THURSDAY JANUARY 21, 2021 VOL. 186 No. 13 AMERICANBANKER.COM Follow us on Twitter @AmerBanker LendingClub-Radius 6 deal clears final Bottomed out? regulatory hurdles LendingClub, poised to be the first U.S. Revenue was flat to down at the biggest in the fourth online lender to buy a bank, says the quarter, but executives predict a gradual rebound in 2021 transaction will be completed in early February now that it has received approvals 4Q19 1Q20 2Q20 3Q20 4Q20 from the Office of the Comptroller of the See story on page 4 Currency and the Federal Reserve. Page 6

$35B Goldman’s consumer 7 bank will take longer to break even, CEO says $30B Its Marcus unit continues to invest in new products and business lines, delaying its path to profitability, according to Goldman $25B Sachs CEO David Solomon. Page 6 Rakuten mounts third attempt for $20B 8 industrial bank charter After withdrawing two previous bids,

$15B the e-commerce company submitted an application to the FDIC outlining a JPMorgan Chase BofA Wells FargoCitigroup significantly simpler business model for a Source: The companies proposed industrial company. Page 7 FHFA asks for input 9 on GSEs’ exposure dailybriefing Bank of America to climate change 3 likes what it sees In a request for information, the agency in consumer spending sought feedback on how it should prioritize Biden’s CFPB nominee Payments activity “snapped back” in the climate risks as part of its supervision of 1 could prioritize tougher fourth quarter and should lift revenue the Fannie Mae, Freddie Mac and the Federal enforcement, COVID relief next few quarters, CEO Brian Moynihan said. Home Loan Banks. Page 7 If he’s confirmed as director of the Consumer (See chart above.) Page 4 Financial Protection Bureau, Rohit Chopra ’s DFPI is expected to move quickly to undo Trump Comerica ahead of schedule 10 issues subpoenas policies and address the pandemic’s impact 4 in reducing loan-loss reserves to debt collectors on consumers. Some experts say he may The Dallas bank says reserves could return to The state’s Department of Financial even get the job on an interim basis before pre-pandemic levels by the end of 2021— a Protection and Innovation alleged Congress acts. Page 2 year earlier than analysts were predicting potential violations of “unlawful, unfair, — if vaccines prove effective at slowing the deceptive or abusive” practices by a dozen Yellen’s banking agenda: spread of the coronavirus. Page 4 companies. Page 8 2 Confront climate risks, launch AML registry Altabancorp in Utah Former Fed Chair Janet Yellen told senators that 5 faces calls to sell from as Treasury secretary she would create a “hub” its biggest shareholder to examine the effects of a changing climate on Members of the Gunther family who own financial institutions and create a database of nearly a third of the company’s stock are companies’ true owners as required by a recent urging the board to consider strategic anti-money-laundering bill. Page 3 alternatives. Page 5 THURSDAY JANUARY 21, 2021 AMERICANBANKER.COM PAGE 2

Trade Commission and already Senate- from being both acting director and then BIDEN ADMINISTRATION confirmed, he can serve on an interim basis permanent director,” Lee said. as head of the consumer bureau. Democrats are giving little credence to the “He is already Senate-confirmed so they idea that Biden can fire Kraninger but then Biden CFPB can have him installed on day one as interim not name her replacement. director without any challenges in order for a “The Supreme Court has made clear that pick could smooth transition,” said Lee. the president has the ability to appoint a But others argue that the Federal Vacancies director,” Rao said. “I don’t see a way for Reform Act expressly forbids an acting Republicans to hang on to the post.” prioritize director from being the nominee. Sen. Sherrod Brown, D-Ohio, the incoming “The way we read the FVRA is that once chairman of the Senate Banking Committee, tougher Chopra gets nominated, he cannot at that and Sen. Chuck Schumer of New York, the point be an acting director of the CFPB,” said Democratic leader, are expected to prioritize Alan Kaplinsky, senior counsel at Ballard Chopra’s nomination. enforcement, Spahr. “I would be awfully surprised if Biden Chopra is expected to try to reverse the names him as acting director. It is much more bureau’s payday lending rule, reopen its COVID relief likely that Biden would name somebody recent debt collection rulemakings and focus at the bureau in a senior position who has on student lending issues by working with the By Kate Berry been there long enough to qualify as acting Department of Education and Congress. January 19, 2021 director.” He is expected to reinstate the CFPB’s Rohit Chopra, President-elect Joe Biden’s One candidate floated for the acting CFPB Fair Lending Office, which was stripped of