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Humility Pledge
The extent of the change in bank supervision under the Trump administration can be summed up with a new “humility pledge” that examiners at the Consumer Financial Protection Bureau recite to a bank when beginning an exam. The CFPB examines banks above $10 billion in assets and some nonbanks for compliance with consumer regulations.
"... the bureau’s goal is to work collaboratively with the entities to review entities’ processes for compliance and/or remedy existing problems,” the pledge states. “The bureau is doing so by encouraging self-reporting and resolving issues in supervision, where feasible, instead of via enforcement."
The 399-word pledge ends with contact information for the examiner’s supervisor, in case the bank has any complaints.
After the industry pushed back on banking regulations under the Joe Biden presidency, including an aggressive consumer protection regime and higher capital standards, this administration is intent to roll back regulations, coordinate better between regulatory agencies and focus on threats to safety and soundness.
But advisers at Bank Director’s Bank C-Suite Summit last month in Nashville, Tennessee, cautioned banks against rolling back on compliance with existing laws and good lending practices. “When the next administration comes in, there is going to be a look back,” said Mark Kanaly, a partner at Alston & Bird. Examiners can review a bank’s books to find evidence of wrongdoing or noncompliance, which can extend into a prior administration’s tenure. Banks often must hire consultants to help with the look back, not to mention to correct regulatory findings. Josh White, a certified public accountant who works with financial institutions at Elliott Davis, agreed. “I would caution you not to take a foot off the pedal,” he said.
Sal Inserra, senior advisor to Bank Director and a former audit professional, summed up his thoughts on stage about the benefit of clear rules. “I like handcuffs,” he said. “I have seen how if handcuffs are removed, folks make decisions that are not in their best interests.”
• Naomi Snyder, editor-in-chief for Bank Director
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