WEDNESDAY DECEMBER 30, 2020 VOL. 185 No. 250 AMERICANBANKER.COM Follow us on Twitter @AmerBanker First Reliance in S.C. cites 5 growth push in announcing First responder executive moves The company promoted two executives as The Federal Reserve was out early with actions to contain part of an effort to revamp its leadership economic fallout from the pandemic, including: team and establish a bigger presence in the See story on page 2 Carolinas. Page 6 Goldman’s Sheila Patel, March 3: First emergency rate cut since 2008 financial crisis 6 chairman of $1.8 trillion manager, to retire March 15: Interest rate and reserve requirements both Patel is among Goldman Sachs’s most senior lowered to zero women and shepherded some of its highest- profile relationships with investors around March 17: Emergency launch of lending facility to backstop the world. Page 6 commercial debt Credit unions get their wish April 9: Plans unveiled for Main Street Lending Program, 7 with extension of CLF changes other facilities Provisions implemented under the CARES Act that made it easier for institutions to use June 25: Freeze on bank stock buybacks and cap on dividend the NCUA’s Central Liquidity Facility have payments been extended for a year with the signing of Consolidated Appropriations Act. Page 7

July 6: Initial purchases of loan participations in Main Street JPMorgan Chase to buy credit program 8 card loyalty platform cxLoyalty JPMorgan Chase is buying cxLoyalty, a major credit card platform, in a bid to enrich its own card loyalty programs when travel Cross River chief resumes after the global pandemic. Page 7 dailybriefing 3 prepares for PPP encore Gilles Gade, one our community bankers Tumbling mortgage rates Fed won praise for 2020 to watch in 2021, led an effort that made 9 partly offset ‘super-sellers’ 1 crisis response, but will Cross River Bank one of the biggest Paycheck market pricing its hands be tied in ’21? Protection Program participants. He is ready Despite intensified demand and The Federal Reserve is credited with for his team to pick up where it left off when plummeting inventory, consumer home containing damage to the financial system the new stimulus package kicks in. Page 4 purchasing power made gains behind falling from the coronavirus pandemic, but experts interest rates in October, according to First say the limits of the central bank’s power Small bank, startup join American. Page 7 to prop up the economy will likely become 4 forces on compliance tech more apparent in the new year. Coastal Community in Washington OCC again overreaches (See chart above.) Page 2 is an investor in and the first client of 10 on preemption law Synctera, a software company that aims Brian Brooks, the acting comptroller of the Sudden change at the top to help community banks manage their currency, used a selective (and dubious) 2 of New York Community fintech relationships, including regulatory interpretation of the Dodd-Frank Act to Longtime chairman and CEO Joseph obligations. Page 5 argue for more say on when banks can Ficalora will step aside Thursday as head of preempt state law, a consumer finance law the regional bank and be succeeded by CFO professor writes. Page 8 Thomas Cangemi. Page 3 WEDNESDAY DECEMBER 30, 2020 AMERICANBANKER.COM PAGE 2

House Financial Services Committee. “The injection,” said Brad Rustin, a partner at CRISIS MANAGEMENT Fed’s authorities and abilities here are pretty Nelson Mullins and chair of the firm’s financial limited going forward.” regulatory and fintech team. “I think that Fed Chair Jerome Powell has said as much, anything that was fast did well.” Fed won calling the case for fiscal policy “very strong” at The central bank created a whole slate of a Dec. 16 news conference. emergency lending facilities as authorized praise for “With the expiration of unemployment under Section 13(3) of the Federal Reserve benefits, some of the unemployment benefits, Act, some of which were backed with funding the expiration of eviction moratoriums, with from the Coronavirus Aid, Relief and Economic 2020 crisis the virus spreading the way it is, there is a need Security Act that passed in the spring. for households and businesses to have fiscal “I think the Fed shined as a professional, response, but support,” he said. highly competent agency with lots of talented And although the Fed does have a role and dedicated staff that were able to step up and to play, Powell acknowledged, experts say do the work that needed to be done at the time,” will its hands that the Fed’s main responsibility is to grease said David Portilla, a partner at Debevoise & markets, while its ability to backstop the areas Plimpton and a former Treasury official. be tied in ‘21? of the economy that most need support is Unlike during the 2008 financial crisis, constrained. the Fed was required to get the Treasury By Hannah Lang Calls from the Fed and others for Congress Department to sign off on the creation of any December 28, 2020 to pick up more of the slack in responding to emergency lending facilities. Observers say WASHINGTON — By all accounts, the economic hardships were answered in the $900 that requirement created a unique relationship Federal Reserve’s assertive response to the billion stimulus package signed by President between the Fed and Treasury that provided coronavirus pandemic earlier this year helped Trump on Sunday. But whether the latest relief confidence to investors. contain the damage to the U.S. economy. But bill is enough is