term as Director Vice Chairman Vacant Director Martin Gruenberg Expired term
OCC Joseph Otting 11/27/2022 CFPB Kathy Kraninger 12/10/2023
Federal Reserve Board Chair Jerome Powell (Term as Chair ends 2/5/2022) (1/31/2028) Richard Clarida (1/31/22) Randal Quarles (1/31/32) Vice Chairman (9/17/22) Vice Chairman for Supervision (10/13/2021) Michelle Bowman (1/31/2020) Lael Brainard (1/31/2026)
Vacant Vacant Term expiring 1/31/2024 Term expiring 1/31/2030
10 The Regulatory Agenda
S. 2155 Issues Principal Issues 1. Community Bank Leverage 1. Transparency Ratio 2. Exam modernization 2. Brokered Deposits 3. Community Reinvestment Act 3. Short form call report Reform 4. Portfolio QM 4. BSA/AML Reform 5. Appraisal relief (rural areas) 5. Appraisal thresholds / requirements 6. De novo banks 7. Compliance Exams
11 Current PCA Framework vs. CBLR PCA Framework
Risk-Based Capital Ratios Leverage Ratio PCA Threshold Common Equity CBLR Total Capital Tier 1 Capital Tier 1 Capital Tier 1 Capital
Well-Capitalized ≥ 10% ≥ 8% ≥ 6.5% ≥ 5% ≥ 9% Adequately ≥ 8% ≥ 6% ≥ 4.5% ≥ 4% Capitalized ≥ 7.5%
Undercapitalized < 8% < 6% < 4.5% < 4% < 7.5% Significantly < 6% < 4% < 3% < 3% Undercapitalized < 6% Critically Tangible equity (defined as Tier 1 capital plus non-Tier 1 perpetual preferred stock) to total Undercapitalized assets ≤ 2%
12 13 Driving a Better Policy Outcome • 66 Research Papers • 5 National Surveys • 158 Banker Outreach Sessions • 4 Case Study Competition Winners • 17 Videos Highlighting a Community Bank • 13 Emerging Scholars Scholarships
communitybanking.org 14 2019 Community Bank Case Study Competition
Public Policy Focus: Impact on a bank’s ability to serve its community from S.2155
25 States 51 Schools 70 Teams
Previous Winners 2015: University of Utah 2016: Southeastern Louisiana University 2017: University of Akron 2018: Eastern Kentucky University
15 Community Bank Sentiment Index – Development Plan
“Attitudinal” questions to the national survey: How do you expect business conditions in your market to change over the next 12 months? How do you expect your bank’s capital expenditures on facilities or operations to change over the next 12 months? How do you expect the franchise value of your bank to change over the next 12 months?
Goal: Quarterly indicator of how key drivers of local economies are feeling about the future.
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