Simply Stated - A Podcast on All Things State Finance: Recent Episodes
Simply Stated - All Things State Finance
Financial Regulation can be complicated. Join us for interviews with state financial regulators, commissioners, policymakers, and CSBS staff to gain further insight on how banks, money transmitters, check cashers, and all forms of financial services are supervised and supported by our regulatory system.
In this mini-podcast, we answer the question "What is an agent of the payee? Are they licensed? How are they regulated?"
In this mini-episode, we ask what qualifies as a Money Services Business and who regulates them.
CSBS COVID-19 Resource Page: https://www.csbs.org/mortgage-relief-coronavirus Show notes: www.csbs.org/covid-pod10
The current economic situation is unprecedented. How do you put it into perspective? We compare unemployment and jobless claims to crises past and try to get a handle on just how severe of a downturn we are having.
People are reporting struggles with their mortgage servicers and getting forbearance or other mortgage payment relief. CSBS and the Consumer Financial Protection Bureau released a consumer relief guide to explain your rights when asking for forbearance and what to expect when you call your servicer.
There’s still more than $100 billion left in Paycheck Protection Program money for small businesses. But what is it like on the ground for business owners applying? We highlight one firm’s experience getting a loan.
And last but not least, the U.S. House of Representatives passed a $3 trillion package. The bill seems to be a starting point for negotiations with the Senate, but what all is in it?
Today, I’d like to focus on a group undergoing a tremendous amount of change, both because of COVID-19 and in spite of it: financial regulators. Next week, state and federal regulators will meet as they do every year, albeit digitally, at the State-Federal Supervisory Forum. The forum provides an opportunity for regulators to connect, learn, and find new ways to collaborate with one another.
What happens when you put $669 billion of grants and loans into the financial system all at once? An expert talks about how the program is intended to work and changes over time. In a rush against the clock, a small business owner tries to get a loan for herself and for a minority-owned business client. An expert on community banks explains how they fit into the program.
CSBS COVID-19 Resource Page: www.csbs.org/information-covid-19-coronavirus Show notes: www.csbs.org/covid-pod9
Twenty-six million have applied for unemployment since the start of the COVID-19 Pandemic. We look at state-level data to figure out where the nation has been hardest-hit.
Broad consensus now exists among legislators, state regulators and the industry about what needs to happen to help prevent a mortgage financing crisis. Has there been any progress? Is there any reason this can’t happen?
And, a reminder to consumers: State regulators have noted an increased number of scams targeting mortgage loans. We’ve got the advice and resources you need to help protect yourself.
CSBS COVID-19 Resource Page: www.csbs.org/information-covid-19-coronavirus Show notes: www.csbs.org/covid-pod8
First it was their regulators, then it was the industry themselves, and now it is members of Congress: there’s increasing agreement that something needs to be done to help mortgage servicers while a record number of unemployed are seeking mortgage forbearance. America is now at 22 million unemployment claims in four weeks. We talk about the new jobless claims and how community banks play a role in understanding the economy. And, a reminder to consumers to watch out for common scams as they receive their stimulus checks.
It’s Friday, April 17, this is Matt Longacre, and here’s the latest as of 11 a.m. Eastern:
COVID-19 Consumer Resources Page: https://www.csbs.org/covid-19-consumer-resources COVID-19 Info Page: https://www.csbs.org/information-covid-19-coronavirus
You don’t need me to tell you what the economic data is saying right now. All over the country, businesses are closed, workers are being furloughed or laid off, and businesses and consumers alike are looking at what they have saved and trying to figure out how much longer they can go in lockdown.
I want to focus on the local economic aspect of the pandemic today as seen through the lens of the primary lenders to small businesses and rural and suburban communities. What are community bankers saying about their local economies and future business activity? What are they telling their regulators? And what do the regulators have to say back?