yet to be determined. “The Fed and the Treasury worked pretty the limits of the Fed’s powers will likely become closely together and to act quickly in order more apparent in 2021, experts say. Notable successes, some failures to foster economic conditions that basically The central bank’s initial action came on The Fed has won ample applause for its bought biomedical science some time to come March 3, in the face of rising pressure on the earliest actions in the pandemic. Staff were said up with a real solution,” said Keith McCutcheon, markets due to COVID-19 outbreak, when the to have worked around the clock to stand up senior vice president and treasurer at the $4.9 Fed made its first emergency interest rate cut crucial programs, such as the Money Market billion-asset Bryn Mawr Trust in Pennsylvania. since the 2008 financial crisis. Mutual Fund Liquidity Facility, which the Norton called it “a historic degree of Before the month ended, the Fed again agency announced close to midnight on March cooperation” between Treasury and the Fed slashed rates (this time to zero), reduced 18 in response to hemorrhaging short-term that enabled Powell and Treasury Secretary reserve requirements to 0%, began purchasing funding markets. Steven Mnuchin to create new facilities to Treasury securities and mortgage-backed “All of the programs that launched early respond to a crisis that originated outside of the securities, and created five emergency lending in March — the liquidity facilities and the financial system. facilities to backstop stressed sectors of the aggressive drop in the rates — all of that tended “Many of the 13(3) programs were economy. to be very effective and act as an immediate unprecedented,” he said. “Some of them were “The American economy was definitely cruising along, 100 miles an hour on the interstate, and then hit a wall, and the car got Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 totally obliterated, and the Fed, Congress and Phone 212-803-8200 AmericanBanker.com the administration acted as the airbag,” said Keith Noreika, a partner at Simpson Thacher Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 and former acting comptroller of the currency. Managing Editor Dean Anason 770.621.9935 “They did a masterful job, I think, of deploying Reporters/Producers that cushion.” Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 But with the book on 2020 all but closed, Washington Bureau Chief Joe Adler 571.403.3832 the Fed’s tools appear to be exhausted just as Executive Editor, Technology Miriam Cross 571.403.3834 the economy is again threatened by the largest Penny Crosman 212.803.8673 Jim Dobbs 605.310.7780 wave of COVID-19 cases yet and ensuing small- BankThink Editor Rachel Witkowski 571.403.3857 business closures. Many of the economic John Heltman 571.403.3847, Allissa Kline 716.243.2679 Community Banking Editor Paul Davis 336.852.9496 closures have become permanent, forcing Hannah Lang 571.403.3855 thousands out of work. Contributing Editor Daniel Wolfe 212.803.8397 John Reosti 571.403.3864, Gary Siegel 212.803.1560 “I think we’re done at the Fed,” said Travis Digital Managing Editor Norton, counsel at Brownstein Hyatt Farber Christopher Wood 212.803.8437 Jackie Stewart 571.403.3852, Kevin Wack 626.486.2341 Schreck and a former general counsel at the

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY DECEMBER 30, 2020 AMERICANBANKER.COM PAGE 3 reruns of programs that we saw in ‘08 and ‘09, in August. The latest $900 billion stimulus The Fed will also be responsible for but certainly the Main Street Lending Program package will reboot the small-business lending ensuring that the banking system remains in its different iterations, including for nonprofit program. well capitalized. The agency will have to make organizations, was completely new ground for Some argue that the government’s relief a decision in early 2021 whether to loosen its the Federal Reserve.” efforts have resulted mainly in booming restrictions on bank dividend payments and The Fed’s asset purchases of Treasury stock markets and profits for large companies share repurchases. securities and mortgage-backed securities, that were able to benefit from some of the “As I think about it, the Fed’s main role in which the central bank is still continuing to buy, Fed’s programs, but little impact for small to terms of supporting the recovery will be to also helped buoy yields on 10-year Treasury medium-sized businesses and workers. continue with the accommodative monetary and lower mortgage rates, enabling the housing “We’ve created a lot of liquidity on Wall policy that they’re pursuing at the moment and market to be a source of strength for the still- Street. We’ve kept the bond markets working; also making sure that the financial system and crippled economy. we’ve kept the Treasury markets working,” the banking sector stays healthy and strong,” “Unlike 10 years ago, which was a housing said Rustin. “But the time bombs in 2021 are said Portilla. “I have to imagine that’s pretty far issue, housing has been the huge beneficiary of right below that, meaning groups of businesses up on their agenda.” all this,” McCutcheon said. that were too big for the [Paycheck Protection And the Fed will have to decide when to But not all of the Fed’s efforts have been Program], but not big enough to really have ease off some of its measures meant to stem successful. Two of the biggest disappointments corporate credit, investment-grade securities the economic