choice to head the Consumer Financial post is Patrice Ficklin, the bureau’s current enforcement power under former acting Protection Bureau, is expected to hit the director of fair lending, who stayed on under CFPB Director Mick Mulvaney. Enforcement ground running at the CFPB by quickly the Trump administration. Ficklin fits the is likely to boomerang back to a top priority undoing Trump administration policies and requirements for temporary appointments for bureau leadership, as it had been under moving aggressively to protect consumers under the Vacancies Act, Kaplinsky said. former CFPB Director Richard Cordray. during the pandemic. Though CFPB Director Kathy Kraninger’s “Rohit Chropra is aligned with the CFPB’s Chopra is seen as a strong consumer term expires in 2023, the Supreme Court consumer protection mission, and he can advocate who will push for fairness and ruled in June that the president can fire a basically further amplify the enforcement financial inclusion for minorities, one of the CFPB director for any reason. It is unclear office’s efforts because now there is Biden administration’s priorities. if Kraninger plans to resign before the alignment inside the CFPB,” said Lee. “They “Rohit is a dynamic leader who knows the inauguration or will be fired. were already aggressively working within the agency, understands the issues and will be Some Republicans suggest that the FVRA confines of Kraninger’s leadership.” ready to set a new course on day one,” said — which gives presidents latitude to make Chopra was outspoken at the FTC, where Michael Gordon, a partner at Bradley Arant appointments — does not cover vacancies he was known for taking aggressive stands on Boult Cummings. created by firings. enforcement particularly of large technology Addressing consumers who are suffering “Assuming Kraninger does not invoke the companies. He served five years as the financially from the coronavirus pandemic Vacancies Act, there’s nothing to stop Rohit CFPB’s first student loan ombudsman and will top his list of priorities, observers said. “He is coming in as director at a time when consumers as a whole are struggling because Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 the economy is depressed,” said Vaishali Rao, Phone 212-803-8200 AmericanBanker.com a partner at Hinshaw & Culbertson. “So he will focus on topics targeting what he can Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 do to alleviate those burdens, and one of Managing Editor Dean Anason 770.621.9935 those is fair lending. Are consumers who are Reporters/Producers already in a vulnerable population getting Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 the services that they need in lending and Washington Bureau Chief Joe Adler 571.403.3832 servicing fairly?” Executive Editor, Technology Miriam Cross 571.403.3834 Some experts even argue that, under Penny Crosman 212.803.8673 Jim Dobbs 605.310.7780 federal law, Chopra could be installed as the BankThink Editor Rachel Witkowski 571.403.3857 CFPB’s acting director while he awaits Senate John Heltman 571.403.3847, Allissa Kline 716.243.2679 Community Banking Editor Paul Davis 336.852.9496 confirmation. Hannah Lang 571.403.3855 Jenny Lee, a partner at the law firm Contributing Editor Daniel Wolfe 212.803.8397 John Reosti 571.403.3864, Gary Siegel 212.803.1560 Arent Fox and a former CFPB enforcement Digital Managing Editor attorney, said that because Chopra is Christopher Wood 212.803.8437 Jackie Stewart 571.403.3852, Kevin Wack 626.486.2341 currently a commissioner at the Federal

For up to date and complete coverage go to AmericanBanker.com THURSDAY JANUARY 21, 2021 AMERICANBANKER.COM PAGE 3 often testified on Capitol Hill. He also pushed launching a registry of startup companies and really make a big, big difference in our internally for policy issues, some of which to combat money-laundering risks are ability to address terrorist financing,” Yellen were not under his purview, experts said. both key priorities for the incoming Biden said. Before joining the CFPB, Chopra spent administration, according to the nominee for Yellen said that she plans to implement two years as an associate at McKinsey & Co. A Treasury secretary. the AML provision of the National Defense graduate of Harvard University, he received a Former Federal Reserve Chair Janet Yellen Authorization Act quickly, launching a Masters of Business Administration from the told the Senate Finance Committee that she database of companies’ beneficial ownership University of Pennsylvania’s Wharton School. plans to create a special unit within Treasury information. Chopra would also take over the CFPB at a to examine risks that climate change poses “This is a very important problem and that time when the bureau is crafting policy about to the nation’s banks and other financial the Act that was recently