martin o'malley serves as commissioner of the social isatn. wednesday, he will be questioned about how social security is working for older adults a people with disabilities. e nate aging committee will be his first appearance before the senate since becoming commissioner in december. watch at 10:00 a.m. eastern on c-span now or c-span.org. next, a look athe stat of the banking industry an existing financial regulations with the bank executives and former regulators. it includes a conversation with tom emmer, who discusses a possible ban on tiktok and his views on a central bank digital currency. this is just over two hours.

>> please welcome aba president and ceo, rob■u[applause] >> to welcome everyone to the nation's capital as we kick off the 20 24 aba washington. we have nearly 1300 bankers in attendance today with even more watching on the livestream. thank you for ta time out of your busy schedules to add your voice, your advocacy efforts. i want to welcome members of the media who are joiningecial thanks to the members of congress, regulators and other guest speakers participating in our program in the next few dathis event is all about advocacy. it is about demonstrating to the policy community that bankers working constructively toward a policy

environment that supports a resilient banking system and economic growth sorhals, familid businesses across the nation can thrive. bankers have an important perspective on how policies that come out of your perspective ane are a cornerstone of our advocacy strategy. so this morning, i want to talk about the strategy in greater detail, specifically about how we have had to shift our approach to respond to the see how the political landscape has changed in watching. let's start with congress in the past year, lawmakers scrambled

to find a new speaker. 9 of next week, all the bipartisan to get major legislation passed. we are seeing veteran members and key lawmakers make the decision to step aside. aside mckenna called the gavel of house financial services committee, congressman blaine glcm are a former banker and long serving member of that committee, and senator kyrsten sinema, , a former member of the banking committee and a lawmaker known for trying to broker bipartisan deals. we don't know what the fall election will bring but the departures from congress and the ongoing partisan divide make it even harder to assess for bankin

moving forward. we remain hopeful of course and will continue to do our part to support members of congressnd candidates in both parties who understand the critical role banking place in our economy. now with congress divided the focus of the attention has shifted to the regulatory agencies. folks, the banking agencies have been busy. some mightay too busy. i refer to this other regulatory tsunami, , this tidal wave of regulation that has crashed down on the banking industr i recent months. we've seen a proposal to dramatically increase capital requirements that will limit already well-capitalized likability to support the economy a proposal to slash the cap on debit card interchange pursuant to brag i i which will limit revenue b!óanks ofll sizes used to pay for new products and promote financial inclusion, a misguided political campaign on so-called junk fees by■ñ the cfb in the biden administration

targeting overdraft fees and assess these and most recently credit discuss in just a moment. and, and they've even targeted fees that by the own admission banks are not even charging as wall street shows that in an editorial last week it feels like the administration is ■b with us all out assault on fee income. we've had final rules tve the committee reinvestment act and rules to the pose complex new data reporting requirements on small business lending under section 1071 of dodd-frank. and we are nng and overall a a bank liquidity rus is also on the horizon. each of these roles will come with significant costsá) and impacts en banc operations, products and services. aba is to be concerned regulators have not considered the cumulative ets these changes will ultimately have on

banks ability to serve the customers and communities, and support the broader ecomy we are so concerned that i sent a letter to president biden a few weeks ago asking him to have the financial stability oversight council step in mr. president, stop the tsunami. when we take all this -- [applause] thank you. we would take all of this together, the prospects for continued divide in congress and the continued threat of independent regulators pushing authority, it makes our jobs as advocates for the banking industry more challenging and more important than ever. so how have we evolved our advocacy efforts to address this current climate? we are stored with members oreed were trying to work with regulators were ever in whatever we can. but we've had to turn to the courts to ensure that regulators, that the regulation that all of you must follow

reflect the law and allow your banks to 30 customers and communities. litigation is never, never our first or preferred course of action. but over the past few years we've seen regulators take actions that overstep the authorities granted to them by congress. when they insist on finalizing rules that fall outside of the regulatory purview, and when they ignored the constructive feedback from banks and other stakeholders, litigation is our only remaining tool in the box. again, it's not a tool we want to use but it's one will coino strategically wield as needed. the good news is we've already seen the courts side with us on some of these challenges. one example, the case would file together with the texas anchors association and the use chamber of commerce in 2022 challenging the cfpb's surprise update to his udaap exam manual. which dramatically expanded its