effects of COVID-19, like its asset in its response, lawmakers and industry bonds that really would have been picked up in purchases, Rustin said. There will inevitably be observers argue, were the Municipal Liquidity the liquidity up top.” some market shock when the Fed winds those Facility that aimed to assist state and local down, he said. governments and the Main Street Lending Looking ahead “The question is, can you actually walk this Program, which offered loans to midsize Although lawmakers and outside experts stuff back? Can you stop buying bonds? Can businesses. alike have floated ideas for improving some of you stop buying Treasuries? Can you stop The Municipal Liquidity Facility was tapped the Fed’s programs like the Main Street Lending buying mortgage-backed securities?” he said. by just the state of Illinois and New York’s Program to make them more attractive, the “Powell has consistently said we’ve got to stop, Metropolitan Transportation Authority, and MSLP along with several other programs but I don’t know that you can without creating the Main Street program purchased just $10 funded with CARES Act appropriations, were a market force that’s going to significantly hurt billion in loans, a far cry from the $600 billion set to expire at the end of 2020. midsized small businesses, small businesses allocated for the program. Plus, the Fed won’t be able to restart and consumers.” “Anything that tended to take a while to those programs under President-elect Joe But from this point forward, it’s Congress underwrite tended to be a problem, whereas Biden thanks to a compromise in the newest that’s responsible for driving the economic in terms of your liquidity facilities for known- congressional stimulus package that prevents recovery and not the Fed, Norton said. quantity financial institutions, all of that tended the Fed from being able to reopen identical Powell “used the tools that he was given in to work very effectively,” Rustin said. facilities. a way that was responsible to the Fed’s dual The Fed was ultimately limited in its ability to Without those options, the Fed is left with mandate and mission,” Norton said. “I think absorb material losses, constraining the types a limited toolkit to support the sectors of the that he also acknowledged very plainly and of businesses and entities that it could lend to. economy hit hardest by the pandemic, and transparently the limits of the Fed’s ability, Powell and Mnuchin even said repeatedly that it remains to be seen what other emergency frankly to, I think in his view, make up for what for many borrowers, loans from the Fed that lending facilities, if any, it would be able to start Congress was not doing.” would be difficult to repay weren’t the answer. up after the Biden administration takes over. That was particularly true for commercial “I think that the Fed’s response this year real estate borrowers and others that obtain to the COVID pandemic will largely be CORPORATE GOVERNANCE financing from capital markets, rather than remembered as having been cabined in by banks, Norton said. the political branch, or by the political forces “The Fed and Treasury never got around to emanating from the Treasury Department,” Sudden change figuring out how to do asset-based lending to Norton said. midsize borrowers, and that had a great impact Powell himself said that the best thing the at the top on industries that almost by their very nature Fed can do for smaller businesses and middle- have to resort to asset-based lending,” he said. and lower-class workers is to facilitate a solid Congress tried to address smaller businesses economic recovery. of New York and working families through the Paycheck “The main thing that [small and medium- Protection Program, which offered forgivable sized] companies need is a robust recovery Community loans to companies with less than 500 — a strong, robust recovery,” Powell said Dec. employees, and expanded unemployment 16. “We contribute to that through highly By Allissa Kline insurance. Yet that relief came with limits. New accommodative monetary policy [and] December 28, 2020 loans under the PPP were suspended when the through accommodated financial conditions New York Community Bancorp will program established in the CARES Act expired that are supporting economic activity.” undergo an abrupt change in executive

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY DECEMBER 30, 2020 AMERICANBANKER.COM PAGE 4 leadership this week. growing New York Community from less than and JPMorgan Chase, and it was No. 12 among The board of the Westbury, N.Y., holding $1 billion of assets and eight branches in New PPP lenders in dollar volume. It accounted for company said Monday that longtime York into a $54.9 billion-asset company with 1% of all PPP volume. President, CEO and board member Joseph 236 branches across five states and a specialty Cross River quickly mobilized its 300 Ficalora, 74, will retire from all three posts in multifamily lending. employees to make the loans, diving headfirst on Thursday. Thomas Cangemi, 52, the But there have been challenges along the into PPP without adding staff, said Gilles Gade, company’s chief financial officer since 2005, way, including the 2016 termination of a the bank’s chairman, president and CEO. To will become president and CEO and join the merger agreement with Astoria Financial in make do, Gade and his team revamped job boards of the holding company and New York Lake Success, N.Y., and investor