passed by Congress how much control consumers have over their companies. gives us an enormously potent tool to address own financial data. The CFPB just embarked “I will look to appoint someone at a very this problem,” Yellen said. “We will try to get on a potential data sharing rule, seeking senior level to lead our efforts and to create a up and running as quickly as possible and public input through a comment period that hub within Treasury in which we particularly devote ourselves to building that database so will end in February. A rulemaking could focus on financial system related risks and we can address these issues and will certainly have far-reaching consequences for banks, tax policy incentives toward climate change,” be looking to give this a very high priority.” fintechs and data aggregators. Yellen said at her nomination hearing Senators also questioned Yellen about “His background and the way he is trained Tuesday. “I think we need to seriously look Treasury and the Federal Housing Finance to think is to look at data and marketplace at assessing the risks to the financial system Agency’s plans to release the government- conditions and where to pinpoint a solution. from climate change.” sponsored enterprises Fannie Mae and That’s how he operates,” said Rao. “So he Yellen was responding to questions from Freddie Mac from conservatorship. The two will look at what underwriting is being done Sen. Sheldon Whitehouse, D-R.I., who noted agencies reached an agreement last week to today, is artificial intelligence being used, that there “is no specific office” within the allow the GSEs to sweep less of their profits what inputs are being used, and are they Treasury Department aimed at addressing into the Treasury, enabling them to hold being disclosed.” the risks of climate change. significantly more capital that they would UPDATE Whitehouse also pressed Yellen on the need to re-enter the private sector. The headline and story were revised after potential impacts of climate change on the Sen. Pat Toomey, R-Pa., described housing publication of the original version to reflect housing market. finance reform as the “great unfinished disagreement between legal experts about “Another serious matter is Freddie Mac business of the [2008] financial crisis.” whether Chopra could be both acting director warning of a coastal property values crash “While I would prefer going further, at least and the nominee for permanent director. around the country because of climate- there is an end to the automatic profit sweep, change-driven sea level rise,” Whitehouse there is the opportunity to build up capital said. through retained earnings, there is a capital BIDEN ADMINISTRATION “I think we should take these risks very, target now for the GSEs, and there are rules very seriously,” Yellen responded. “I think that are meant to limit the acquisition of the climate change is an existential threat and riskiest by the GSEs,” Toomey said. Yellen’s both the impact of climate change itself Yellen said that the Treasury Department and policies to address it could have major under her leadership “will certainly give banking impacts, creating stranded assets, generating priority to studying this issue and coming up large changes in asset prices, credit risks, and with ideas about what should be done.” so forth that could affect the financial system.” Toomey also pressed Yellen about the agenda: Yellen also lauded Congress for passing Financial Stability Oversight Council’s role reforms to the U.S. anti-money-laundering in designating nonbanks as systemically Confront system, which the Treasury Department important financial institutions. He said oversees through the Financial Crimes it was “the right decision” by the Trump Enforcement Network. administration not to designate asset climate risks, In a recent defense spending bill, Congress managers and money market funds as SIFIs. enacted a measure requiring companies to However, Yellen signaled that she would launch AML disclose their true owners to Fincen when like to see the return of working groups at the they go through the process of incorporation. council, which have been disbanded, that The legislation was partly intended to ease examined the risks of high leverage at hedge registry burdens on banks, which up to now have been funds, as well as relatively illiquid mutual responsible for identifying and reporting their funds. By Neil Haggerty customers’ beneficial owners. “This is an activities-based approach that January 19, 2021 “I want to thank you and Congress for FSOC was pursuing and I thought that was the WASHINGTON — Limiting the impact of passing a law that will enable us to identify right approach,” Yellen said. “I would hope to climate change on the financial system and beneficial ownership of shell corporations look again at some of those approaches.”