I’m Matt Longacre, and this is Simply Stated
CSBS COVID-19 Resource Page: https://www.csbs.org/information-covid-19-coronavirus Show notes: https://www.csbs.org/covid-pod7
Another week, another concerning round of economic data. We talk about the new jobless claims, what community bankers are seeing on the ground, and how state regulators are working to help bankers and their customers. There’s plenty of new announcements and initiatives ongoing to help mortgage servicers. But will it be enough to keep the industry afloat? And CSBS has put together some resources for consumers trying to navigate this trying time.
It’s Thursday, April 9, this is Matt Longacre, and here’s the latest as of 1 PM Eastern
Read the show notes in full: www.csbs.org/covid-pod5 CSBS COVID-19 Consumer Resource Page: https://www.csbs.org/covid-19-consumer-resources
You already know about the troubling economic numbers coming out. We break down how this looks from state to state. The results of the Community Bank Sentiment Index arrived today, and the numbers are, as expected, way down. We’ll explain how community bankers provide a perspective job numbers cannot and how the sentiment of community bankers declined each week. After that, we focus consumer resources: as you prepare to collect payment from the federal government, as you look out for increased unemployment checks, and as you consider loans or financial products to help you get through these unprecedented times, we’ve got resources to help you avoid getting scammed.
It’s Thursday, April 2, and here’s the latest as of 2 PM Eastern.
Full show notes: www.csbs.org/covid-pod4 CSBS COVID-19 Resource Page: www.csbs.org/information-covid-19-coronavirus
Calls are growing for the Federal Reserve to provide safeguards for mortgage servicers as the industry is left out of the $2 trillion rescue package. Guidance from state regulators for industries, bankers and consumers continues. Washington State develops guidelines to keep the mortgage and real estate industries operating while enforcing strong health standards. As the $2 Trillion CARES Act becomes law, we have some tools to help consumers watch out for scams.
Good afternoon, and welcome to the COVID-19 Financial System Update. It’s March 30, and here are the news updates as of 4 p.m. Eastern Time.
Shownotes: www.csbs.org/covid-pod3 CSBS COVID-19 Resource Page: https://www.csbs.org/information-covid-19-coronavirus
Regulators alert Congress about an overlooked impact of COVID-19 on mortgage loan servicers. As states work to provide guidance to consumers and institutions, California strikes a major agreement with its banks to help their community. Fed Chair Jerome Powell goes on ABC Morning News. And, CSBS provides state-level data into just how much the unemployment rate has changed so far in March. Good afternoon, and welcome to the COVID-19 Financial System Update. It’s March 27, and here are the news updates as of 2 p.m. Eastern Time.
Follow all updates on COVID-19 Financial Services here: https://www.csbs.org/information-covid-19-coronavirus
Read the shownotes in full here: https://www.csbs.org/covid-pod2
Good afternoon, and welcome to the COVID-19 Financial System Update.
During the ongoing pandemic, news is happening at a rapid pace. And we at Simply Stated realize that you might miss something important. So we will be sharing the most recent financial stories, regulations, guidance and more surrounding the pandemic. Each news item shared here will be available in a single link, available in shownotes of today’s podcast and from the homepage of CSBS.org.
Follow all updates on COVID-19 Financial Services here: https://www.csbs.org/information-covid-19-coronavirus
Read the shownotes in full here: https://www.csbs.org/covid-pod1
Good afternoon, and welcome to the COVID-19 Financial System Update.
During the ongoing pandemic, news is happening at a rapid pace. And we at Simply Stated realize that you might miss something important. So we will be sharing the most recent financial stories, regulations, guidance and more surrounding the pandemic. Each news item shared here will be available in a single link, available in shownotes of today’s podcast and from the homepage of CSBS.org.
So, let’s get started. It’s March 23, and here are the news updates as of 4:40 PM Eastern Time.
Hey folks.
A lot is going on right now. As companies go remote, businesses shut down, and we all work on social distancing during the COVID-19 Pandemic, we here at Simply Stated have also gone remote.
In the coming weeks, we are completely retooling our programming to focus on the Coronavirus pandemic, steps regulators are taking to strengthen and protect the financial system, and advice for bankers and consumers alike during this time.