pushback on duties to meet the challenge. Community Bank. executive compensation. “We dropped everything we were doing,” In a press release, the company did not Chief Accounting Officer John Pinto will Gade said. give a reason for Ficalora’s departure or say if succeed Cangemi as CFO. Like Cangemi, “We had a strong sense that the country the transition was planned. A spokesman said Pinto joined the company in 2001 as part of needed us to step in,” he said. “If we’re not the decision was made in the past week and the Richmond County Financial deal. making these loans, a lot of people will be out that Cangemi “has the necessary institutional The shift at New York Community is one of jobs and won’t be able to put food on the knowledge of New York Community as well of several recent or upcoming executive table. That gave us a sense of purpose, and it as the skills and ability the board was looking changes at regional banks. In October, drove us.” for in a new CEO.” Fifth Third Bancorp in Cincinnati elevated Gade is bracing for another big PPP push as Cangemi, who started his career at KPMG’s Timothy Spence to president, a role that soon as the new stimulus package kicks in. For financial services practice, joined New York was previously held by Chairman and CEO that reason, Gade is one of American Banker’s Community in 2001 as part of a merger with Greg Carmichael. Some industry observers community bankers to watch in 2021. Richmond County Financial, where he was speculate that Spence’s promotion puts him “We want to step up in a big way,” Gade said. CFO. Cangemi said in Monday’s press release in line to become the next CEO of the $202 Absent federal aid and emergency small- that he is “dedicated to working with [the billion-asset company. business lending, many companies would company’s] executive management team to Synovus Financial in Columbus, Ga., have collapsed in 2020 — costing millions of develop ways to enhance [the company’s] announced earlier this month that President people their jobs, financial industry observers performance and evolve [its] business model and Chief Operating Officer Kevin Blair will said. The hope is that new relief measures will while maintaining conservative underwriting succeed Kessel Stelling as CEO on or around help hard-hit businesses make it to the spring practices.” April 21. Stelling will serve as executive when vaccines are expected to be more widely “Importantly, I am firmly committed to chairman until Jan. 1, 2023, and will hold an distributed. increasing shareholder value,” he added. advisory role until Jan. 1, 2025. “A lot of small businesses are still struggling,” Analysts in recent years have pointed to said Damon DelMonte, an analyst at Keefe, the underperformance of the company’s Bruyette & Woods. “Ultimately, [new stimulus] shares. Over the past five years, New York COMMUNITY BANKING could be the shot in the arm we needed to get Community’s adjusted stock price has us to the finish line. I think banks will step up declined by 16% while the KBW Nasdaq again … and help a lot of these companies get Regional Banking Index has climbed 13.2%. Cross River over one last hurdle.” Its shares were up less than 1%, to $10.48, in Cross River has a sense of duty and unique early afternoon trading Monday. chief prepares positioning when it comes to the PPP. The Michael Levine, presiding board director bank, founded in 2008 as the last financial and chair of the nominating and corporate crisis gripped the industry, launched with the governance committee, said Cangemi “knows for PPP intent of becoming a tech-savvy operation. It the bank extremely well and has a wide range would go on to partner with dozens of fintechs. of experience and a demonstrated ability to encore After the public health crisis took hold this deliver strong operating results.” year, the bank worked with several fintech “Tom is held in high regard inside of By Jim Dobbs partners, including Intuit and Kabbage, and the organization and is well respected by December 28, 2020 reached well beyond its own pre-pandemic Wall Street analysts and the investment The U.S. banking system has helped many customer base to serve borrowers that bigger community,” Levine said in the press release. small businesses stay above water during the banks overlooked. “The board has the utmost confidence that pandemic — and Cross River Bank in Fort Lee, As a result, Cross River swelled to $11.8 he is the right person to assume the CEO role N.J., has played an outsize role in that effort. billion of assets by the close of the third quarter. and looks forward to NYCB’s next chapter The bank, which had $2.5 billion of assets on Regulators have excused PPP participants under his leadership.” March 31, made $6.5 billion in loans to more around the size of Cross River from the stricter Ficalora joined a predecessor of the than 198,000 borrowers during the Paycheck supervision they normally would have faced company, Queens County Savings Bank, in Protection Program’s initial run. in surpassing $10 billion of assets. 1965 and remained with the organization for Cross River was third among all banks by Excluding the initial PPP loans expected his entire 55-year career. He is credited with PPP loans made, trailing only Bank of America to be forgiven and removed from its balance

