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The Examiner

Everybody wants respect. In their own way, three-year-olds would like respect, and acknowledgment, in their terms.

- Aretha Franklin

In This Issue...

     - CSBS Chairman Corley: FDIC needs a state regulator on its board
     - CSBS Releases 2017 Annual Report
     - 2019 CSBS Case Study Competition to Focus on Federal Regulatory Relief Law
     - Texas Deputy Commissioner Robert L. Bacon to Retire
     - Senate Nominations Update
     - Media Highlights

CSBS Chairman Corley: FDIC needs a state regulator on its board

CSBS Chairman and Mississippi Commissioner Charlotte Corley writes for the American Banker:

The Federal Deposit Insurance Corporation is the federal regulator for most of the nation’s state-chartered banks. But even though it is required by law, there is no one with state bank supervisory experience on the FDIC’s board of directors.

That must change — and now is the time. The administration has an opportunity to fill a current vacancy on the board and it should use this opportunity to nominate someone with state bank supervisory experience.

State-chartered banks make up 79% of the nation’s banks. They are regulated by state bank supervisors, and most also are examined at the federal level by the FDIC. That makes the FDIC arguably one of their most important federal-standard setters. As a state bank supervisor, I know first-hand the importance of these institutions in our communities. It is just as important to have someone who has been a state bank supervisor on the FDIC board, as is required by law.

There are approximately 4,400 state-chartered banks, which are mostly community banks, in the United States. Many have a small but vital footprint in their communities. State-chartered banks provide 75% of all agriculture lending and nearly half of all small business lending in the nation. That means they are helping farmers finance their new equipment and a local restaurant or hardware store maintain its business or grow.

In small town America, these issues are critically important. And I think it is equally important for the FDIC board to have someone who understands the state banking system. State bank supervisors have a unique perspective on banking services in local communities. They are mandated to ensure the safety and soundness of these banks, protect consumers and support economic development of their communities.

Congress recognizes this need. In 1996, it amended the Federal Deposit Insurance Act to require that, separate from the comptroller’s and the director of the Consumer Financial Protection Bureau’s seats on the FDIC board, one of the three independent positions must be held by someone with state bank supervisory experience. The law is clear that this requirement is only met by a person who has worked in state government as a supervisor of state-chartered banks, and as Congress noted, someone with “state bank regulatory expertise and sensitivity to the issues confronting the dual banking system.”

Yet no one has met this requirement on the FDIC board since former Massachusetts State Bank Commissioner Thomas Curry finished his term in 2012 to lead the Office of the Comptroller of the Currency. Although Curry still served on the FDIC board in his role at the OCC, he no longer met the requirement as it’s described under the law.

I want to be clear that we need a number of voices on the FDIC board. It is important to have those who have worked in and are knowledgeable about Washington policy. But to have a board solely made up of policymakers not only sidesteps the law, it ignores the importance of why it was created. Congress saw that the FDIC board needs practitioners, as well as policymakers.

The FDIC board needs someone who knows about local banks and the communities they serve. It needs a state bank supervisor.

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CSBS Releases 2017 Annual Report

CSBS released this week its 2017 Annual Report, highlighting accomplishments and progress of the organization through the past year.

Annual Report Image

Key highlights from the report:

  • Vision 2020 - CSBS launched Vision 2020 to advance a more streamlined state regulatory system and create a more consistent approach to licensing and supervision through technology. A progress update on Vision 2020 can be found on the CSBS web site here.
  • OCC Lawsuit - When the OCC initially proposed a national charter for fintech firms, CSBS provided formal comments that eventually formed the basis of our legal challenge. The decision to sue the OCC reflects the gravity and importance this issue holds with our members. It will continue to be a priority as the OCC proceeds with accepting charter applications.
  • Bank Regulation Recommendations - CSBS provided comments to the Treasury Department on financial innovation,  with many recommendations incorporated into Treasury's report on depository institutions. CSBS also made recommendations to federal agencies on capital simplificationappraisals, and small business lending data collection.
  • Data & Tools - CSBS developed numerous data analytics products and tools to help state regulators. Public data tools can be found here, and sensitive tools can be found after logging in here.
  • Legislation - Texas Department of Banking Commissioner Charles Cooper testified on tailored community bank regulation and supervision in June 2017. CSBS staff also worked closely with legislators to ensure several provisions of the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) contained several provisions for which CSBS has long advocated. S. 2155 became law in 2018.
  • Bank Supervision - State regulators prioritized cybersecurity by working with federal agencies in the face of several large data breaches, made recommendations to Congress on ways to further reduce regulatory burden through the EGRPRA process, worked to help streamline the call report for community banks, and distributed the Examinations Tools Suite.
  • Nonbank Supervision - In 2017, the NMLS was the system of record for more than 16,000 mortgage companies, while 44 state agencies managed one or more license authorities in money services businesses, consumer lending and debt. The NMLS Money Services Businesses Call Report was launched in April and was adopted by 25 states. 
  • Accreditation and Training - CSBS revised several parts of state agency accreditation to streamline the process for state regulators, conducted more than 30 technical, continuing and executive education programs and launched a new Certification Online Application and Renewal Platform. 

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2019 CSBS Case Study Competition to Focus on Federal Regulatory Relief Law

The application period for the annual CSBS Community Bank Case Study Competition is now open, and faculty advisors can now submit their statements of interest. 

This year’s competition will focus on how the Economic Growth, Regulatory Relief and Consumer Protection Act (Public Law No: 115-174) will impact community banks and how their communities will benefit from the new law.


The CSBS Community Bank Case Study Competition is an academic competition where undergraduate student teams partner with local community banks to conduct original case studies.  For the 2019 competition, student teams will study how community banks and communities will benefit from EGRRCPA. 

Statement by CSBS President and CEO John W. Ryan: “This competition, now entering its fifth year, provides valuable insights into the community bank business model, connects students with professionals in the banking industry, and provides many students with their first opportunity to have their work published. This year’s theme adds a new, forward-looking aspect to the competition that will challenge students to think critically about legislation’s impact on banks and the communities they serve. We look forward to yet another year of insightful research from undergraduate students nationwide.”

Prize for Winning

The First-Place winner of the competition will:

  • Receive a $1,000 scholarship per student and faculty advisor;
  • Be invited to present at the CSBS-Federal Reserve Community Banking in the 21st Century Research and Policy Conference; and
  • Be published in the CSBS Journal of Community Bank Case Studies.

Second and third place teams will also receive scholarships and have their works published in the journal.


  • November 19, 2018 – To participate, faculty advisors must submit a Statement of Interest. Faculty advisors are not yet expected to have a full student team.
  • February 4, 2019 – Deadline for student teams and community bank partner to be identified and fully registered to participate in the competition.
  • April 22, 2019 – Final papers and videos are due 12:00 PM local time

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Texas Deputy Commissioner Robert L. Bacon to Retire

Bob BaconAustin, Texas – Following a distinguished career spanning 36 years with the Texas Department of Banking, Deputy Commissioner Robert L. “Bob” Bacon has elected to retire effective August 31, 2018. Mr. Bacon has held the position of Deputy Banking Commissioner since December 2006.

“For nearly four decades, Bob Bacon has played a key role in cultivating the Department’s national reputation as a fair and innovative banking regulatory agency,” noted Commissioner Charles G. Cooper. “His unwavering dedication to excellence and strong leadership skills are only two of the many reasons he has been such a valuable member of our executive team. We wish him a long and happy retirement.”

Mr. Bacon joined the Texas Department of Banking as an examiner in 1975 but left in 1981 to become the president of a local community bank in Central Texas. After rejoining the Department in 1988, he quickly established himself as one of the leading bank examiners in the regulatory field. He continued to advance through the state regulatory system over the next several years, eventually serving as Director of Strategic Support for the Department and later as Director of Bank and Trust Supervision.