enforcement powers literally overnight. in that case the federal judgeas and vacated the manual update. and a separate case on the cfpb's section 1071 final rule which will reduce small businesses access to credit, we also succeeded in winning af the rule and the outcome of another cfpb case at the supreme court. more recently, aba pva of use chamber of commerce and other partners challenge the agencies committee reinvestment act overhaul in court. now again this is not decision we made lightly. aba and our members fully support the goals and principles underlying the cra. america's banks have long believed people in every corner of this country should have a chance to succeed. d we agree the rules implement this decade old statute should be updated to reflect the

realities of modern day banking. but as we reviewed the final role with our members we reached the conclusion that this exceedingly complex rulemaking one fails to consider bankst to opportunities, and two, it will it will create a cra evaluation framework that goes far beyond most troubling, the final cra real risks undermining the very spirit of the original law by creating disincentives for banks to offer certain products or land outside the branch network. the agencies missed the mark and we reluctantly had to call them on it. to be clear, our nation's banks are committed to lifting up all of their customers, clients andr should be challenged here now, that's not the last of our legal actions. earlier this month we were forced to fall yet another lawsuit against the cfpb over a

newly issued final rule slashing credit card late fees by 75%. 75%. now, there are reasons why banks charge late fees and why they are late fees incentivize timely payments and compensate card issuers for costs they incur when payments are late. but the cfpb has labeled these fees junkies and with this final rule of your upended ten years of regulations back my administration of both parties. now while the cfpb claims to have exclude reality of that in a competitive marketplace, all card issuers will be forced to drop fees if they want to compete for customers. to be crystal clear, , this rule will affect the accessibility of credit to consumers and will have a profound impactness mode. our complaint lays out in detail

are arguments against this rule, including the c absurdly short 60 day compliance deadline. we are seeking immediate intervention by t preliminary injunction that will stop it from taking effect until the court decides the merits of the we have an obligation to make sure the agencies overseeing the banking system are carrying out their duties within the law. authority granted to them by congress. when they don't they can count on seeing us in court. if we have to follow the rules, so do they. [applause] thank you the other way we are enhancing our advocacy is by investing in data capabilities. as we've seen regulators falling short on their own obligations

to understand the potential consequences of their actions. a good example of this is what's been happening with the bank capital rules. in our view regulators failed to assess how the proposed baselil. in our joint comment letter with dpi, we showed the harm it would cause. we were when you look at the comments that came in several weeks ago, and overwhelming 97% of them, 97%ere critical. and that criticism came from a broad cross-section of stakeholders. many outside the banking industry, agriculture business,, housing advocates, environmental and civil rights groups. all of them spoke up and to this proposal is a mistake. chairman powell's comments earlier this month signaled that the agencies may finally be listening, but we still justllek to the drawing board. today i am reiterating aba's

call for this proposal to be wi proposed. basel iii should not move forward in its current form. we've also conducted --es [applause] we've also conducted our own extensive research to support our 1071 case. in fact, the ap survey a bank lends found the cfpb mostly underestimated the implementation and ongoing compliance costs by literally millions deployed our research teams to debunk the harmful claims that the cfpb continues to make regarding the competitiveness of the credit card market. to highlight the damage the fed's rag proposal would inflict on banks of all sizes, particularly their ability to offer low or checking gas and other products. and to emphasize the potential harm that would have on consumers, including spelling

in for credit card rarnow. i can spend the rest of the money go into detail on any one of these issues but i will say that for the panels that are coming up later in our program.n deep dive into our extensive research by visiting aba.com/reg research. where you'll find a complete list of detailed analysts that we provided posted and provided bottom line we where better position today to prove how policy decisions coming from washington or not just affect customers, clients and communities that you so importantly serve. these agencies should expect us to rigorously review a data where appropriate. by the way that's how our in-house team of economists was able to ren the rising costs of the special assessment banks are paying for last springs failures.