One big thing you are hearing about in the news right now is all the steps the Federal Reserve is taking to stave off the economic impact of the pandemic. The Fed has cut interest rates to near zero, is re-starting quantitative easing like it did in the 2008 Financial Crisis, and it’s actively trading in something commonly referred to as the “repo market.”
But this isn’t the first time in the last year that the Fed has been working in the Repo Market. Last fall, another far-less-noticed crisis occurred in that market that led the Federal Reserve to intervene.
So, just a few weeks ago, I talked with an economist who could better explain to me what the repo market is, why the Federal Reserve sometimes participates in the repo market, and what exactly happened last fall. Even though this recording is just 3 weeks old, some of the information is going to feel dated due to recent developments. But the story and lessons in it are even more relevant today than they were at recording. So, we decided to provide it to you anyway.
Please keep up with us. I’m Matt Longacre, and this is Simply Stated.
Guest: Rachel Siegel - Senior Associate, Consumer Finance, The Pew Charitable Trusts Host: Matt Longacre
Timestamps
2:22 - What is a "mobile payment?" 4:10 - Are mobile payments companies utilizing the current infrastructure or building their own? 6:10 - What are consumers saying about mobile payments? 7:36 - Has mobile growth payment slowed? 9:11 - What causes some consumers to decide not to use mobile payments? 10:26 - Do consumers understand the protections they have when using a mobile payment? 11:47 - What protections do exist for consumers? 13:37 - What needs to happen for mobile payments to grow? 14:45 - What are "real-time payments?" What is FedNow? 16:46 - What is the impact for consumers of a real-time payments system? 18:50 - Are there risks associated with real-time payments?
It feels like you can do almost anything on your phone nowadays. Beyond just, you know, making a phone call, there’s listening to music, texting, games, photography, changing your thermostat, watching the delivery driver drop a package at your front door… The point I’m trying to make is that more and more of our lives have been driven into our mobile phones. And where people go, so goes money. Shopping, sending cash to your friend or super, paying your Uber driver… all of these things are part of a growing financial ecosystem known as “mobile payments.”
But, I’m just curious… do you really know what’s going on with your money on these apps? Is the cash you store on them secure? Are your payments protected from fraud like they are with a credit card? Am I the only one who is totally clueless about this yet still continue to use these apps?
Today, I sit down with an expert from The Pew Charitable Trusts to talk about an interesting survey they conducted about consumers and mobile payments. We try to answer the questions: Are consumers adopting mobile payments technology as fast as everyone expected? Do consumers trust mobile payments? Are they running into issues and, if so, are their issues getting resolved? What sort of mobile payments are protected and what aren’t?
Today, we talk with CSBS Senior Legislative Vice President and Deputy General Counsel Margaret Liu and try to define exactly what everyone means when they call a company a "fintech."
Right now, in San Francisco, over 800 people have gathered for the 2020 NMLS Conference. The System, initially designed to handle all the work that goes into licensing mortgage loan originators, is now used for all sorts of nonbank financial companies.
This conference attracts everyone in the nonbank space. State regulators, federal regulators, licensees, the press... And the meeting serves as a forum to discuss what's new in licensing and compliance. It's all centered around this platform - NMLS.
That's because NMLS revolutionized how companies got licensed. It sped up the time for approval, it made it easier to get licenses in multiple states and even made completing the test you take to get a license way more straightforward.
This year, there's some big news coming out of the conference. An entirely new piece of tech - the State Examination System - seems poised to revolutionize how regulators examine - or "check in" - on these companies.
All of this is a big push for a more "networked system of supervision."
Today, I sit down with CSBS President and CEO John Ryan to talk about this concept. What does a "networked system of supervision" look like for nonbanks? What is the vision for a fully tech-enabled world of compliance? What is a day going to look like in the life of an examiner?
Simply Soundbites is a new mini-series on the Simply Stated Podcast, where the guest of the week explains a complex topic or definition from the news in ten minutes or less.
Today we ask Darryle Rude, Chief Examiner at the Utah Department of Financial Institutions, what an Industrial Loan Corporation is(also known as an Industrial Bank or ILC).
