Community Banks

As you have been reading here on the blog, we released the first draft versions of a combined Good Faith Estimate and Truth in Lending disclosure form in May. Here on the website, we asked for public feedback through the Know Before You Owe project. We’ve also been talking to some of the institutions that will have to use these forms with their customers.

Shortly after Know Before You Owe launched, I was a guest at the New Hampshire and Vermont Bankers Associations’ annual compliance conference. I was struck by participants’ enthusiastic response to the project. Many attendees mentioned that they were impressed not only by the lower burden imposed by the draft forms, but also by the CFPB’s eagerness to solicit feedback at an early stage of the process.

We also spoke with community bankers from Connecticut, Rhode Island, and Massachusetts when they stopped by the CFPB office. Steve Antonakes, the CFPB’s Assistant Director for Large Bank Supervision, and I answered a variety of questions and gathered input from individual bankers about each of their views. One banker suggested that we conduct outreach to the software providers who help create mortgage disclosure forms. This will help bring the technological concerns around building these forms into the process.

Later that afternoon, we discussed the Know Before You Owe forms with individuals from 20 credit unions who each shared their own opinions. This ad hoc meeting lead to valuable, specific insights on what mortgage information works best for consumers.

We are committed to remaining attentive to the concerns of credit unions and community banks throughout the development of CFPB priorities, and we look forward to continuing this dialogue for future CFPB initiatives.

A mortgage loan market that works for all Americans benefits from input from many places. We wanted to make sure individuals from credit unions and community banks were heard from alongside the consumers they serve and other stakeholders.

The CFPB plans to issue a regulatory proposal on mortgage disclosure for public comment in the future.

Since Professor Warren spoke at the Independent Community Bankers of America convention last month, she and I have continued to meet with community banks and credit unions. We were thrilled to reach the milestone of connecting with small providers in all fifty states, but we know there is still more for us to do. As we said at the time, we are continuing to reach out to independent bankers and credit unions from across the country to better understand their concerns.

The week before last, Professor Warren connected with thirty-eight members of the North Carolina Bankers Association in Charlotte. In Columbus, Ohio, I spoke about the new consumer bureau and our goal to ensure a level playing field for small depository institutions with several hundred members of the Ohio Credit Union Association at their annual convention. And over the last two weeks, we have been in touch with community bankers from California, Arkansas, Kentucky, New York, and Alabama. We have reached out to the State Department Federal Credit Union, and we spoke to the community bank group at the American Bankers Association.

Finally, last week Professor Warren traveled to Lexington, Kentucky, where she delivered the Chellgren Lecture at the University of Kentucky Law School. While there, she also participated in a seminar in Louisville called A Day with the Commissioner. The event was hosted by the Kentucky Department of Financial Institutions and the Federal Reserve Banks of St. Louis and Cleveland. Many attendees of the seminar came from nearby banks, and Professor Warren stressed that consolidating the functions of several agencies into one will simplify the banks’ regulatory burden.

In our first week on the job, Professor Elizabeth Warren set a goal for the new consumer bureau: to reach out to small, independent bankers from all 50 states before July 21st. We are excited to announce that she has reached her goal early after speaking to bank heads from Arizona, New Jersey, New Hampshire, Maryland, and Connecticut.

From Hawaii to Maine to Texas to Florida, we have engaged in thoughtful discussions with hundreds of bankers who come from all walks of life. We are grateful to them for the time they have spent with us, and we have listened closely to their thoughts and concerns. As we’ve worked toward our 50-state goal, we’ve tracked our progress with a map in my office. The pushpins below are a small piece of it; we’ve also kept it up to date here on the website.

Speaking to bankers from all 50 states is a starting point. But making sure bankers will be able to continue effectively serving their customers cannot stop after a single meeting. We will continue to engage with the small institutions that help to create a robust and diversified financial services marketplace.

As part of this mission, Professor Warren was the keynote speaker at the Independent Community Bankers Association’s annual conference in Southern California last month. She spoke to more than 1,500 community bank CEOs about the new bureau’s top priorities and our commitment to engage with community banks as we build the CFPB. As she says in the clip below, there are issues they understand all too well, and we need them to share that knowledge.

During my many visits with you, I’ve heard about the high cost of regulatory compliance. I understand the difficulty of determining what is or is not required by a particular regulation – and the costs that creates. I appreciate the widespread anxiety and frustration over the future of community banks and other small financial institutions. I know that you want a regulatory structure that doesn’t require an army of lawyers. Big banks may be able to afford to hire all those lawyers, but you cannot.

This is what you have said to me in visits all around the country: Community banks work hard to build long-term partnerships with the families they serve. Community banks didn’t cause this financial crisis. And badly done regulation can further weaken our community banks, significantly increasing the pressures they face. How should the new consumer bureau incorporate these lessons into its work?

Read her full remarks.

Last Tuesday morning, Professor Warren spoke to the Credit Union National Association (CUNA) at its Annual Governmental Affairs Conference. CUNA is a trade association representing 90 percent of America’s credit unions.

Professor Warren spoke to them about the CFPB’s emphasis on clarity. She suggested that in a market in which prices and risks are clear up front, the investments made by credit unions in “creating a valued partnership with your members can be a real competitive advantage.” Take a look:

Read the full text of her prepared remarks.

Also last week, thirty-five members of the Delaware Bankers Association visited Washington to meet with several federal agencies and Congressional staffers. On Friday, Professor Warren sat down with the group to share ideas. Three quarters of the attendees were presidents or CEOs of smaller banks with assets of less than $10 billion.

Professor Warren reviewed three of our top priorities, all of which should help community banks and other providers who want to offer beneficial products to their customers in a transparent manner: consolidated and streamlined mortgage shopping disclosures, simplified credit card agreements, and supervision of non-bank entities that have not previously been subject to Federal oversight. We strongly encouraged their use of our website to share their expertise and input as we stand up this consumer bureau.

Elizabeth Vale is the Assistant Director of External Affairs for Small Business and Community Banks.

Small financial institutions like community banks and credit unions play key roles in a competitive consumer financial products and services marketplace. They are community members as well, often personally connected to the customers they serve. Each week, we hope to highlight the interaction the consumer bureau has had with these smaller institutions.

Last week, Elizabeth Warren met in Rosemont, Illinois, with twenty members of the Community Bankers Association of Illinois (CBAI). She discussed the consumer bureau’s priorities and highlighted the Office of Community Banks and Credit Unions. This office is dedicated to communicating with small financial service providers about their concerns, feedback, and suggestions.

The bankers from CBAI expressed concerns about possible increases in their regulatory burden. They cited how mortgage forms have changed over the last few decades as an example of why they are concerned. One banker demonstrated how these forms have grown more complex over time by comparing forms used decades ago with forms used today. Today’s forms are noticeably more complex. The CFPB is working on a mortgage disclosure project that will make it easier for families to see the costs and risks upfront and give them the tools to help them make the choices that are right for them.

The CBAI bankers also asked about the consumer bureau’s plans for supervising non-bank financial institutions. They echoed one of the CFPB’s top priorities: ensuring all institutions compete on a level playing field.

Elizabeth Warren also spoke with several bankers from the Community Bankers of Washington. They shared the CFPB’s belief that financial literacy is essential, and they stressed the need for a robust and diversified banking industry. They also asked about how often the CFPB must report to Congress, a question which a lot of people may want answered. By law, the consumer bureau must submit reports to Congress twice a year on matters relating to its budget and activities, in addition to submitting several other issue-specific reports specified by Congress.

Elizabeth Vale is the Assistant Director of External Affairs for Small Business and Community Banks.