Panel, Conference Presentation
Modernizing Financial Regulation to Facilitate Shared Economic Prosperity
Milken InstituteMichael Piwowar, Kathy Kraninger, Eugene Ludwig, Jelena McWilliams, Joseph Otting, Mike Pivovar, Tom Coury
- Financial institutions expect a 60% reduction in institutional letters and a modernized supervision process using technology, with the FDIC aiming to allow internal innovation or fintech partnerships to expand services to underbanked communities.
- The FDIC plans a listening tour in 14-15 states by the end of the summer and 22-23 states later, while the CFPB intends to meet consumers in 14-15 states by summer's end, eventually visiting all 50 states.
- Regulatory reviews are targeted to identify and remove outdated, unnecessary, or duplicative rules, with a specific goal for the OCC to finalize rule changes benefiting banks with assets of $10 billion or less by the fourth quarter of the current year.
- The CFPB anticipates assessing the cost-benefit effectiveness of rules implemented five years after the financial crisis, such as the TRID rule, after identifying the most impactful regulatory burdens from a pool of 1,750 unique issues.
- The OCC expects to complete the process for fintech national bank charters between nine and 12 months, anticipating a number of filings in the current quarter from entities focused on small-ticket lending or asset custody.
- Banks project a potential 25% to 30% increase in Community Reinvestment Act (CRA) spending if provided with clearer guidance on unique investments and a measurement system that reduces the current three-year wait for determinations.
- Regulators view the current CRA as an opportunity to transform annual lending volumes for low- and moderate-income Americans from $500 billion to $800 billion through better assessment area clarity and credit for minority depository institution investments.
- There is an expectation that a five-year regulatory review cycle is insufficient given the speed of change, prompting calls for smart regulation that allows institutions to safely adopt new technologies in a timely fashion.
- The CFPB aims to prioritize financial education as a primary mission, including deep dives into examination processes to encourage self-identification of issues and partnerships with employers to boost savings.
- A final policy position on the trial disclosure policy is being formulated from received comments, alongside ongoing efforts to align federal and state regulatory frameworks and discuss the risks and opportunities of financial innovation.
- Cybersecurity and technology risks are highlighted as systemic issues where consumer harm can spread globally instantly, with current institutions often lacking the technology to identify problems at the C-suite level.
- Regulatory coordination is proposed to ensure compliance burdens are not excessive, particularly regarding cybersecurity data requests, while legacy banks' ability to adopt fintech is seen as critical for system relevance over the next decade.