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY DECEMBER 30, 2020 AMERICANBANKER.COM PAGE 5 sheet, which is underway, Gade said Cross the end of the day we didn’t meet a company daunting to manage fintech relationships but River would have about $3.5 billion in assets that had the full range of services to meet a want to expand their market presence and — a size he likes. bank’s needs in banking fintechs.” boost deposits on their balance sheets. At its core, Cross River is a bank that These challenges are shared by other For example, it ensures that fintechs are originates, packages and sells loans and community banks that sell their services to compliant with bank regulations, for instance partners with fintechs to service them. fintechs — or would like to — but may not by monitoring for money laundering and Following another round of PPP — and have the resources or the technical expertise fraud. Synctera does this by centralizing forgiveness — Gade does not expect the bank to nurture multiple partnerships. At the same data relating to customers, accounts and to get much bigger. time, fintechs may need help connecting with transactions and analyzing it for anomalies. Gade said he does expect Cross River to potential bank partners that can help them fill Synctera reconciles transactions between the deepen ties with thousands of PPP borrowers. licensure and compliance gaps. The solution bank and fintech by comparing the balance The bank is planning to delve further into Coastal arrived at, a collaboration with a in the bank’s one omnibus account that holds traditional Small Business Administration fintech that can handle all the compliance all of the fintech’s customer deposits with lending, offering automated application chores that go with banking-as-a-service the sum of all individual balances from the services, to recovering small businesses. offerings, could become an option for other fintech’s customers every day. It also tracks “It’s in that way that we plan to tap into the community banks. whether the fintech has given its customers wealth of new” borrowers added from the Coastal recruited Diagram, a Canadian the proper disclosures using data analytics. emergency lending program, Gade said. firm that invests in companies in the financial If a fintech wants to increase the rate it Between now and then, Cross River plans to and insurance sectors, to build a product that pays on its deposit accounts and needs to be an active participant in a new round of PPP, would meet its needs. The fruit of that effort get approval from its bank, Synctera will lending “more aggressively than usual because is Synctera, a platform that helps community streamline communications between the two it’s absolutely important to reinvigorate the banks ensure fintech partners are compliant parties on its dashboard and verify interest economy entirely,” he said. with bank regulations and more; it launched calculations to make sure customers are being on Dec. 8. It was developed over the course paid an accurate rate. It can also package of 2020 by Diagram, and Coastal served as a the capabilities a bank can sell to fintechs, COMMUNITY BANKING founding investor and the first client. including know-your-customer checks, card Synctera hopes to take on more bank and processing and account management, so fintech clients and eventually become a fintechs can sign one deal. Small bank, marketplace for companies seeking support Sprink says billing is one prime challenge for pre-existing relationships or, perhaps, a that Synctera will smooth over through startup join referral to a new relationship. automation. Typically, Coastal depends on Such support is key because small and accountants to manually prepare invoices for midsize banks “don’t have the resources its fintech partners each month. forces on and abilities to put their fingers into as many He chose One Financial as the first fintech opportunities as large banks do,” said Ron that Coastal would onboard to the Synctera compliance Shevlin, director of research at Cornerstone platform. One is a banking app that bundles Advisors, a consulting and research firm spending, saving and borrowing functionality based in Scottsdale, Ariz. into a single account and debit card, created tech In a December survey of senior executives by Capital One alum Brian Hamilton and from 235 midsize bank and credit unions, former PayPal CEO Bill Harris. By Miriam Cross he found that 66% say fintech partnerships Synctera will help Coastal handle billing, December 28, 2020 will be important in 2021. But 46% of these reconcile account balances and ensure Coastal Financial in Everett, Wash., has institutions only have one or two employees all proper disclosures have been sent to embraced the concept of banking as a service dedicated to this strategy full time. One customers. Coastal is also nurturing by issuing debit cards, providing deposit There are several challenges facing relationships with 10 fintechs that will go live accounts and more for fintechs such as banks that want to partner with fintechs, by year-end, ranging from challenger banks Aspiration, Ellevest and One Financial. said Rolland Johannsen, senior consulting to investment-focused firms to lenders. As But the community bank had devoted associate at Capital Performance Group in the relationships mature, they will migrate to several years to these efforts when executives Washington. They must determine who owns Synctera as well. realized they needed more help with back- the customer experience, how viable the Shevlin notes there are other fintech-as-a- end work, such as billing its fintech partners product is, and what the risks are regarding service providers, including Treasury Prime, and ensuring the fintechs’ customers have liquidity, concentration, reputation and Moov and Unit, that offer similar benefits received the required disclosures. compliance. But community banks in so banks can widen their range of services. “We did a complete market analysis,” said particular may not have a lot of flexibility in “They can take some of the load off financial Eric Sprink, president and CEO of the $1.75 their operating or technology systems. institutions in terms of vetting, negotiating billion-asset Coastal. “We interviewed a lot Synctera tries to solve some of these and even contracting,” he said. “But where of different firms and tech companies, and at problems for smaller institutions that find it they really come to the table is creating this

