Financial Services and Banking Update for June 2017
Housing finance reform took center stage the month of June. An area that both Republicans and Democrats view as needing reform, experts debated the need to move Fannie Mae and Freddie Mac out from under the Federal Government’s conservatorship. Despite an agreement to the need for reform, ideas for achieving this goal vary greatly and spark heated debate. At the heart of the issue is concern over the affordability and access to reasonable rates and terms on home mortgages. Concern over another taxpayer funded bailout is pitted against the “American Dream” of homeownership.
On June 5th, President Trump announced his intentions to nominate Joseph Otting, CEO of One West Bank, as Comptroller of the Currency. Once confirmed by the Senate, Otting will take over for the current acting Comptroller, Keith Noreika. This position was previously held by Thomas Curry who caused waves in both Washington and the financial services community on the whole with a proposed OCC charter for fintech. Curry’s charter would allow fintech companies to apply for a charter through the OCC but without the full requirements of a bank chartered by the OCC compliance. Unfortunately, Curry’s draft was not well received by the industry or Congress. The odds against any further movement of the OCC’s fintech charter seemed stacked against Curry’s proposal.
As more and more small businesses take advantage of the ease and convenience of online lending, consumer rights concerns grow, especially in Congress. In June, Congressman Emanuel Cleaver, II sent a letter to a number of online, small business lender CEOs asking for information on possible discrimination in their lending. With little to no data available on the demographics of the business owners borrowing online, concerns over fairness are difficult to address for these companies. However, as the Consumer Financial Protection Bureau (CFPB) attempts to implement a requirement to study small business lending, known as Section. 1071 of the Dodd-Frank Act, more of these concerns may come to light.
Although Washington will focus on health care reform for the next three weeks, a plethora of issues in the financial services area will still receive attention. For example, a July Federal Reserve Board meeting will center around a potential interest rate hike when faced with volatile global markets.