Editors Note: At 3:28, we discuss a "loophole" for ILCs. From a technical perspective, it is an exemption for ILCs, not a loophole.
In recent years, there’s been a new obsession with something called “Real-Time Payments.” It’s the idea that everything it takes for one person to send money to another could happen instantaneously.
Host: Matt Longacre, Guest: Joey Samowitz, Senior Analyst, Policy, Conference of State Bank Supervisors
Timestamps:
2:05 - The Journey of a Check in the 20th Century 6:05 - How 9/11 Stopped Your Check from Flying Commercial 8:33 - How Does Money Move Today? 10:34 - What's a Real-Time Gross Settlement System? 11:25 - What's a Net Deferred Settlement System? 12:52 - Are there any Real-Time Payment Systems Today? 14:15 - Why Create a New System if one Already Exists? 16:18 - What's in it for the Consumer? 17:38 - Who is for FedNow? Who is Opposed? 18:57 - How did the Federal Reserve Gather Feedback for FedNow?
Editor's Comment: During the interview, we discuss how "50% of banks have been reached by the Clearing House RTP system." This system has in fact only reached 11 of the 24 banks that currently own The Clearing House, accounting for 50 percent of all deposits.
Paying someone feels so simple nowadays, right?
Whenever I go out to dinner with friends and we need to split the check, they just tell me to “Venmno them” or “Paypal them” or “Zelle them” (Okay, nobody’s ever actually told me to Zelle them, but you get my point).
And even the old, "slow" systems seem faster! When I get a check, my bank lets me snap a photo of it and deposit it.
But even though the transaction kind of feels instant, it’s still anything but. When I add that check to my account, it says “Pending.” And the bank tells me to hang onto that check for a couple days in case something goes wrong.
It turns out that, behind the scenes, there’s a vast system of machinery working to make sure the little bits and bytes of data on my phone represent real transactions.
They want to be sure that everyone actually has the money they say they have and that the money is getting safely from bank A to bank B. That process can still take a while to complete.
In recent years, there’s been a new obsession with something called “Real-Time Payments.” It’s the idea that all this should be able to happen (the movement of the money, the confirmation that person A has the funds, the deposit into person B’s account) instantaneously.
Today, I talk to an expert who knows more about the hard work going into making payments faster. We talk about how checks cleared before, where we are today, and what new and innovative “Real-Time Payments systems” mean for the future.
Timestamps:
1:39 – Intro 2:45 – Why does the Community Bank Research Conference exist? 5:11 – Why the FDIC Joined the Research Conference 7:06 – What Impact has Research had on Policy for Community Banks? 13:41 – How Does the FDIC Build Trust with its Regulated Banks? 19:20 – What is a Community Banker’s Biggest Risk Right Now? 24:33 – Community Banks and Fintech? Friend or Foe? Adapt or Ignore? 26:50 – How do States and the FDIC Collaborate? 34:05 – What to Regulators Wish Bankers Understood About Them? 38:39 – Time Travel! What Does Community Banking Look Like in 2030?
Supervising banks anywhere is hard work. But there’s an extra challenge when supervising institutions in the United States: more than any other nation in the world, we have the most diverse number and type of banks themselves.
These banks can be globally, nationally, or locally-focused. Some of those most locally-focused banks are commonly referred to as “Community Banks.” Community banks have played an important role in serving rural areas, towns, and cities for more than a century.
But supervising and truly understanding so many institutions with such diverse purposes and goals requires regulators and leaders truly “in the know” about America’s diverse localities.
Today, I sit down with two of the most “in the know” people there are when it comes to community banks. How do we go about understanding them? How has what we’ve learned impacted our view of the nation’s financial system as a whole? What does a fintech-filled future hold for America’s uniquely-diverse banking system?
Listen to learn more.
Time Stamps
1:55 – What is the Supervision of Non-Banks Like Now? 8:45 – What is the State Examination System? What Will the Experience Be Like for Regulators? 15:55 – What Will the Experience Be Like for the Industry, and what are some of the coolest features of the system? 23:30 – What’s Next? For State Supervision, for NMLS, for SES? What’s the next step in this process?