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY DECEMBER 30, 2020 AMERICANBANKER.COM PAGE 6 integration layer that enables the bank to The company is expanding its presence in around the world. She will step down from more rapidly partner with fintechs.” the Carolinas. CEO Rick Saunders has spent the partnership and become an advisory The larger goal is for Synctera to become a recent months retooling the leadership team director in the new year, Chief Executive two-way marketplace for fintechs and banks in preparation for a revenue-growth push in David Solomon said in a memo to staff to join forces, said Peter Hazelhurst, CEO of 2021. In November, the company hired a Monday. Synctera and the former head of Uber Money. new chief financial officer and a treasurer, “Sheila has contributed to our culture, “We want to bring a bunch more banks and it promoted a longtime executive to be including by serving as a mentor to many into the ecosystem that will have different its chief risk officer. Goldman Sachs professionals around the risk tolerances,” he said. “Some don’t want Saunders said in a news release world,” Solomon said in the memo. “I look to do crypto; some want to lend and don’t announcing the promotions of Dozier and forward to benefiting from her continued want deposits. Our job will be to effectively Stuart last week that Dozier’s charge to counsel.” match-make between what the bank feels is drive growth while maintaining the current Patel rose to Goldman’s highest ranks in the appropriate level of risk to take and what corporate culture is crucial if First Reliance 2006 when she was named partner within the fintech is prepared to pay.” is to “become a leading bank and regional three years of joining the firm. Part of the Sprink sees the service as particularly vital presence across the Carolinas.” bank’s management committee in Europe, to community banks. First Reliance is aiming to rely heavily she’s overseen the fast-growing areas of “Banking is under tremendous pressure on its mortgage business under Stuart to environmental, social and governance and with margins collapsing due to low long-term get there. Its mortgage production nearly impact investing. rates, and some communities are not growing doubled in the third quarter compared with Before joining the asset management as handsomely as the Seattle market,” said a year earlier to $204 million, driven largely unit, she worked in various roles in the Sprink. “This is giving community banks an by prospective homebuyers and existing equities division, including as co-head opportunity to diversify their earnings.” homeowners chasing historically low rates, of distribution in Asia and head of U.S. according to the company. derivatives sales. “The mortgage business has been the Goldman’s partnership ranks have been COMMUNITY BANKING shining star of our already remarkable year, shrinking, with a number of longtime accounting for a large percentage of our executives departing in recent years. This noninterest income and overall net income, year, the firm has added the smallest number First Reliance and I see that continuing,” Saunders said in of partners since 1998, a move that can limit the announcement. costs, as the elite ranking tends to come with in S.C. cites significant perks. The asset management unit has also been ASSET MANAGEMENT facing tremendous changes. Tim O’Neill, growth push a key leader at the division since 2008 and partner since 1990 who helped transform in announcing Goldman’s the business into a juggernaut, was moved into a senior advisory role in recent months, Sheila Patel, while Eric Lane and Julian Salisbury were executive assigned to co-lead asset management as it adds more heft in merchant banking moves chairman of capabilities. The bank is seeking to boost its presence in private fundraising. By Jon Prior $1.8 trillion Meanwhile, leaders at the business December 28, 2020 including quantitative investing co-head First Reliance Bancshares in Florence, Gary Chropuvka and Kane Brenan, who S.C., has promoted its recently hired chief manager, to oversaw a business that worked with pension banking officer, Robert Dozier, to president funds, have announced their departures of the holding company and chief operating retire since mid-2019. officer of its banking unit. Patel was elevated to the firm’s Dozier joined the $781 million-asset By Bloomberg News management committee in 2018 as part of company in January. He has previously December 28, 2020 Solomon’s first major personnel moves after been chief business officer of the Federal Sheila Patel, chairman of Goldman Sachs being named CEO, boosting the number of Home Loan Bank of Atlanta and chief Group’s asset management unit, is retiring women in the firm’s senior-most governing operating officer at Homeowners Mortgage from the $1.8 trillion division after almost body. in Columbia, S.C. two decades at the firm. First Reliance has also promoted Charles Patel is among the company’s most senior Stuart to president of First Reliance Mortgage, women and shepherded some of Goldman’s the home lending unit within the bank. highest-profile relationships with investors