they discovered the fdic chose to seek financing from the fed instead of other cheaper sources of funding, and the fed loan came with penalty pricing and added as 2.5 billion to the bill that banks ultimately are being asked to foot. we have yet to an explanation for that decision. now litigation and emphasis on conducting our own robust data and analysis are to make ways we have evolved our advocacy efforts to respond to the current climate. but there are also several pillars of her advocacy strategy to#- remain unchanged. we continue to engage with congress, , the administration, the independent regulators as constructive as again and were committed to working with anyone and everyone interested in advancing a pro-growth policy agenda. we continue to build industry coalitions to elevate the issues facing the nation's banks. we are collaborate with other

trades, our incredie■ others to raise the alarm about the regulatory tsunami. and we will continue to do so with facts and data on our0 we will also continue to leverage of these partnerships as we work to advance some key pieces of legislation including strengthen banks ability to support world economies pick and a safer banking act which will enable banks to serve can the 38 states that have voted to legalize it. it's also great to see new legislative proposals to encourage the creation of de■é r new and innovative ways to address the real world facing consumers. we work to help reduce the number of unbank americans through championing the bank on initiative. we're tack t pervasive problem of fraud head on with several ongoing initiatives

including our award-winning banks never asked that campaign. and we're taking particular aim at check fraud. today, for example, the aba foundation and u.s. postal inspectier new joint infographie hope will be shared across the country. last but certainly not■ least, e continue to engage with the public to tell the story of america's banks. it's a different story that some an obligatoryomeecans are happy with their bank and they clearly recognize that the financial services marketplace is highly, is highly competitive despite claims to the contrary. this morning where releasing a new morning consult national pollonducted on behalf of the aba. it shows almost nine of ten and american consumers say they are satisfied or very satisfied with theirri overwhelming 96% rate their primary banks customer service is excellent, very good

or good. furthermore, eight in ten say they're confident that the money that had deposited at the primary bank is s banking sector is highly competitive. a similar number agreed they have multiple options to choose from whe and services like bank accounts, loans and credit cards. not only are consumers happy with t choices, , and the service they received from the banks, they are skeptical of the government interfering in the financial services marketplace. according to our survey almost seven in ten american consumers agree that the economic challenges facing our country, everything from of growth, given all that now is not the time to post additional regulatory burdens that will restrict bank lending. and a similar number agreed that when so many new■

should be required to assess the combined effects of the new rules on banks, consumers and the broader economy before rules can take effect. we could not agree more. so bring my comments to a close, the message of what do want to take away is of this. there are two different stories being told right now about the banking sector. nonexistent data.aulty, consequently, the regulations that are tailored to this false narrative are fundamently of banking that americans live every single day. and pursuing their implementation with the ant harm to our nation's banks, the customers and communities everywhere. bankers know the real story because you are every day. and we need you now more than ever to help us tell it. not just here at theummir as wed

into the upcoming election season. we need you to speak up about the importance of preserving and protecting our broad and diverse banking sector which remains the envy of the world. about how banks continue to be vital providers of credit, that fuel the engines of our local state and national economies. and how banks serve as a get with for consumers seeking their own piece of the ameri relationp can help unlock. your voices can help us turn the page on the false narratives that are spreading about the banking sector so that you can get back to doing what you do best, serving your customers clients and committees and helping our nation's economy thrive. thank you for being here. thank you for your time this morning, thank you for your advocacy today and every day. [applause], to bring a real word

perspective to the policy debate here in washington, i'd like to invite to the the state fouk ceos from different corners ofnp the country who can help us tell the real story of banking today. please welcome aba chair elect john asbury,unit bankshares in , virginia. aba board member brent beardall, the president and ceo of wafd bank in seattle. aba vice chair kenneth kelly, chairman ceo of first independence bank in detroit. and aba chair julie thurlow president ceo of the reading cooperative bank in writing massachusetts. and our moderator are very own chief [applause] ♪ ♪ ♪ >> good morning, everyone.