As Deputy Commissioner, Mr. Bacon has had primary responsibility for overseeing the regulation and supervision of Texas state-chartered banks which control approximately $255.6 billion in assets, trust companies with approximately $102.8 billion in fiduciary assets, foreign bank agencies and representative offices of foreign bank agencies with approximately $68.2 billion in assets, and data processing centers. 

A native of Austin, he graduated from the University of Texas at Austin in 1975 with a Bachelor of Business Administration in Finance. Mr. Bacon is a 2004 graduate (Class XXII) of the Texas Governor’s Executive Development Program. In addition, he has served on various CSBS committees. 

The Department recognizes that finding someone to fill Bob’s role will be an arduous task. Anyone interested in the Deputy Commissioner position can visit the career section of the CSBS website for specifics.

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Senate Nominations Update

The Senate's summer schedule has been filled with hearings and floor debate on several nominations for federal agencies. This week, the Senate Banking Committee announced previously-postponed votes for nominees for the CFPB, SEC, Ginnie Mae, the Office of Financial Research and the Export-Import Bank.

Consumer Financial Protection Bureau: Kathleen Kraninger to become Director. Status: Senate Banking Committee held a hearing. Next step: a vote by the committee on August 23. You can read her opening statement here, along with statements by Committee Chairman Mike Crapo (R-ID) here and Ranking Member Sherrod Brown (D-OH) here

Securities and Exchange Commission: Elad Roisman to become a Member. Status: Senate Banking Committee held a hearing. Next step: a vote by the committee on August 23. You can read his opening statement here.

Ginnie Mae: Michael Bright to become President. Status: Senate Banking Committee held a hearing. Next step: a vote by the committee on August 23. 

Export-Import Bank: Kimberly Reed to become President. Status: Senate Banking Committee held a hearing. Next step: a vote by the committee on August 23. You can read her opening statement here, along with statements by Committee Chairman Mike Crapo (R-ID) here and Ranking Member Sherrod Brown (D-OH) here

Office of Financial Research: Dino Falaschetti to become Director. Status: Senate Banking Committee held a hearing. Next step: a vote by the committee on August 23.

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Media Highlights

News of interest to state regulators:

  • OCC Fintech Charter - As the OC begins accepting financial technology company charters, the agency has announced fintech office hours. State regulators firmly oppose the new OCC Fintech Charter, with CSBS President and CEO John Ryan penning an op-ed in the American Banker arguing the charter is harmful to innovation.
  • CFPB Examinations - The New York Times reported that the agency is planning to suspend examinations of lenders for compliance with the Military Lending Act, a consumer protection law, and move towards compliant-based oversight. You can read more here
  • Extraordinary Situation Proclamation in California - Due to dangerous wildfires throughout the state, California Commissioner Jan Lynn Owen issued several proclamations over the last month allowing state-chartered banks to close any or all of their offices in affected areas until the Commissioner determines the extraordinary condition has ended. 
  • California Supreme Court on Usury - The California Supreme Court ruled that interest on certain loans greater than $2,500 can still be illegal, even if exempt from usury laws. JD Supra provides analysis on what that might mean for supervision of these loans going forward.
  • House and Senate Candidates Receiving Campaign Funds from Bankers - The American Banker Reports that, although the top five recipients of donations from banks in the House are all Republican (Blaine Leutkemeyer [MO], Patrick McHenry [NC], Kevin McCarthy [CA], French Hill [AR], Andy Barr [KY]), four of the five top recipients in the Senate are Democrats (Jon Tester [D-MT], Heidi Heitkamp [D-ND], Dean Heller [R-NV], Joe Donnelly [D-IN], Claire McCaskill [D-MO]).
  • 2018 Elections - The website, a data analytics site, this week published its first full forecast for the 2018 House elections. Bottom line: Democrats have a 75 percent chance of winning a majority. You can read the forecast here

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