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tone from companies such as Bank of pretty quickly on the other side of that,” CONSUMER BANKING America is justified, even if the overall Moynihan said. economic data says otherwise, said Mike Results from the biggest banks, while Matousek, a trader at U.S. Global Investors. far from strong, are showing investors that Bank of “I’m not sure we’re seeing it quite yet credit quality is holding up despite the in the actual economy, but there’s a lot of ongoing pandemic, industry observers said. America likes expectation for a pretty strong recovery “There is still real uncertainty about how looking into this year,” Matousek said. quickly we can all get vaccinated and return BofA’s revenue fell by 10% from a year to what we all know as normal,” said Michael what it sees earlier and 1% from the third quarter, to Jamesson, a principal at bank consultant $20.1 billion. Net interest income decreased Jamesson Associates. “But if the vaccines in consumer by 16% from a year earlier, but inched up by get out, by mid-summer, the economy could $124 million from the third quarter, to $10.3 really look quite good.” billion. spending But revenue in BofA’s consumer unit climbed by 2.5% from a quarter earlier, to EARNINGS By Jim Dobbs $8.2 billion. January 19, 2021 Though many businesses still face Bank of America in Charlotte, N.C., challenges, BofA said it is seeing positive Comerica is counting on a rebound in consumer developments with some commercial spending to get revenue back on track. clients. ahead of Executives at the $2.8 trillion-asset “Our companies are highly liquid and company expressed confidence Tuesday generally in pretty good shape, except of that net interest income had turned a corner, course for those industries that are most schedule setting the stage for stronger earnings over hard-hit by COVID,” Moynihan said. the next few quarters. “As the economy continues to push ahead, in reducing With many businesses still struggling these companies … will need operating with the coronavirus pandemic, and after capital,” he added. “We saw early signs of all big banks reported flat to down revenue loan demand stabilizing as we went through loan-loss in the fourth quarter, Brian Moynihan, Bank the fourth quarter.” of America’s chairman, president and CEO, But Moynihan cautioned that “it’s a four- reserves said most of his optimism hinges on the or five-quarter fight” to narrow the gap company’s operations. between overall loan and deposit balances. By Jon Prior “Consumer payment activity began and The company’s loan-to-deposit ratio was January 19, 2021 ended the year very strong,” while pressure 51.7% on Dec. 31, a notable change from Comerica Bank is on track to reduce its from low interest rates “likely bottomed” in 68.5% a year earlier. reserves meant to guard against loan losses the fourth quarter, Moynihan said during Overall, BofA reported that its fourth- by the end of the year or in early 2022 — just a conference call to discuss quarterly quarter profit fell by 22% from a year earlier, as demand for new lending is expected to earnings. but it rose by 12% from the third quarter, pick up, executives said Tuesday. Payments activity, which plunged in the to about $5.5 billion. Earnings per share of The Dallas bank’s timetable for lowering earliest days of the pandemic, “snapped 59 cents surpassed the average estimate of reserves to pre-pandemic levels is ahead back” to finish the fourth quarter slightly analysts polled by FactSet Research Systems of what analysts had been expecting, but ahead of where it was three months earlier, by 4 cents. executives say they are encouraged by the including a “record volume of holiday BofA’s results, like those of JPMorgan relative strength of Comerica’s markets and spending,” Moynihan added. Chase and Citigroup, benefited from an the outlook for a broader economic recovery Other factors will likely push revenue and improved credit outlook. The company in the second half of this year. profit up in 2021, with most tied to consumer released more than $800 million of its “We’re in a lot of high-growth markets activity. loan-loss reserves in the fourth quarter, that we do believe should perform better BofA pointed to improved digital with three-fourths of the amount tied to than the U.S. as a whole as we come out of payments activity, which boosted fee consumer loans. the COVID situation and hit the second half income, and lower loan-loss provisions. Net charge-offs fell by 9% from a quarter of the year,” Comerica Chairman and CEO Americans ramped up use as they earlier to $881 million, including a 15% Curt Farmer said on a call with analysts adapted to the pandemic, and government decline in its consumer unit, to $482 million. discussing the bank’s fourth-quarter and stimulus programs helped prop up the job Accelerated vaccination efforts would full-year results. market, Moynihan said. provide lenders with more clarity when it For now, loan-loss reserves remain The recent recovery in bank stocks comes to loan exposure. elevated. The $85.3 billion-asset bank said suggests that investors think the positive “You’ll see the uncertainty come down its reserves totaled $992 million in the