have a seat. welcome. thank you for being here. thank all of your being here as well. always a highlight for me to be able to chat with our members, particularly four board members right now, essentially my boss is right here so i could have this conversation. nice to see you all. and rob just gave the introduction to you heard his remarks. we know we are all from but not everyone here may necessarily consumptive watching a c-span for examp not know all that much about your individual institutions. julie as archer i will ask you to go first. tell us a little bit your bk >> we are a mutual bank we are in, north of boston, massachusetts, about 1mi from le if you're familiar with the north shore. we are deposited over were found in 1886, and we are nine branch operations and get a mission 990 assets. but our last couple of office of

anonally opened in communities in minority majority communities with an attempt to address financial needs in those communities. >> great. do you want to go an expert yes. whatever. my name is kenneth kelly to a search of sco first independence bank based in detroit, michigan. we have been a business now for going on 54 years but we want oe 1967 rights in detroit becoming the first african-american owned and controlled bank in the state of michigan. we currently have actuallyions , minnesota, part of george floyd's murder was the outcome of banks in the market that we want to do something difrently and we got invited to come and look at the opportunity to expand into that market. so we are proud to represent the team there in a fine job of it a try to bring financial services to that community. >> great. and brent. >> good morning peter. thank you having.

i from sea trivet to marchand lynch so i don't get find. [laughing] >> that is not true. the board fees are going to be withheld i understand. a pleasure to be here. i have good fortune of ceo of wafd bank, now a $30 billion bank on the west coast and nine western states from washington all the way down to texas. we just completed acquisition, after 50 months of waiting to get regulatory approval we finally got that done. the close of the 11:59 thursday 729th. the next day friday we close branches down, started thegb conversionnd the very pleased to report that on sunday night at 8 p.m. we got it all done. so to my knowledge when we fast everywhere net positive on deposit so i'm happy to sitting on stage. >> great, great and you're not going to decide. >> thank you very john.

>> thank you, peter weir atlantic he did make an operative threat virginia, a diversified full-service bank, a little over $21 million i kn assets or our roots go back to 1900 you. while we are principally of virginia bank we do at some operations in maryland and north carolina. we also have a m close on april 1. we emerge with a wonderful when had a a 14-year-old virginia community bank called american national bank. i longtime friends of ours and operate in the western and southern part of the state and north carolina. we are excited the expansion into north carolina. so that is our story. >> so four bank serves in the diversity of the banking sector in many respects you, this i

year. john come tell me a little bit about where we are today as an industry, your own institution what's the last year been like?r place. i think industry has limited its resilience. i think we seen plenty of proof point that what happened with what i call flash failure banks. these were anomalies, not representative of the industry. hypergrowth should become stable deposit bases, editing all of that was essentially called out, overreliance on uninsured deposits had appeared as an industry we■b stayed trueo our clients. relationships can we tell our story and we demonstrated more so than anything else its matters big something i said, peter, over and over and over again, at the end of the day it's really the strength of deposit base that■, matters. and so i think the vast majority of us have very granular stable deposit bases and if that's a really carried us through. let's face it, it

was already building pressure on the interest margin. so we one of the first publicly traded banks in america that ane meaningful expense reduction actions. we did what we needed to do and to seem like it long. but in the end we grew our deposit base i .6 percentage points and we grew lending. we did w be done. i think that's true for most people in the field. this industry is resilient. >> brent, your take a year later. much about stress testing, right? after the great financial crisis on the stress test and were done. let's be real, this industry just with an amazing stressck it rates. that is, especially some such an uber low point fornterest rates were. so it's natural that were stresses and if you think about the failure of std, it was really a basic failure of block and tackle of banking, dash svb.

i love what of the will talk i'm sure all the regular talking each of you about is my risk management. i always go back to svb, right? what was at the duration of their core deposit? and almost anything you look at with svb the core deposits was geeky as a positive effect the w grow grow through the cycles of 40 years. you could've done any study what is said eight to ten y■9ears estimated duration under deposits, except for what happens, you get stressed, you get this kind of flash event that happened with them come with social, instead of eight years, it was less than 24 hours. .. ■n