If you work for a financial company that's not a bank, chances are pretty good that you need licenses to operate in the states you work in.
If you're a regulator of these companies, you've got a lot of licenses to supervise. You may need to examine companies every so many years, or you may need to examine based on risk. And you also need to work with your colleagues across state lines to coordinate.
And this is important work. These exams ensure companies are operating in a safe and sound manner. They ensure that consumer protection laws are being followed.
But, with 50 US states, and tens of thousands of companies (that number only continues to grow), you can see how this is a behemoth task.
Today I talk to two minds who work day in and day out to tackle this problem. They are working on a new system - the State Examination System - that works with the licensing system present today to make examinations faster, more efficient, and more meaningful for regulators and companies.
If not often that regulatory work can be made less burdensome and more effective, but we may be in one of those rare moments.
CSBS, the FDIC, and the Fed have this annual conference every year about community banks. And we get together these brilliant economist, and statisticians, and we even do a poll! A poll of community banks all across the country. And we look at all the data and research, and it’s pretty informative.
But we also learned pretty quickly that we weren’t capturing everything that was going on. Community banks are local, just like these local interviews that I’ve slowly learned to appreciate.
So we started doing a sort of “Vox Pop” of our own, focused just on community bankers, and we call it “Five Questions for Five Bankers.” Today, I have on an expert from CSBS who works with the state regulators that gather the feedback from bankers across the country, summarizes, and publishes it for the conference. Some of what they say can be seen in data we have, and some of what they say is pretty surprising.
As nonbanks have grown their market footprint, regulators are looking at ways to modernize the regulatory approach to these entities. At CSBS, we refer to these efforts as "reengineering nonbank supervision."
Fintech continues to be a hot-button issue for regulators, industry and policymakers. All of us want to know what the future holds, but few of us really know the answers. What we do know is that technology is powering more financial transactions, enabling new business models, and even propelling new regulatory initiatives.
So this is a good time to check in with state regulators and get their perspective. And that is the purpose of this version of Simply Stated.
Economists, investors, policymakers, and reporters use all sorts of different “indicators” as guideposts to assessing the health of the economy.
Some are purely informational and numeric, like job growth numbers and changes in GDP.
But others are based on feeling, like consumer sentiment. They’re basically asking someone “how’s it going?” and compiling all those feelings into a single indicator.
Getting a comprehensive picture across the country can be tough. But, there is one group that is connected to consumers and businesses alike that could provide us this valuable information. community bankers are some of the most connected individuals in a wide cross-section of society, whose very livelihood relies on the success of neighbors and local businesses – rural, urban and in between.
Today, I want to talk to someone who has examined, worked with, and promoted research on these community bankers.
And I want to discuss a new economic guidepost six years in the making, designed to use community bankers nationwide to take the pulse of America’s economy. It’s called The Community Bank Sentiment Index.
Welcome to Simply Stated, a podcast by CSBS, the Conference of State Bank Supervisors. I am Matt Longacre.
My guest today is Greg Gonzales. He is commissioner of the Tennessee Department of Financial Institutions.
Like many other state regulators, the department oversees banks, credit unions, trust companies, and a variety of nonbanks. Because of this diversity, Greg says, “Our small department touches every community in the state of Tennessee.”
And that comes in handy as the department looks to support the strategic plan of his new Governor, with an emphasis on assisting rural communities across the state. The regulatory approach relies on balancing two important parts of its mandate — “ensuring safety and soundness and being mindful of economic development” — while tailoring regulations to the risks presented by individual institutions, depository and non-depository alike.
To Greg, that’s the best way to enable financial institutions to deliver benefits to the citizens of Tennessee. “We want to help institutions not just survive but thrive.”
In our interview, Greg elaborates on his regulatory approach. He recounts how companies have thanked the department for flagging risk issues to make those companies stronger entities. He describes a large increase in assets managed by state-chartered banks — from about $40 billion a few years ago to $120 billion and more in the near future — and what conditions have led to this growth.