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY DECEMBER 30, 2020 AMERICANBANKER.COM PAGE 7

financial institutions, such as community LIQUIDITY development financial institutions and HOUSING AFFORDABILITY Credit unions minority depository institutions. Tumbling get their LOYALTY AND REWARDS mortgage wish with JPMorgan rates partly extension of Chase to offset ‘super- CLF changes buy credit sellers’ card loyalty By Ken McCarthy market pricing December 28, 2020 Credit unions have scored some victories platform By Paul Centopani with the signing of the Consolidated December 28, 2020 Appropriations Act. cxLoyalty Purchasing power grew 17.6% annually The new bill extended key provisions and 0.9% monthly in October as descending originally granted under the Coronavirus By Kate Fitzgerald interest rates created some affordability Aid, Relief, and Economic Security Act, or December 28, 2020 amid a white-hot seller’s market, according CARES Act. But the fate of the legislation had JPMorgan Chase is buying cxLoyalty, to First American’s Real House Price Index. been in question for several days. President a major credit card loyalty platform, in a The pandemic caused concentrated Trump initially said he would not sign the bid to enrich its own card loyalty programs demand and tightened an already- bill before reversing his position. He signed when travel resumes after the global constrained inventory, pushing home price the act on Sunday. pandemic. appreciation up by 7.9% in October from Under the Consolidated Appropriations JPMorgan will gain a full-service travel March. However, home-buying power rose Act, changes to the National Credit Union agency plus the gift card, merchandise 10.7% as affordability grew 2.5% over that Administration’s Central Liquidity Facility and points-bank operations of cxLoyalty same time frame. made to help institutions weather the Group Holdings, which will operate as a “The pent-up demand from spring came economic fallout from the coronavirus new Chase business unit, according to the roaring back in June and the super-sellers’ pandemic will now be extended through Dec. companies’ press releases. Financial terms market emerged,” Mark Fleming, chief 31, 2021. The changes, which were originally of the acquisition, which is expected to economist at First American, said in the set to expire on Thursday, give credit unions close imminently, were not disclosed. report. “The pandemic has intensified a greater flexibility and borrowing authority. The chief executive of the Stamford, sense of home as refuge and falling mortgage Additionally, the act extends the Conn.-based cxLoyalty, Todd Siegal, will rates have made financing a home purchase regulatory relief measures related to retain that title, reporting to Marianne Lake, historically inexpensive.” troubled debt restructurings and lengthens JPMorgan’s head of consumer lending. The Real House Price Index — a metric the exemption from complying with the CNBC reported that JPMorgan is retaining that adjusts residential property prices for Financial Accounting Standards Board’s 3,100 cxLoyalty Group employees. income and mortgage rate fluctuations CECL methodology until Jan. 1, 2022. Over time users of Chase’s Ultimate — dropped 5.8% in October from the year “These vital extensions ensure the NCUA Rewards loyalty program will have access before. Declines in RHPI equate to improved and federally insured credit unions are to enhanced travel experiences through affordability for buyers. able to respond to the evolving nature cxLoyalty’s platform, JPMorgan’s release Only three states posted year-over-year of COVID-19, and they provide needed said. RHPI growth. Wyoming led with a 2.7% regulatory certainty to the industry,” said increase, followed by 0.3% in Vermont and NCUA Chairman Rodney Hood in a Monday 0.2% in Oklahoma. California had the largest press release. decrease at 9%, trailed by drops of 7.6% in The act also extends the Paycheck Hawaii, Massachusetts and New Hampshire. Protection Program, with about $284 RHPI rose in 11 of the 50 largest metro billion set aside for first- and second-round areas tracked. Cleveland led with a 4.78% forgivable PPP loans. annual gain, with 3.97% in Pittsburgh There is also roughly $15 billion earmarked and 2.05% in Kansas City, Mo., next. San for PPP lending through community-based Francisco experienced the largest drop at