>> i would tell you, peter, in times of stress, provide calm and stability and we saw what happened and bret just mentioned it a moment ago, we saw really $47 bil■lion move within 24 hours. and so, when there is lack of trust, you find that people will do things that they normally wouldn't do like go withdraw all of their money. so i think it's important that we as leaders in this industry demonstrate tt leadership of calmness when we're on the hill today. hopefully we'll hear that on the panel behind us from the >6■x of that door at the same time and someone will get hurt in a capi

society money is oxygen and we've got to be sure that we're providing the level of leadership that everyone ç■8áñ understands, your objection jen is going to be at julie's bank, bret's bank and john's bank when you need it and that's calmness that we need to bring to this discussion. i'm an engineer by training, when you look at the slope o the lines, fancy way of saying, no one in modeling 500 basis points. if you do, please inform me. we do 400 on the high and low side. the point i'm making, no one anticipated that type of run-up inside of a 18 montho my advice to governors in office that i've had a chance to speak with, we need calm and stability now with you need to somewhere, define what that is so we can prepare for the ride. and we didn't have a chance to prepare for the ride on this one and so, it created stress,

as brent just mentioned, not only those banks we were talking about, but really across the system so hopefully they've done a good job of projecting a downward increase, but my view, given where we are and given the instability around the election, i think, is calm and steady will win the race on this one, be sure that the pig gets through theon. >> and julie, you've had a chance to talk to your customers of course in massachusetts and travelling with abs and association and around the country. what's your sense of last year and today? >> i think we're in a good spot now and t are a lot more resilient than we've given credit for. we've been through cycles before. we have balance sheets and we only have certain levers that we can pull so we adjust our strategy as we move forward to address for the new paradigm. did we this, and our

deposit costs rose, but i think we've managed through that and we're waiting for the next cycle to hit and preparing to meet the needs of our customers. >> well, we have, by chance, a fed meeting starting today with the decision on interest rates had the chance to talk to jay powell and his colleagues, maybe kenneth, i'll with you. you mentioned before. what advice are you giving to jay powell. >> i don't have a direct lane to jay powell so i don't want to fake that, but i have a chance to speak with folks and provide and the fed out of chicago, and i thi we need stability at this point in time. we have not seen the net effects of the costs running through the system, meaning, understain wan to small busines have to pay a higher interest

rate cost. so, my advice would be calm and steady i think will win the race made we shouldn't take for granted that race won't move, but now is the time to allow individuals to figure out, how do you build that of resiliency across your balance sheet so if we run into more turbulence at some point this timeii you're capable of dealin with that. >> any advice for jay powell or input for the fed? >> i'm no person t give jay powell advice, but calm and steady. we're leaders of the financial system. let's never forget we're a factional banking system. if any one of us suffers the run that sb had, we' not to be. and we have substance and from 1 c standpoint, from a

liquidity standpoint. it is relates to the federal reserve, i believe there's too much transparency, i think they make a mistake and give their thoughts where rates are going to go. and they go out there, this is where we think rates are going to go, but, an important but, we're data dependent. none of us can predict the predict the future. why set expectation where rates are going to go when we don't have data. i think it's one of the things that's gotten us in trouble and the markets to get frothy in some respects and some were baking in five to seven cuts, and i shook my head. inflation is well above the 2% target and how can we, and people loo at the doc thoughts and that's where it needs to be. and i think the pendulum may have swung too far in terms of transparency because they get themselves into a box. >> i think it's steady as she

goes. they'll go the measured pace and i think they should. we need to let inflation calm down a bit more. i think we'd all like to see lower interest rates, but they don't need my advice. i think they'll continue to hold for a while. all of you if they had the chance, how is business? if you had to had input as far as the picture of the economy, the state of the economy right now, john, how is it? >> pretty good. it's a function of our markets, in virginia where most ofcd our exposure is and north carolina and two economies. the business is pretty good. things have slowed a t,ustrial clients are doing just fine. they're still liquid and they've been resilient on the commercial real estate side and we'll perhaps talk about that later. we're seeing fewer project underway now, being started mainly just because of the higher cost of interest rates, the amount of capital that needs t in order to make the project work.

