Window of opportunity opens for meaningful change in Washington
By Colin Barrett, President/CEO, Tennessee Bankers Association
The last four years of the Biden Administration have put unnecessary burdens on Tennessee banks and their customers.
For instance, Treasury Secretary Janet Yellen’s attempt to mandate that banks report customer account information to the IRS raised privacy concerns and would have imposed significant compliance costs. Similarly, the CFPB’s rules for Sections 1071 and 1033 of the Dodd-Frank Act create burdensome reporting requirements of customer information and expose banks to increased liability. There is also the rewrite of the Community Reinvestment Act, which would put additional requirements on traditional banks resulting in the continued growth of the non-bank financial sector.
Meanwhile, the FDIC has been run more like a political machine than a regulatory agency with partisan votes by its board members replacing years of consensus decision making. Not to mention, their examiners have come down hard on high performing Tennessee banks due to their own lack of understanding of advancements within the industry.
I am more than ready to turn the page and welcome new regulatory leadership that has the opportunity to make it easier, and much less intrusive, for Tennessee banks to serve their customers.
But there is still much we do not know about a second Trump Administration, and a number of promises have been made by the President-elect that could be detrimental to our industry. There is concern around the impact on prices if Trump imposes new tariffs. And his promise to cap credit card interest rates might provide temporary assistance to consumers but, in the long term, would hurt those who use credit responsibly.
At this point we do know that tax reform is the first priority of the incoming Trump Administration. After that, it is hard to predict where the focus will lie. It is up to us to make sure that previous decisions detrimental to our industry and customers are top of mind for both the President and Congress.
An immediate issue to address is CFPB’s rule on 1071. Earlier this year, the House and Senate
used the Congressional Review Act to block the regulation earlier this year with bipartisan support, President Biden vetoed it. Although this option is now off the table, a new head of the CFPB could delay or rewrite the rule. However, any efforts of the new CFPB Director to entirely withdraw the rule would most certainly draw a legal challenge from Senator Elizabeth Warren who is poised to be the new ranking member of the Senate Banking Committee.
The timing is right, however, to use the Congressional Review Act to block the CFPB’s rule on Section 1033, which would allow third-party access to customers’ bank accounts. Some aspects of the rule, including allowing fintechs more access to the industry, have bipartisan support, so CRA may not be viable. Overall, the rule’s scope and liability still make it unworkable if bankers are expected to protect customers’ privacy and accounts. This must be addressed by the next CFPB Director.
As for the Community Reinvestment Act, it will likely be reworked by new Trump appointed agency heads. The question for the industry will be if we would rather continue with the current CRA framework or risk an update that could lead to something much more onerous. That said, industry lawsuits on this and other rules that were promulgated over the last four years will continue unless they are withdrawn.
Our industry operates best when we have a functioning Washington and healthy economy. There is no guarantee that either will happen over the next four years, but I am optimistic about the opportunity to get back to the actual business of banking.
As we prepare for this next chapter, your engagement is crucial. Tennessee’s Republican-led Congressional delegation will have more influence now in a Republican controlled Senate, House and White House. And we will have numerous opportunities for you to join us in D.C. in the year ahead. I encourage you to make your presence felt and your voice heard.