Level playing field in finance takes focus at CBA LIVE 2021
Richard Hunt, President and CEO of the Consumer Bankers Association, reflects on this year's CBA LIVE conference and some of the top issues facing the retail banking industry.
We heard some fascinating remarks from Acting Comptroller Michael Hsu, but what are some other highlights from CBA LIVE 2021 that you feel deserve special mention?
As the banking industry rapidly evolves, I continue to hear of the important work CBA banks are doing to create diverse and collaborative work settings, even when some members of the team are remote. The pandemic also reinforced our industry’s commitment to reach underserved communities, and one of our Super Sessions, focused on expanding access to credit, illustrated how banks can bring more unbanked Americans into the well-regulated, well-supervised financial system. Lastly, it is clear America’s leading banks are continuing to make investments in their digital offerings as more and more of their customers use these platforms.
Despite a last-minute shift to a virtual setting, CBA still managed to deliver CBA LIVE 2021 attendees insights from more than 150 speakers and 66 hours of programming. In light of that success, do you think we will see more industry conferences like this held virtually in the future, even when there aren’t external factors like a pandemic?
The COVID-19 pandemic has forced organizations of all sizes to be nimble and quickly adapt, including those planning conferences. Clearly, technology has shifted the way we all work over the past 18 months, but I still believe there is immense value in meeting industry leaders face-to-face. As public health conditions improve, in-person conferences will return in some form. For example, if a company organized 20 conferences annually before the pandemic, I expect that company will now hold 15 in-person and five remote.
Hsu spoke of the need for interagency cooperation to establish a level playing field in markets. What would you like to hear from other banking authorities on this matter?
RAs Acting Comptroller Hsu mentioned, the current regulatory framework does not reflect the dramatic evolution of the banking industry that has occurred since the 2008 financial crisis. For the policymakers who wrote the Dodd-Frank Act more than a decade ago, the word “fintech” was not even in their lexicon. Risk-based capital requirements, safety and soundness regulation, and supervision by federal prudential regulators have strengthened banks and provided security and protection for consumers. As CBA has long warned, until all market participants, including fintechs, are held to these same broad oversight requirements, consumer protections and the safety and soundness of the broader economy are increasingly at risk.
We’ve recently learned via an academic study that nine of the 10 lenders that issued a high number of problematic Paycheck Protection Program loans were fintechs, and not traditional banks. Do you think this marks a turning point in how the public, and regulators, view fintech lenders?
Banking activity outside the regulatory system is significant and growing rapidly with the emergence of fintechs. Collectively, fintechs control nearly 50% of the personal loan market, up from just over 22% – more than double – in 2015. This study is just the latest in a series of fintech red flags over the last several months, highlighting the growing regulatory disparity within the banking industry today. Levelling the playing field for banks and non-bank lenders alike will not only mitigate the risk of broad consumer harm, but also establish a truly competitive banking landscape all Americans can safely benefit from.
CBA and several other trade groups recently called for legislative action to change the CFPB’s governance structure in a bid to keep it more isolated from shifting political winds. What is your read on Washington’s appetite for such a change?
The CFPB holds enormous influence over more than 300 million Americans and virtually every sector of the economy. Since its inception, it has suffered from revolving leadership between changes in administrations, causing significant uncertainty for consumers and the market. CBA has long advocated for replacing the single director with a Senate-confirmed, five-person commission to lead the bureau in a transparent manner, ensuring it no longer is plagued by the swinging political pendulum in Washington, D.C. I hope policymakers of all ideological backgrounds recognize until the bureau’s governance structure is reformed, consumers will not receive the high level of protection they deserve.