Youngstown Daily Legal News

Ohio banks are giving more of their attention to consumer protection

TIFFANY L. PARKS
Special to the Legal News
Published: September 1, 2015

On Friday, Aug. 7, bankers from around the state gathered at the Fawcett Center for the chance to get up close with consumer compliance examiners who work for the major banking regulation authorities.

The issues discussed at this year’s Ohio Banker’s League Regulator Roundtable ranged from overdraft fees to flood insurance during a question-and-answer session where community banks and thrifts were given the opportunity to ask direct questions of the men tasked with ensuring that banks stay on the up-and-up in a sea of ever-changing rules and regulations.

“I think forums like these are so important for the industry because it allows for a dialogue,” said Mike Adelman, president of the OBL. “A number of bankers pulled me aside today and said this is just a great, nonadversarial sort of format, it’s just like a big, one-on-one conversation (and) the regulators aren’t up there hitting us with platitudes.”

Present on the panel were John George of the Federal Deposit Insurance Corporation, Archie Johnson of the Consumer Financial Protection Bureau, Guye Pennington with the Federal Reserve Bank of Cleveland and Chris Saunders from the Office of the Comptroller of the Currency.

A big focus of this year’s panel was the question of “consumer harm,” and it was a topic that came up often as banks are under enormous amounts of scrutiny since 2007’s economic collapse.

“We saw examples of this when questions were going down the line about unfair, deceptive, abusive practices,” said Jeff Quayle, senior vice president and general counsel for the OBL. “The CFPB is leading the way on consumer harm ... and you’re seeing the other agencies saying yes, that’s influencing our examinations and our measurement of risk metrics.”

This new shift in focus at the CFPB has “changed the dynamic” among the banking regulators and examiners, according to James Thurston, OBL’s vice president of public relations. “This is the first time that there has been an agency devoted to consumer protection which, by definition, is what the CFPB is all about,” he said.

Although the CFPB is responsible for overseeing only banks worth $10 million or more, the rules that it writes apply to everyone, “so they’re clearly setting the standard for consumer compliance throughout the industry,” Quayle said.

But other issues discussed at this year’s roundtable were not so clear-cut.

Quayle, who moderated the discussion, asked the agency representatives about digital technology. The question elicited crickets from the compliance men.

“The issue is that a lot of these rules were written 30 years ago” said Quayle. “I was fishing a little bit (when I asked the question) because you can’t talk to a group of bankers now without talking about how access to digital technology impacts marketing, impacts profitability, impacts lending, impacts every phase of banking.”

“I can think of so many rural banks that were represented here today and they just haven’t gotten there in terms of technology,” said Adelman, noting that compliance relies on the laws that are in place at any given moment, and with the “sheer volume” of regulations that have been thrown on the industry, sometimes technology just isn’t a bank’s priority.

Digital banking and technology was just one issue this year that reflected a tension between banking regulations and emerging trends.

Similar to last year’s roundtable, flood insurance was discussed at length, with a warning from Saunders of the OCC: “Climate change is not going anywhere.”

Whether the bankers like it or not, Saunders said, federal flood insurance requirements are here to stay.

Overall, the banking industry and the regulators were able to have an amicable discourse on the issues that affect them most.

“That’s not to say that everything always goes well,” said Adelman. “But certainly, if you’ve got relationships and good lines of communication, hopefully you can avoid those pointy elbows and sit down and mitigate those issues amicably.”

Thurston agreed, stating that the banking industry is uniquely positioned because of events like the roundtable: “A lot of regulated industries are not going to get this kind of opportunity.”

[Back]