For up to date and complete coverage go to AmericanBanker.com THURSDAY JANUARY 21, 2021 AMERICANBANKER.COM PAGE 5 fourth quarter, of 1.81% of loans, up from going to happen,” Sefzik said of the coming opportunities to our employees, customers $668 million, or 1.33% of loans, in the fourth boost in new loans. and communities,” brothers Dale and quarter of 2019. Overall, credit quality is stabilizing. About Blaine Gunther wrote in a Jan. 13 letter to Still, total reserves have actually come 10.5% loans that were flagged as most at-risk Altabancorp’s board. down since the middle of 2020, when they from social distancing measures put in place The Gunthers said they are representing topped out at more than $1 billion, or 2% of during the pandemic — from hotels and the interests of nearly two dozen family total loans. retail stores to art and recreation centers members. On the call with analysts, Chief Credit — were considered criticized at the end of A third Gunther brother, Paul, recently Officer Melinda Chausse said she expects the fourth quarter, about level where it was resigned from Altabancorp’s board, the bank will continue shrinking reserves if three months earlier. attributing his decision to the board’s “recent the coronavirus vaccine proves effective at On the earnings call, executives were tenor toward my family and disregard of its stopping the spread of the disease and the noncommittal when asked how the company concerns.” economy begins to bounce back from the may consider deploying excess capital. The board and the family “are on pandemic-induced recession. Farmer said Comerica has no immediate divergent paths concerning the future of “Assuming ... the current level of interest in buying a bank to boost the the organization,” Paul Gunther wrote in his uncertainty has started to abate, reserve business, even as a number of regional resignation letter. “Accordingly, I believe my levels are going to come down,” Chausse competitors bulk up through acquisitions. support for my family’s objectives precludes said on a call with analysts. And Chief Financial Officer James Herzog my continued service.” The pace of reserve releases surprised said that the company has no immediate While activist investor challenges are some analysts, who weren’t expecting levels plans to start buying back its stock. hardly a new phenomenon, the Gunther to return to normal until the end 2022. “We’re at the peak of the COVID family has a unique connection to “This is certainly a little bit earlier than pandemic,” Herzog said. “We just think it’s Altabancorp. we’ve been generally anticipating, but it’s prudent to wait for a little more clear line of The family’s involvement in the 115-year- not that much of a stretch depending on sight to see where this is going.” old bank goes back to 1952, when Orville how the macro outlook shapes up over the Gunther — the father of Blaine, Dale and next few quarters,” said Gary Tenner, an Paul — bought his first shares in what was analyst with D.A. Davidson. M&A known as People’s State Bank of American The reserve release helped Comerica Fork. Orville would later become the bank’s report $215 million in fourth-quarter net chairman and president. income, which was up 1.8% from one year Altabancorp Dale Gunther was the bank’s president prior. from 1988 to 2005. Paul Gunther, who joined Total loans increased 2% year over year, in Utah the board in 1984, was chairman from 2003 to $51.4 billion, but were down slightly from to 2018. Blaine Gunther was a director for the third quarter. Executives don’t expect more than 15 years before stepping down in demand to strengthen until the second half faces calls 2013. of the year, when economic growth is likely The Gunthers said in a regulatory filing to accelerate and the government’s effort to to sell from last June that they were hoping to open a stimulate the economy has run its course. dialogue between family members and the Net interest income increased 2.4% from board, but the talks never happened, Dale one year earlier on the higher volume but its biggest Gunther said in an interview. was down more than 18% for the full year “We were unable to get them to agree to 2020 due to shrinking loan yields brought shareholder let us communicate with the whole board,” by the Federal Reserve’s decision to lower Dale Gunther said. interest rates. The bank’s mostly floating- By John Reosti While Altabancorp’s management has rate loans are particularly sensitive to low January 19, 2021 “done a good job on the financial side,” rates. Altabancorp in American Fork, Utah, is Dale Gunther said the family believes Peter Sefzik, the executive director of facing pressure from a large investor block. the company has “achieved maximum Comerica’s , said on the Members of the Gunther family who performance and cannot deliver more for call that business in December “felt like a own nearly a third of the $3.2 billion-asset the shareholders.” pre-COVID environment.” But the increase company’s outstanding stock are urging the The Gunther family has bigger concerns in interest for new commercial lending board to “conduct a full review of ... strategic about morale at Altabancorp. “There was less concentrated in investments, like alternatives,” including a possible sale. have been a number of high-producing factory upgrades, and were more related to “Such a review may lead you to conclude employees that have left citing a change in financing for mergers and acquisitions and that partnering with another larger the culture” at the company, Dale Gunther other harder-to-predict moves. organization may be the best way to ensure said. “It does feel better than it did 90 days ago, the realization of Altabancorp’s value as a Altabancorp earnings for the first nine but it’s just too hard to nail down when it’s franchise as well as providing a better set of months of 2020 were flat from a year earlier,

