Richard Hunt, president and CEO of the Consumer Bankers Association, told bankers their industry stands to benefit from the current political environment, but warned favorable conditions may not last through this fall’s elections. The Consumer Bankers Association represents the retail banking industry, including large community banks, regionals and the nation’s largest banks. Hunt spoke Jan. 28 at the Acquire or Be Acquired conference in Phoenix.
Hunt called the current leaders of the bank regulatory agencies his “dream team.”
“It starts with Joseph Otting at the OCC. He is the first comptroller at the OCC in 36 years who is a former banker. I met with him two weeks ago. He is to the right of me. He understands banking, coming from U.S. Bank, Bank of American, CIT, and OneWest. He knows the banking system and consumer protection inside and out.”
He also praised Randal Quarles, vice chair of supervision on the Federal Reserve Board. “He is looking at regulatory coordination,” Hunt said. “Both of these gentlemen have as a top priority CRA reform. The Community Reinvestment Act is going to be front and center in Washington, D.C.”
The White House nominee to head the Federal Deposit Insurance Corporation also won high marks from Hunt. Jelena McWilliams currently works at Fifth Third Bank and formerly worked on Capitol Hill. “Get to know her well. She came into this country [from Yugoslavia], her, and her family with $500… I can’t wait to see when Elizabeth Warren tries to oppose this definition of the American dream.”
Mick Mulvaney, the interim head of the Consumer Financial Protection Bureau, rounds out Hunt’s list of “dream team” regulators.
“Let me make one thing clear,” Hunt warned. “While this is the dream team, this is not the substitute teacher of the sixth grade where you can get away with things. They will know you inside and out. They know what you can and cannot do. If you are guilty of a UDAAP provision, they are going to lay down the hammer on you. At the same time, they are going to know that consumer protection has to be balanced with regulatory relief. The two must work together. This is what I call the dream team.”
Hunt said the top priority for industry change should be the CFPB. “By far and away the most powerful agency over everybody else combined; unlimited budget of $700 million, 1,600 employees, and they are all union, which means if they are terminated they get a two-year grievance process,” Hunt explained. “So, Rick Mulvaney cannot go in there and just terminate people who do not understand banking and consumer protection. It’s going to take a long time. And he’s only in there until June. They have rule-writing over every single U.S. financial institution; probably over 20,000 companies when it’s all said and done.”
Hunt said he worries regulators may back off too much. “The one thing we are worried about in Washington is the pendulum will continue to swing. It swung all the way to the left. Now it’s going to swing all the way to the right. And then in five years if they still have a single director, guess what’s going to happen if a Democrat takes over the White House? They are coming back with a vengeance. And it will swing all the way back to the left.
“We are trying to depoliticize the CFPB. We are trying to bring it more to the middle so the pendulum doesn’t continue to swing. Right now, Rick Mulvaney said he has 100 enforcement actions on his desk. Some of them he has withdrawn, but it is time we really get in there and get a five-person bi-partisan commission to get this done.”
Hunt said the next election may bring a change in the political winds. “We have three years to get our house in order because I am not sure how long pro-banking people will be in Congress,” Hunt said. “Right now, in the U.S. Senate it’s 51-49 Republicans – a two-seat majority. Right now, I can name two states I think the Democrats are going to win and three states the Democrats are going to lose. So, we go to 52-48, Republican. If there is a Supreme Court nominee to consider, Washington D.C. will shut down … So all this reform package we keep talking about, we better get that thing passed quickly before Washington shuts down.
“On the House side, this is going to be tough. It is a very slim majority. There is a chance Republicans are going to lose seven seats just in California. If the election were held today, Nancy Pelosi would be the next speaker of the House of Representatives. It will be Maxine Waters as chairman of the House Financial Services Committee. That would not be good. So, you have to be real careful about the election results coming up. That’s why we have to get real good reg reform passed now before it is too late,” Hunt said.
“Over the next three years, don’t screw it up. We have the dream team in Washington D.C.,” Hunt summarized. “We don’t have the crosshairs on us anymore. Let’s right the ship, make it more moderate, so we can have a good, longstanding economy and banking system.”