Seismic Changes Coming

July 21, 2011, is now less than 30 days away. That date is destined to be as memorable for bankers as another landmark date: Jan. 1, 2000, or Y2K. This new date marks the one-year anniversary of President Obama’s signing of the Dodd-Frank Act into law and will trigger several momentous changes for bankers. While the list below is not complete, it hits the highlights.

If you manage a federally thrift chartered institution, you will have a new regulator, as the Office of Thrift Supervision (OTS) will be merged into the Office of the Comptroller of the Currency (OCC). Because OTS had been focused exclusively on thrifts, its regulators were highly knowledgeable about the unique structure of thrifts, both stock and mutual.

Uncomfortable with losing OTS expertise, many thrifts will opt instead to convert to state charters, bringing them under the examination of the Indiana Department of Financial Institutions. Regardless of who their new regulator is, all thrifts will eventually say goodbye to the Thrift Financial Report (TFR) and begin to file the Call Report required by the Federal Deposit Insurance Corp.

Another change is that regulatory institutions will come under the as-yet-unreleased new debit card interchange price controls, as set by the Federal Reserve. This development alone will bring about repricing of many deposit-related fees and, potentially, the consequences of limited debit card usage and undeserved windfalls to the large-box retailers.

The biggest change, most likely, will be the empowerment of the new Consumer Financial Protection Bureau (CFPB). This bureau will have unprecedented and nearly unfettered power over all consumer financial transactions, with no regard to a financial institution’s safety and soundness. We can only hope that the as-yet-unnamed director of the CFPB is a benevolent dictator. More realistically, we hope that he or she understands that the best consumer financial protection is a local, diversified, safe and sound banking system.

In less than one month, we will all begin to learn what the impact of these seismic changes portend for our banks and our country.

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