He also speaks to his role as chairman of the State Liaison Committee of the FFIEC and the critical role that organization performs. In particular, he appreciates how federal officials have supported state efforts to assist smaller institutions on issues such as exam modernization, and how CSBS provides important staff support. And, finally, he speaks to how regulators need to do their jobs — both with industry and with consumers — to enable financial services to be delivered in a safe, sound and reliable manner. As he summarizes, “It’s all about public confidence.”
A lifelong Tennessean, Greg speaks with enormous pride in the work of his department, everyone he works with outside the department, and his hopes for a better future for all those in the state.
Conducting this interview is Jim Kurtzke, who recently spent the day with Greg and his staff in their offices in Nashville. Let’s go to the interview.
Banks want your deposits. They want you to deposit your paychecks, they want your employer to deposit their assets with them. They want you to choose to keep your money with them rather than put that money into other places.
And there’s all sorts of reasons for that. It means they can issue more loans and grow more quickly. And, importantly for regulators, it helps the bank stay on a stronger financial footing.
But deposits aren’t always easy to come by. In a strong economy, banks are competing for a limited pool of assets that could end up going to other institutions, into investments, or to other regions. This can be especially challenging for rural communities. And, in an economic downturn, as some loans become losses, banks fight even harder for these deposits that will keep them financially sound.
Today, I wanted to talk to the experts about two things regulators are talking about constantly right now but probably haven’t come up at your kitchen table over dinner. The first is how regulators should handle a sometimes-risky type of deposit known as brokered deposits. Why are they risky? If a bank isn’t well-capitalized, should they be cut off from seeking brokered deposits? What’s the logic behind blocking a source of liquidity for a bank that desperately needs it?
And second, I want to talk about the issue of a bank being undercapitalized more broadly, and what happens when regulators put a bank in what is known as Prompt Corrective Action. We covered this a lot in an earlier podcast on leverage ratios, so it might be worth listening to that first if you need some warming up.
My question today is: How do regulators make sure they are catching the warning signs of a struggling bank and intervene in a way that’s beneficial for the bank, consumers, and the federal deposit insurance fund? It’s a question that regulators still grapple with today. In fact, just last week the federal agencies proposed a new rule adjusting their approach to this very question.
Today we talk to Tom Fite, Director of the Indiana Department of Financial Institutions, about how his agency built out their examination skills in cybersecurity supervision.
Today we interview Bill Matthews, who leads the nation's licensing system for nonbanks.
We speak to the Director of Washington Department of Financial Institutions about an initiative to streamline the nonbank licensing process.
Being chairman of CSBS is no easy job. You have to lead the design and implementation of a strategic plan...represent state regulators in relationships with their federal counterparts...all while managing the regulatory department in your own state. In other words, not for the mean and mild.
This is Simply Stated, a podcast by CSBS, the Conference of State Bank Supervisors.
For the year ahead, into the role of chairman steps Bret Afdahl, director of the division of banking in South Dakota. We recently talked onsite at the CSBS annual meeting in San Antonio, just following his speech on what he plans for the year ahead.
So let’s give a listen.
2 - What's a Community Bank Leverage Ratio and Why Does it Matter? by Conference of State Bank Supervisors (CSBS)
All across the country, tens of thousands of non-bank financial companies are operating on a daily basis. Debt collection companies, money transmission companies, mortgage, and lending companies are engaging in TRILLIONS of dollars of transactions each year. And, despite the fact that there are now several federal regulatory agencies, states remain steadfast at the forefront of non-bank supervision.
But with new technology comes unique obstacles. Many of these non-bank companies, embracing the role of the internet and emerging tech, have labeled themselves “fintech” companies, short for financial technology. And they’re oftentimes operating in several states simultaneously, issuing loans and transferring money to consumers all over the country.
Today we explore ways states work together to handle the behemoth task of supervising America’s diverse financial system, how those same regulators try to engage with the regulated in a balanced, fair way and, using this one example from just last week, how those changes can lead to something bigger.