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CSBS Examiner

A weekly report of events affecting the state banking system from the Conference of State Bank Supervisors


 In This Issue...

 Upcoming Events...

Day One: Examiner Training, Web-based (ongoing)MSB Examiner Training, Mortgage Examiner Training, and Bank Safety & Soundness Examiner Training. CSBS's Day One platform allows examiners to begin training on their first day on the job instead of delaying training while waiting for an on-ground school to become available. These innovative online training modules enable examiners to get up to speed more quickly. 

Fraud Identification Training (ONLINE), February 6-March 10: This course examines financial institution practices and procedures that would be considered red flags, potential examination procedures that would identify such weaknesses, and the corrective measures needed to improve them. The course consists of 21 case studies drawn from regulatory agencies, and lessons learned from each of them. 

CSBS State-Federal Supervisory Forum, New Orleans, LA, May 23-25: The Forum is an annual gathering of senior executives in key leadership positions with state and federal regulatory agencies. 

“Dispositions of the mind, like limbs of the body, acquire strength by exercise.” – Thomas Jefferson

Thomas Jefferson was elected as president this day in 1801.

College Students Participate in Nationwide Community Bank Competition 

The Conference of State Bank Supervisors (CSBS) has announced 44 student teams from colleges and universities around the U.S. will participate in its 2017 Community Bank Case Study Competition.

The competition, which is open to undergraduate students in all fields of study, is an opportunity for students to gain valuable first-hand knowledge of the banking industry, and the opportunities and challenges facing today’s 21st century community banks. Each student team must develop an original case study that evaluates bank leadership succession planning and provides succession planning recommendations based on research. 

 “More and more, succession planning has become a recurring topic at the CSBS-Federal Reserve Community Banking Research Conference,” said CSBS President and CEO John W. Ryan. “This is partly because it is an essential part of doing business, but also because a large number of bank senior executives are set to retire in the next few years. This backdrop also makes this year’s community bank case study competition that much more exciting and interesting as students partner with senior bank executives to evaluate and recommend innovative succession plan practices.”

The student teams are competing for a chance to get their work published in an academic journal, an opportunity to attend the fifth annual CSBS-Federal Reserve Community Banking Research Conference, and an academic scholarship. Competition finalists will be announced in early May. The top three scoring teams will be announced May 25, 2017 from the State-Federal Supervisors Symposium in New Orleans, La. The announcement will be streamed live on the competition website at

The full list of participating teams is available here.

Why Some Fintech Firms are Saying No Thanks to OCC Charter

American Banker published an article Thursday highlighting why some fintech firms are skeptical of OCC’s plan to charter fintech companies. Excerpts are below; the full article is available here [subscription required].

Some fintech firms are flatly rejecting the Office of the Comptroller of the Currency's creation of a charter for such firms, citing fears that it will come with too many strings attached. “This provides zero benefit to innovation,” said Timothy Li, the founder and CEO of Kuber, an online lender targeting college students. “It’s a self-serving act.” The chartering and supervision process offered by the OCC, Li said, is a costlier, slower proposition that seems out of reach for smaller companies.

Other fintech companies, meanwhile, are also wary of the new charter. Several have suggested they will wait until their more established peers test the waters, in order to get a better sense of the benefits and costs at stake.

Even some of the larger technology companies appear to be sitting on the sidelines. “What types of handcuffs or restrictions would that place on these companies that have to be pretty nimble as they figure out a way in the marketplace?” said Brock Blake, CEO and co-founder of the online marketplace Lendio, which partners with 75 different lenders.

Treasury Secretary, Budget Director Confirmed for Trump Administration

Steven Mnuchin was confirmed Monday as the Secretary of the U.S. Treasury Department, and Mick Mulvaney was confirmed Thursday night as Director of the Office of Management and Budget.

Mnuchin, who previously worked for Goldman Sachs, will be tasked with handling President Trump’s tax policy.  Recently, Trump signed an executive order directing the Secretary of Treasury to review all financial regulations and report back to the President as to their effectiveness.

Mulvaney, who most recently served in the House of Representatives for South Carolina’s 5th congressional district, will work to set fiscal priorities for the new administration and will serve as a gatekeeper to many federal regulations.  One of Mulvaney’s first tasks as OMB Director will be to compile a first budget for the Trump Administration.

State Regulators Promote Fintech Friendly Features of National Registry 

Financial regulators from Texas and Louisiana Tuesday highlighted innovative features of state regulation in remarks before the annual conference of the Nationwide Multistate Licensing System (NMLS). “We have embraced what we call ‘reg-tech’ to take state regulation to the next level,” said Charles G. Cooper, Chairman of the Conference of State Bank Supervisors (CSBS) and Commissioner of the Texas Department of Banking. “It is a system that has made the licensing process more efficient, including for those operating on a national basis, all while ensuring transparency to the consumer.”

“Because of NMLS, there is a robust, vibrant regulatory system for non-depository companies operating in the United States,” said Cooper. “NMLS is one of the great developments in financial regulation.”

State regulators use NMLS as a common platform for licensing and registration.  NMLS acts as the system of record for 62 state agencies. Through NMLS, companies engaged in mortgage lending, consumer finance, money services, and debt collection can obtain state licenses and operate in one or more states.  At year-end 2016, roughly 20,000 companies operated under state licenses in NMLS.

“NMLS gives us a regulatory platform to get innovators up and running, and enable existing companies to expand their reach,” said John Ducrest, Commissioner of the Louisiana Office of Financial Institutions. “We recognize that fintech has the potential to deliver financial services more easily and perhaps more broadly. But we also recognize that business innovations must protect consumers and the safety and soundness of the financial system.”

Ducrest explained how state regulators balance these goals by crafting regulatory regimes that focus on business activities, not technology alone; support businesses of all shapes and sizes; ensure local accountability to small business and consumers; and encourage collaboration with other regulators to learn new approaches. “Financial technology is affecting so many business and policy decisions today,” said Ducrest. “Only by working together will we find the right answers.”

Read the full speeches of Commissioners Cooper and Ducrest here.

Around the Agencies

CFPB: The CFPB is seeking public feedback on the benefits and risks of using unconventional sources to extend affordable credit to consumers lacking credit history.

Closing Comment

“I want to know what other regulators are learning. What business models are they seeing and how are they regulating it? What can we learn together to support innovation within the context of a stable financial system? Only by working together we will find the right answers."

     -  John Ducrest, Commissioner of the Louisiana Office of Financial Institutions, at the NMLS Annual Conference

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