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16.91%, followed by declines of 13.61% in fees in ways that consumers had a hard time sidestep the process. San Jose, Calif., and 11.62% in Boston. avoiding. The likely reason for this maneuver is to San Francisco also finished first in annual Each of these state efforts was met buttress the agency’s legal arguments in the purchasing power growth, with a gain of with pushback from the federal banking so-called Madden fix regulation lawsuits, 24.84%. Miami and Riverside, Calif., came regulators, who argued that because of as well as in the inevitable litigation over next at 23.41% and 23.3%, respectively. federal preemption, if a bank was federally the recently issued and highly controversial Kansas City fell to the other end of the chartered, the state law simply did not “true lender” rule. spectrum with an 8.99% jump in home- apply to the bank. This culminated in Yet, the letter itself is a power grab of buying power. Pittsburgh was just above at a now infamous 2004 regulation where an even greater magnitude. By the OCC’s 9.15% and New Orleans next with 9.59%. OCC broadly claimed that practically all reading, any of the agency’s future efforts “In 2021, mortgage rates are anticipated state laws were completely inapplicable to to blunt state consumer protection laws to remain near historic lows and the national banks. would largely be shielded from meaningful economy should improve as vaccinations This occurred at about the same time oversight — a return to the freewheeling become more widespread. Both of these states were beginning to notice and respond days of OCC preemption. conditions will keep house-buying power to the growth in subprime mortgage lending. Luckily, there’s almost surely no legal strong,” Fleming said. “Yet, housing supply The OCC, armed with favorable court basis for this power move. Whether constraints will likely remain and continue decisions, cut states off time and time again, something is preemptive or not depends on to fuel a sellers’ market. The question is, while not as heavily policing the banks’ bad what the regulation itself purports to do. And will robust house-buying power be enough behavior itself. if it looks like preemption, it is preemption, to offset strong nominal house price In the wake of 2008, Congress clamped even if the OCC doesn’t explicitly say it. appreciation?” down on the OCC and sought to make To allow the OCC to engage in preemption it more difficult for the agency to issue rulemaking and completely ignore the law preemption regulations. Specifically, by by merely avoiding the use of buzzwords BANKTHINK approving a section in the Dodd-Frank like “preemption determination” would Act that circumscribes when the OCC can completely undermine Congress’s intent. preempt state consumer financial laws. The OCC should not be able to do indirectly OCC again One the most important limitations what it cannot do directly, and a court would provides that, in order for the OCC to claim likely agree. overreaches preemption, the state law at issue must But there’s a larger lesson here, one for “significantly interfere” with the exercise by the incoming Biden administration. The the national bank of its powers. In coming national federal banking regulator has been on preemption to this conclusion, the OCC must engage in engaged in overreach since the start of the a case-by-case analysis (rather than make a current administration. law blanket claim of preemption as it had done Whether through special nonbank in the past). The agency must also consult charters or efforts to undermine state usury By Christopher K. Odinet with the Consumer Financial Protection or licensing laws, the OCC has bypassed December 28, 2020 Bureau in the process. In essence, this state attorneys general and state financial As the nation awaits an incoming law responds to the OCC’s pre-2008 services supervisors, as well as consumer administration, acting Comptroller of the machinations of making broad preemption advocates, at every turn. The OCC serves the Currency Brian Brooks continues to charge declarations applicable to whole swaths public, not the banks it regulates. It should ahead with aggressive actions, provoking of state law without specific, articulable view the states and advocacy groups as both state authorities and consumer reasons for doing so. partners, not adversaries. advocates. His latest overreach involves an But as of Dec. 18, the acting comptroller It’s time for a hard reset on the financial age-old favorite for this banking agency — offered a different interpretation of federalism relationship and, more preemption. this provision — one divorced from the fundamentally, in how the OCC views its The Office of the Comptroller of the intentions of Congress and from common role. The new administration should make Currency has a long history of this type sense. this a priority, particularly when it comes to of behavior. In the late 1990s and early In its interpretive letter, the OCC asserts personnel decisions. 2000s, the OCC (and the former Office of that it does not have to go through the A good first step would be to toss this Thrift Supervision) engaged in a forceful above-described determination, with its interpretive letter into the trash bin. campaign to preempt state laws that placed case-by-case analysis and consultation with restrictions on the problematic practices the CFPB, unless it makes an “affirmative Christopher K. Odinet is a professor of law of federal banks and thrifts. States tried to conclusion” that the agency is engaging in at the University of Iowa College of Law, where clamp down on banks for false advertising, preemption rulemaking. If the OCC instead he teaches consumer finance law. q failing to provide meaningful disclosures issues a regulation that just so happens to when offering financial products and preempt state law, but doesn’t affirmatively © 2020 Arizent and American Banker. services and increasing overdraft and other state as such, then the agency can completely All rights reserved.

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