For up to date and complete coverage go to AmericanBanker.com THURSDAY JANUARY 21, 2021 AMERICANBANKER.COM PAGE 6 at $32.5 million. Asset quality was solid with investors. The company is also eyeing new nonperforming assets totaling 0.22% of total M&A lending options for trade union partners and assets and charge-offs equal to 0.28% of their members, a core client base for Radius. average loans. It will maintain its loan marketplace. The Gunther family has also taken LendingClub- “This transaction brings together the issue with Altabancorp’s plan to pursue two sides of a bank balance sheet at scale acquisitions, including banks outside Utah. Radius and two strong customer bases that present In a conference call with analysts in October, compelling opportunities for future growth,” President and CEO Len Williams said Sanborn wrote in the blog post. Altabancorp would consider expanding into Bank deal Arizona, , Idaho and Wyoming. “We do not believe that this strategy holds clears final CONSUMER BANKING much promise and are ready to share with the board the analysis of these opportunities that led us to this conclusion,” Blaine and regulatory Goldman’s Dale Gunther wrote in their Jan. 13 letter to the board. hurdles consumer “The board will carefully review and consider the letter,” Richard Beard, By Miriam Cross Altabancorp’s chairman, said in a regulatory January 19, 2021 bank will filing. “Members of our board have LendingClub has received the regulatory had several meetings with the Gunther OKs it needs to buy Radius Bancorp less than take longer to representatives since their original [June] a year after the deal was announced. filing in an attempt to ascertain the ... The San Francisco-based online lender specific areas of concern with the company’s said Tuesday that the Federal Reserve Board break even, strategic plan. Our board remains open to approved its purchase of Radius, a $2.4 continuing those discussions.” billion-asset bank in Boston. The Office of the CEO says Williams said in the filing that Altabancorp Comptroller of the Currency had approved had hired a leadership development the acquisition Dec. 30. By Kevin Wack company “to help us strengthen and LendingClub expects the acquisition to January 19, 2021 build a unique culture of commitment, close on or around Feb. 1. No shareholder Goldman Sachs says that it will continue accomplishment and accountability” as approval is required. to lose money on its nascent consumer the company looks to become a regional The deal is the first instance of a U.S. business for longer than previously community bank. lender buying a bank. It could also open the expected. “I’m proud of the financial performance door for more fintech-bank acquisitions. Chairman and CEO David Solomon said our strategic plan has shown to date,” The acquisition would give the online Tuesday that the New York bank likely won’t Williams added. lender a charter, a low- reach the break-even point for its existing The company, which adopted the cost source of funding for its loans and a consumer-related products until some time Altabank brand in 2019, has 25 branches suite of deposit accounts that could attract in 2022. The company previously anticipated in Utah and holds about 3.2% of the state’s LendingClub members who rely on credit that it could hit that target in 2021, but deposits. cards to manage their cash flow. pandemic-induced business adjustments LendingClub announced its agreement to have resulted in a delay, Solomon said. buy Radius for $185 million in February 2020. In the first quarter, Goldman plans to The online lender launched in 2007 as an launch a product that online provider of installment loans. will allow U.S. consumers to invest as little “As the full-spectrum fintech marketplace as $1,000 in index funds and exchange- bank, LendingClub will be able to use our traded funds. And before the end of the technology and data-driven platform to year, the company expects to introduce a provide new products and services to our checking account, adding to a suite of digital millions of members that will help them consumer products that currently includes both pay less when borrowing and earn more an online , personal loans when saving,” Scott Sanborn, LendingClub’s and a in partnership with Apple. CEO, said in a press release Tuesday. More new consumer products could In a blog post on the LendingClub follow, as the firm that long epitomized Wall website, Sanborn summarized the combined Street seeks to become the primary bank company’s initial plans. The first product for millions of Americans. Over the past 12 will be a high-yield savings account for retail months, Goldman has announced lending

For up to date and complete coverage go to AmericanBanker.com THURSDAY JANUARY 21, 2021 AMERICANBANKER.COM PAGE 7 partnerships with Amazon, Walmart and additional benefits and rewards by doing General Motors. LICENSES AND CHARTERS business with the bank in addition to Any additional product launches Rakuten Rewards.” could further delay the point at which the By contrast, in its 2019 application, company’s Marcus consumer unit breaks Rakuten Rakuten said it may offer “consumer even, Solomon said. But he added that such loans, consumer credit cards, consumer investments will not affect Goldman’s ability mounts third deposits (NOW, savings, and time), to meet its companywide financial targets. merchant acquiring, commercial loans, and Reuters reported last week that Goldman commercial savings accounts.” Sachs is considering acquisitions to scale attempt for the growth of Marcus. On Tuesday, Solomon affirmed that path as an option, though he industrial CLIMATE CHANGE said that the bar for such a deal is extremely high. “If something came along that helped bank charter FHFA asks for us accelerate or advance our strategic growth plans, and we thought it was a good By Brendan Pedersen input on GSEs’ fit strategically, and we thought we could January 19, 2021 acquire it and integrate it attractively, then WASHINGTON — Rakuten has submitted we would do it,” Solomon said. another application to the Federal Deposit