June 14, 2017

U.S. House Votes to Roll Back Dodd-Frank Financial Rules
Treasury Releases Report on Core Principles of Financial Regulation
Lawmakers Decry Withdrawal of Durbin Amendment Repeal
View from the District: Fintech: Balancing the Promise and Risks of Innovation
BankThink: Community banking's future is in offering advice, not products

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U.S. House Votes to Roll Back Dodd-Frank Financial Rules                    
by Associated Press

The Republican-led House has moved closer to fulfilling President Donald Trump's goal of doing "a big number" on Dodd-Frank, the landmark banking law created after the 2008 economic crisis that was designed to prevent future meltdowns.

But the effort will likely require some major changes to bring about Democratic support in the Senate. Such support was missing entirely when the House voted 233-186 Thursday for a bill that would undo much of Dodd-Frank. House Republicans recognize the uphill climb, but were happy to chalk up a victory.

"Our families, small businesses and communities have been desperate for this change for years," said Rep. Steve Scalise, the House majority whip.

House passage was widely expected. Senators have said they'll spend the next few months trying to find common ground on legislation designed to boost the economy. Potential areas for compromise include changes to how much capital banks must maintain and decreasing the paperwork burden for small lenders.
Democratic Rep. Maxine Waters of California urged senators not to take up the House bill.
Read more....   
The U.S. Department of the Treasury issued its first in a series of reports to President Donald J. Trump examining the United States' financial regulatory system and detailing executive actions and regulatory changes that can be immediately undertaken to provide much-needed relief. 
"Properly structuring regulation of the U.S. financial system is critical to achieve the administration's goal of sustained economic growth and to create opportunities for all Americans to benefit from a stronger economy," said U.S. Treasury Secretary Steven T. Mnuchin. "We are focused on encouraging a market environment where consumers have more choices, access to capital and safe loan products - while ensuring taxpayer-funded bailouts are truly a thing of the past."
Over the past four months, Secretary Mnuchin and other Treasury officials met with hundreds of stakeholders across the financial ecosystem, including community, independent, regional and large banks, regulators, FSOC members, consumer advocates, academics, analysts and investors. These listening sessions provided a very clear picture of redundancy, fragmentation, and inefficiency in our regulatory framework.
"We congratulate the House on passing the Financial CHOICE Act. The report we are releasing today focuses on solutions the Executive Branch can execute through regulatory changes and executive actions. We look forward to working on a parallel track with Congress to provide swift relief, particularly to community banks," said Mnuchin.
The report detailed the following findings:
  •          Community financial institutions - banks and credit unions - are critically  important to serve many Americans
  •          Capital, liquidity and leverage rules can be simplified to increase the flow of credit
  •          We must ensure our banks are globally competitive
  •          Improving market liquidity is critical for the U.S. economy
  •          The Consumer Financial Protection Bureau must be reformed
  •          Regulations need to be better tailored, more efficient, and effective
  •          Congress should review the organization and mandates of the independent banking regulators to improve accountability
See the full report.... 
During the debate over the Financial CHOICE Act, several key lawmakers lamented the withdrawal of a provision to repeal Durbin amendment price controls on debit card interchange fees.

In an exchange on the House floor, House Financial Services Committee member Ted Budd (R-N.C.) and Subcommittee on Financial Institutions and Consumer Credit Chairman Blaine Luetkemeyer (R-Mo.) cited the cost of the Durbin amendment to community banks and consumers.

Budd noted that community banks have seen interchange revenue fall 20 percent, while Luetkemeyer said the only entities that have benefited from the price controls are large retailers.

"Basic economics tell us that when government fixes market prices, consumer welfare suffers," added committee Chairman Jeb Hensarling (R-Texas), who introduced the CHOICE Act and was forced to withdraw the Durbin repeal due to pressure from colleagues. "It's not a surprise that the Durbin amendment resulted in a net loss of perhaps $25 billion for consumers."

Watch the exchange.... 
by Teresa Curran, Executive Vice President and Director, Financial Institution Supervision and Credit, Federal Reserve Bank of San Francisco

One of the hottest topics I am often asked about today is financial technology or fintech, as it is widely known. Fintech is a broad term, but at its core, it refers to the use of technology to better deliver banking products and services. These services could be in the form of lending platforms, payment processes, investments and savings, blockchains, digital currencies, or a host of other areas. In all of these sectors, fintech has the potential to transform financial products and services for consumers and small businesses.

Think about it. Consumers can now use their smartphones and other mobile devices to manage their money, transfer funds, or obtain a loan. This type of accessibility has altered their expectations and demands about when and how they should be able to conduct financial transactions. In my view, the expectation for an on-demand experience is just one of the permanent changes driving today's innovation.

Learn more.... 
BankThink: Community banking's future is in offering advice, not products                          
The familiar face that is always available to help; the person you visit during life's most exciting events (your first house, your business startup); the individual who generously gives back to the community. That was my perception of the community banker when I was growing up.

Bankers were trusted community leaders. If you attained such a label, you made your parents proud and found purpose in your calling. Today, however, some parents may be less eager for their children to grow up and become bankers. This is because the public perception of the banker has changed, especially in the last dozen years.

Many banker reputations were wrongly (and a very few rightly) dinged and battered during the Great Recession. Other bankers suffered image erosion by simply not keeping up with changes in customer preferences. The overhang of excessive regulation - or even the threat of it - simply took some of the wind out of their sails.

With digital technology, paper transactions will eventually reach nonexistence. But this just means community bankers need to shift focus to solving customers' problems and answering their questions - not selling them products.  

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