BPInsights: August 16, 2019

BPInsights: August 16, 2019

TOP OF THE AGENDA

This week’s special edition of BPInsights revisits some of the content published during the first half of 2019 and identifies the “5 Most-Read Articles of Early 2019” based on total web traffic.

July 30, 2019
American Banker’s Criticism of RTP: It’s Like Rain On Your Wedding Day.
BPI published a blog post that responds to a recent column that criticized our CEO Greg Baer’s comments to Politico about the Fed’s potential entrance into the real-time payments market. Greg notes that it is hardly surprising that the Clearing House would want to hold out the possibility of offering discount pricing for large banks if the Fed enters the market, noting that this is exactly what happened with the ACH network. A big fact that did not make its way into the American Banker: the Federal Reserve currently offers volume discounts on ACH to the largest banks. In fact, it charges small banks about four times what it charges large banks. Baer also ponders whether community banks will come to regret their alliance with retailers, like Amazon and Apple, and against large banks for no strategic reason, but for Seinfeldian spite, if that leads to an open banking system.
Read More >>
March 20, 2019
Deposit Growth and Occam’s Razor
The topic of deposit growth has recently come front and center – interestingly, as both a business matter and a political matter. From a business perspective, the focus has been on the demonstrated ability of the nation’s largest banks to generate significant deposit growth, leading to questions about whether greater scale is necessary for other banks to compete – for example, whether deposit gathering challenges will prompt M&A activity. From a political perspective, the focus has been on whether community banks, which remain quite popular politically, are obsolescent.To understand this better, BPI used U.S. Census Bureau data and FDIC branch data to compare deposit growth across urban and rural areas. This blog demonstrates that large bank deposit growth is not due to unfair competition, too-big-to-fail advantages or favorable regulatory treatment. The blog shows that technology and demographics are assisting universal and regional banks that serve large and mid-sized population centers to gather a significant percentage of deposits. Community banks continue to thrive in the rural areas that they have always considered their sweet spot and have even increased their share there. However, those areas are losing population, and therefore deposits, so community banks are shrinking relative to large banks.Read More >>
April 4, 2019
Some Facts About Bank Branches and LMI Customers
A popular narrative has grabbed headlines over the last few years regarding the growth of the so-called “banking deserts” – that is, areas where American consumers do not have access to branches, and therefore presumably to banking services. Critics allege that this problem predominately affects low- to-moderate income geographic areas and that big banks and regional bank M&As are to blame; however, these stories are not based on actual data or analysis.The actual share of the U.S. population living in banking deserts is about unchanged in the post-crisis period and the share of ‘unbanked’ households is at an all-time low. A new report released on April 4 demonstrates that assertions about banking deserts and inclusiveness in the U.S. banking system have been contrary to observable evidence.Read More >>
May 14, 2019
American Bar Association Opposes Anti-Money Laundering Efforts. Objection!
On May 6, the American Bar Association released a letter opposing H.R. 2513, the Corporate Transparency Act sponsored by Rep. Carolyn Maloney (D-NY), a bipartisan proposal that would end the creation of anonymous shell companies, which are routinely used to facilitate money laundering, terrorist financing and other criminal activities. H.R. 2513 is strongly supported by a wide and diverse variety of groups, from the Fraternal Order of Police to the FACT Coalition. These supporters recognize that the bill would impose minimal requirements on businesses yet provide law enforcement and national security officials an important and much-needed tool to track criminals and their activities. BPI responded to some of the factual inaccuracies and misleading statements.Read More >>
March 14, 2019
Machine Learning and Consumer Banking: An Appropriate Role for Regulation
Machine learning has the potential to democratize access to credit.  It can expand the pool of people qualified to obtain credit—most notably low- to-moderate income (LMI) borrowers—and decrease the cost of that credit.  It also can increase access to credit and reduce systemic risk by allowing different banks to analyze different factors, and thereby generate different results in a way that the existing FICO-based system discourages.Banking regulators need to use a currently neglected tool, the notice and comment process required of them by Congress, to seek information and advice from experts in machine learning as to how it can benefit access to credit and what the role of regulation should be for this technology. As described in this BPI blog, they will likely hear that their current stance is antiquated and is the greatest current obstacle to a smart and sound way to offer credit to more Americans.Read More >>

 

Upcoming Events


August 20, 2019
FDIC Scheduled to Meet to Vote on Revisions to the Volcker Rule
The FDIC will be the first regulator to vote on a final rule to revise the Volcker Rule. For the official meeting notice, please click here.
September 9, 2019
Expanding Access to Credit Through Artificial Intelligence and Machine Learning
Machine learning has the potential to democratize access to credit. It can expand the pool of people qualified to obtain credit — most notably low- and moderate-income (LMI) borrowers — and decrease the cost of that credit. This event brings together industry experts, policymakers, lawmakers and regulators to explore the legal landscape and discuss ways to address constraints to responsible AI implementation. Register >>
November 19 – 21, 2019
2019 TCH + BPI Annual Conference
The Bank Policy Institute will partner with The Clearing House to host its 2019 Annual Conference in New York City on November 19-21. This conference, the premier gathering focused on the changing regulatory landscape and the future of payments, brings together senior financial services executives, regulators, policymakers, and academics to address the challenges and opportunities for the industry through a thoughtful and fact-based discussion. Register >>

 

 

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