exposure Goldman says that it has a long-term Insurance Corp. for an industrial bank, its strategy in consumer banking, but some third attempt in less than two years. to climate investors are growing antsy at a time when In an interview with American Banker, standalone neobanks such as SoFi are Rakuten Bank America CEO Lee Carter said achieving rich valuations. Asked Tuesday the company filed its latest application on change about when Goldman shareholders might Jan. 15. Rakuten proposed a business model be able to unlock the value of Marcus, that is significantly simpler than what was By Hannah Lang Solomon said, “We’ll continue to execute envisionsed in its previous applications, he January 19, 2021 and wait on that.” said. WASHINGTON — The Federal Housing Goldman reports Marcus’s financial “We have simplified our business plan. Finance Agency is seeking feedback on results as part of its larger consumer and The first plan. … I’ll call it intense,” Carter potential climate risks to Fannie Mae, wealth management division, which said. “We had a lot of products and wanted Freddie Mac and the Federal Home Loan recorded $165 million in net earnings during to do a lot of things. We’ve since simplified Banks and how the agency should account the fourth quarter, up 21% from the third our business plan considerably.” for global warming in its supervisory quarter. It did not say how much Marcus lost Rakuten, a Japanese conglomerate framework. during the quarter. specializing in e-commerce, technology In a request for information issued Consumer loan growth slowed in 2020, and , has tried to secure Tuesday, the FHFA asked for public with total loans rising from $7 billion to $8 approval for a U.S.-based bank since July comment on how climate risks could billion, as the firm tightened its underwriting 2019, when it first applied with the FDIC. affect the safety and soundness of the standards during the COVID-19 pandemic. Banks have argued for years that a Rakuten government-sponsored enterprises, and Goldman’s goal is to reach $20 billion or bank would represent a breach in the what risk management strategies the more in consumer loans by 2024. traditional separation between commerce industry currently uses to address climate and finance in the U.S. Over the summer, change and natural disaster risks. a joint letter from representatives of large The move, which could precede a future banks, community banks and consumers rulemaking, comes almost a year after several urged Congress to declare a three-year Senate Democrats sent a letter to Fannie and moratorium on new regulatory approvals for Freddie asking how the companies factor industrial loan companies. extreme weather into their risk modeling. But Rakuten has kept trying. According to The incoming Biden administration has Carter, the latest iteration of the proposed pledged to address climate change as one of bank would offer consumers a credit card its top priorities, a goal that has been echoed with cash-back rewards plus a “suite of by Janet Yellen, Biden’s nominee to serve as deposit services” for online banking. Treasury secretary. “It’s a natural fit for us,” Carter said. “It’s “Natural disasters can adversely affect a way for us to facilitate more commerce the regulated entities. Historically, the on behalf of merchants who do business ability to assess the scale, timing, location, with Rakuten. It allows our clients to get and impact of such risks has been limited,”

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FHFA Director Mark Calabria said in a debt collectors do not violate the rights of billion-asset Glenview State Bank. The deal, statement. “Today’s RFI will help FHFA California consumers,” DFPI Commissioner which is expected to close in the second better understand and address the regulated Manny Alvarez said in a press release. quarter, priced Cummins-American at 109% entities’ exposure to climate and natural State and federal laws prohibit debt of its tangible book value. disaster risk.” collectors from harassing or threatening Cummins-American will pay its The agency is also asking for input on how consumers, calling at unusual times or shareholders a special dividend of $60 it should evaluate the ability of the GSEs to attempting to collect phantom debts. The million before the deal closes. assess and account for climate risk, as well as subpoenas seek documents related to how the Glenview State has seven branches in how it should prioritize climate and natural companies collect debts and communicate Chicago’s northern suburbs. disaster risks as part of its supervision of with consumers. “We believe this strategic merger will Fannie, Freddie and the Federal Home Loan “Consumers allege that these debt benefit our clients through enhanced Banks. collectors call repeatedly, fail to validate capabilities and products in commercial The FHFA also asked whether it should debts, and threaten to sue the consumers banking, wealth management and impose climate stress tests or scenario for debts they do not owe,” the DFPI said in depository services,” Van Dukeman, First analyses on Fannie and Freddie and if so, a press release. Busey’s president and CEO, said in a press how those should be designed. The agency said it issued subpoenas release. The public can submit comments to to Portfolio Recovery Associates, a unit of “A growing, dynamic organization the FHFA for 90 days after the request for PRA Group in Norfolk, Va.; Encore Capital presents more professional growth information is published. Group in San Diego, a publicly traded debt opportunities for our associates,” Dukeman buyer, and its subsidiaries Atlantic Credit added. and Finance, Midland Credit Management The deal is expected to be 6.3% accretive DEBT