A Refreshing Perspective
I just attended the Washington Bankers Association Convention in Suncadia where the keynote speaker was FDIC Chairman Jelena McWilliams. She has been in the job for just over a year, but brings a fresh perspective to the industry. Her varied and impressive background as a lawyer, Chief Counsel to the Senate Committee on Banking, and Chief Legal Officer at Fifth Third Bank was reflected in her attitude and candid comments. The following are some of my takeaways.
The FDIC has adopted a “Trust Through Transparency” approach, which includes publishing timeframes and expectations for processing various applications and exam reports. Essentially, it is a means of keeping her staff accountable, which she seems committed to accomplish. Toward that end, Chairman McWilliams advised that it was her goal to visit all 50 states to spread that message and solicit feedback from those working with the FDIC.
Again professing support for new bank formations, Chairman McWilliams voiced the same frustration she has heard about excessive delays and “black holes” for new bank applications. She highlighted that not every market needed $20 million in capital to support a new bank – adding that some have even been approved at $8 million. Eight percent capital after three years of operation is the minimum expectation. Whether her encouraging tone will be followed in the various regional offices is still open to question. However, word on the street is that not all new banks will need Washington, D.C. signoff, provided they follow traditional community bank models.
Last fall, the FDIC launched their “Office of Innovation" and the Chairman was adamant about the need for technology and melding it with traditional banking. The message I heard was that she would be supportive in this arena with the right players.
Industrial Loan Banks
In her own words, Congress approved industrial bank creation by statute and the FDIC’s job was to permit new charters where the business plan and organizers justify it. Again, a sharp contrast to where we have been the last decade. Things are looking up for Square.
Reduce Onsite Exam Time
Playing to the technology theme, one of Chairman McWilliams goals is to make the exam process more efficient and shorten its length and onsite visit time. It is clear she believes this is doable.
Review Every Rule and Regulation
Amazingly and ambitiously, Chairman McWilliams said it was time to review all FDIC rules and regulations, given the passage of time and changing conditions. We shall see if she can accomplish this goal within the remaining four years of her initial term as Chairman.
Long Economic Cycle
In response to a question from Laurie Stewart, Chairman McWilliams said the things that concerned her most were cybersecurity and the length of our current economic cycle. Quoting Charles Dickens, “These are the best of times.” In other words, the FDIC is still waiting for the other shoe to drop.
All in all, it was a remarkably candid, funny, and insightful presentation. Her positive attitude left the audience upbeat and bodes well for continued regulatory reform at the FDIC.