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In This List

Washington Wrap — Banking regulatory agenda still intact despite Trump cuts

Street Talk Episode 68 - As many investors zig away from bank stocks, 2 vets in the space zag toward them

Street Talk Episode 66 - Community banks tap the debt markets while the getting is good

Street Talk Episode 67 - Veteran investor tabs Mick Mulvaney to help with latest financial stock-focused fund

Street Talk Episode 65 - Deferral practices trap US bank portfolios in purgatory


Washington Wrap — Banking regulatory agenda still intact despite Trump cuts

The Washington Wrap is a weekly look at regulation, news and chatter from the Capitol. Send tips and ideas to brian.cheung@spglobal.com and polo.rocha@spglobal.com.

At the Regulators

On Dec. 14, President Donald Trump held a press conference at the White House where he cut the ribbon off of a large stack of papers representing the "ever-growing maze of regulations." Trump claimed that the administration has eliminated 22 regulations for every new regulation created.

Trump's speech came as the Office of Management and Budget released its regulatory agenda for 2018, detailing each agency's priorities for the next year. But an analysis of the agendas for the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau appear largely unaffected by Trump's promises to cut regulations in the banking space.

The OCC, for example, still says it is working on the net stable funding ratio. At the CFPB, work on a rule concerning overdraft is still listed as being in the "prerule" stage while student loan servicing is still listed as a long-term priority.

One notable addition concerns the Volcker rule, which the OCC listed as being in the "proposed rule" stage with a target date for a notice of proposed rulemaking around March 2018. The OCC said the proposal would be aligned with suggestions from the U.S. Treasury Department to exempt institutions with less than $10 billion in total assets from Volcker compliance entirely.

Although the regulatory agenda appears to show little pullback in work at the CFPB, 17 attorneys general wrote to Trump on Dec. 12 warning him that the states will "redouble" their efforts on consumer protections if his choice of acting director, Mick Mulvaney, rolls back work on federal enforcement. The attorneys general voiced support for the agency and expressed concern over Mulvaney's leadership given his previous comments calling the CFPB a "joke."

At the Fed

Federal Reserve Chair Janet Yellen said Dec. 13 she is not too concerned about stocks potentially dropping from record highs.

Yellen, in her last news conference as Fed chair, said a stock market correction is one of many possible risks the Fed monitors but said it likely would not "provoke financial stability concerns." That is partly because the U.S. has a "much more resilient, stronger banking system" today, she said.

"When we look at other indicators of financial stability risks, there's nothing flashing red there or possibly even orange," she said.

Yellen spoke shortly after the Federal Open Market Committee announced it would raise its benchmark federal funds rate to a target range of 1.25% to 1.50%.

Two FOMC members who have raised concerns about stubbornly weak inflation dissented on the rate hike: Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans.

Yellen said inflation is below the Fed's 2% target likely due to "transitory" reasons and that it should reach the Fed's goal within the next couple of years. But Evans said in a Dec. 15 statement explaining his vote that he was concerned "persistent factors are holding down inflation," not temporary ones.

At the OCC

The OCC appears to have survived one of two major lawsuits threatening its special purpose national bank charter designed for fintech companies. On Dec. 12, the U.S. District Court of the Southern District of New York dismissed a lawsuit from the New York Department of Financial Services challenging the OCC's authority to issue such charters, arguing that the state regulator should have the authority to regulate nonbanks.

The OCC is still facing a lawsuit from the Conference of State Bank Supervisors over similar claims.

On Capitol Hill

The House Financial Services Committee passed a number of bills out of the committee this week. One notable bill, introduced by Rep. Claudia Tenney, R-N.Y., amends the Truth in Lending Act to create a safe harbor from escrow requirements for creditors with less than $10 billion in total assets that hold mortgages on their balance sheets for three years. The bill would also exempt companies that service 20,000 or fewer mortgage loans annually.

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