COLLECTION and Midland Funding; Enhanced Recovery to First Busey’s earnings in its first year of Company, a Jacksonville, Fla., debt buyer; fully recognized cost savings. First Busey and LVNV Funding, a Greenville, S.C., debt said it plans to cut about half of Cummins- California’s owner and collection affiliate Resurgent HP. American’s annual noninterest expenses. Others that were sent subpoenas include It should take about three years for First DFPI issues the Offices of Morgan and Moss, a Newport Busey to earn back the deal’s expected 1.1% Beach, Calif., debt collector; Convergent dilution to its tangible book value. First Outsourcing, a Renton, Wash., debt buyer Busey said it expects to incur $23.3 million subpoenas and collector; Spectrum Billing Services, a in merger-related expenses. Los Angeles collections arm of the cable and Vedder Price and Stephens advised First to debt phone network; and Monterey Financial Busey. Barack Ferrazzano Kirschbaum Services, a Monterey, Calif., collections firm. & Nagelberg and Piper Sandler advised collectors Cummins-American. M&A By Kate Berry CONSUMER LENDING January 19, 2021 California’s Department of Financial First Busey Protection and Innovation said it has issued Illinois caps subpoenas to a dozen debt collection would expand companies alleging potential violations of interest rates “unlawful, unfair, deceptive or abusive” practices. in Chicago The state regulator said Tuesday that on consumer the subpoenas were based on consumer area with complaints and marked the first major action loans at 36% taken by the agency since the California Consumer Financial Protection Law went M&A deal By Kate Berry into effect on Jan. 1. January 15, 2021 The law gave the agency expanded By Paul Davis The Illinois state legislature passed a bill oversight and enforcement authority over January 19, 2021 Thursday that will impose a 36% interest rate previously unregulated industries including First Busey in Champaign, Ill., has agreed cap on all consumer loans, including payday debt collectors, fintech firms and credit to buy Cummins-American in Glenview, Ill. and car title loans. reporting agencies. The $10.5 billion-asset First Busey said Illinois becomes the 18th state plus the “We take our expanded responsibility very Tuesday that it will pay $190.8 million in District of Columbia to impose a rate cap and seriously and are moving swiftly to ensure cash and stock for the parent of the $1.4 the second state in the past three months to

For up to date and complete coverage go to AmericanBanker.com THURSDAY JANUARY 21, 2021 AMERICANBANKER.COM PAGE 9 do so after Nebraska voters approved a ballot former general counsel of Wells Fargo measure last year. $3.5 million in a settlement, the agency The Consumer Federation of America announced Friday. called the legislation “historic,” noting that James Strother, who served as general it was supported by more than 50 consumer, counsel to Wells Fargo from 2003 to 2017, faith, labor, community and civil rights will pay $3.5 million to the U.S. Treasury organizations, as well as some financial for his role in the bank’s infamous phony- institutions. accounts scandal dating to 2016. “I think it’s a big deal,” said Chris Peterson, The OCC hit Strother and other Wells a law professor at the University of Utah, executives with civil charges last January. who was the Democratic nominee in 2020 His $3.5 million settlement fine is lower for governor of Utah. “It’s an important step than the $5 million penalty first floated by for the country and it shows that mainstream regulators at the time. financial institutions can live with the Wells Fargo came under sharp scrutiny restrictions based on the Military Lending for sales misconduct first reported by the A c t .” Los Angeles Times in 2013. Regulators said Peterson is a former director of financial bank employees were pressured to meet services at the Consumer Federation of sales goals and opened millions of bank and America. The federal Military Lending Act credit card accounts without customers’ caps interest rates for service members knowledge. and their families at 36% for most credit According to the civil charges filed by the transactions. OCC last year, Wells Fargo’s legal department The Illinois law comes on the heels of led by Strother “had a responsibility to renewed calls by consumer advocates for ensure incentive compensation plans were a national interest rate cap, though many designed and operated in accordance with lawmakers are opposed to the idea. bank policy, evaluate risk and ensure it Last year, the Consumer Financial was adequately managed.” The department Protection Bureau rescinded strict had failed to “adequately [perform] their underwriting requirements for payday loans responsibilities with respect to the sales that required lenders to determine borrowers’ practices misconduct problem,” the OCC ability to repay. Some industry experts think complaint said. the 2017 payday rule that was rolled back While not banned from banking under the Trump administration could be altogether, Strother will be required to reinstated under the Biden administration. present a copy of the OCC’s order to the president or CEO of any bank he is affiliated with currently or in the future, according to ENFORCEMENT an OCC legal filing. Strother also agreed “to cooperate with the OCC in any investigation, litigation, or Former Wells administrative proceeding related to sales practices misconduct at the bank,” the Fargo general agency said in a press release. q

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By Brendan Pedersen January 15, 2021 WASHINGTON — The Office of the Comptroller of the Currency fined the

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