the credit is quiescent. credit continues to be very quiet and the fundamental health of our economy in which we operate in looks good to me, so, slower, but doing fine. >> anyone have a different take on that? -- is that what's happening in your neighborhoods? >> our delinquentsy is probably the lowest it's ever been and consumers seem to be faring well. there hav rumblings, but commercial takes many forms, family, owner occupied real estate, the diversity of our portfolios will look at the strength. >> let's look at that. commercial real estate has been a hot topic ifou watch used to work a few moons ago. it's been a hot topic. help the audience understand what commercial real

estate-- your point, julie about commercial real estate. there's been an effort to theret you have to look specifically, don't you? >> i think so. let's be honest, there are some zip codes that are going to havey when people don't go to the office as often to do their work. then they're going to be people that change their-- leases and stability in certain sections of the portfolio, but the whole commercial portfolio is not actually exposed and a lot of businesses, asoh cni businesses are very strong right now. >> if i could, i'm on a personal vendetta to set t record straight. the sky is not falling ton commercial real estate, stop the madness, there are so many chicken littles out there on stop. there will be issues in pockets of commercial real estate as julie pointed out. in my mind you need to estate, number one, what kind of

commercial real estate. it's a bad thing like saying the stock market is a bad thing. there are9j companies that are overvalued, overall, there's thousands of categories of commercial real estate. number location, location, where is the real estate you have. are you downtown manhattan, washington d.c., salt lake city? it matters a great where people-- and one statistic i wish we all had to my knowledge, nobody has a very good statistics, it's physical occupancy of office buildings. we talk about occupancy and financial occupancy. that doesn't matter. what matters is occupancy because that means if your workers are coming in, you're going to renew your lease when that's due and how much equity is in if somebody only has 10% equity they're going to walk pretty quickly. 50% equity they're along for the ride and lastly, as we all know, the most important characteristic of those we lend to is character, so it's really

hard to say, oh, my goodness, you have a cre concentration. i believe warren buffett said concentration can be a good thing if it's concentrated in the right place or it can be bad■x thing, but categorizing commercial real estate. >> i think it's not a bad thing. the properties different. and it's around the apartments and hotels. the overafternooning concern is rates are higher and so historically commercial real estate has been a pretty good hedge against inflation, and apartments and rents are going so, sure debt is higher and cash flows are up, true. it's not true for office. office is a whole different conversation, that's not so much about interest rates, that's a structural change and the nature of work, but then it comes down to, are you talking about high rise office buildings and you know, major metro areas or talking about,

like suburban, single rise office buildings, and tenants less supportive of remote work, hybrid work, et cetera. it's about are you using the i think it's just not one thing, there's a lot of press about rent controlled apartment buildings and that's a localized issue and very few places in the country that's an issue, it's not one thing. >> let me ask you something else that's happened in the last year, that's what rob spoke about in his remarks, the regulatory changes coming from washington. a long list. the basel capital rules, interchange for debit cards, any number of proposals that have come. rob called it the tsunami of registry changes. how much of your time has been

devoted to dealing with these issues, plann issues? is this-- walk me through how you're navigating this right now. julie, maybe i'll start with you on the it is a tsunami of regulation when you think about tremendous amount of requirements in the organizations keeping people. i think there was 5,000 pages in amount we need to sift through and the new cra rules are going to fundamentally change the business model and how we actually operate, how we meet our communities, how broad our communities are and who we need to serve so it makes you rethink how we go a banking andk that's the reason we're all in the room and engaged in this conversation right now because we really need to push back so that we actually protectmodel a provide the financial services and meet the needs of our

community. >> is there a particular proposal? i'll invite this to the rest the panelists, that stands out to you, that causes you the most concern where if you had the ear of regulators you'd love for them to hear x? i'll let you go first. >> if you ask me what i think has the potential to have the most unintended consequences overtime that would really impact our low to moderate income, it's cra reform. i think we're all in favor of cra reform as we as anax industry, and i think unintended consequences that have not been fully thought through. and we have to start with what is accomplish from a policy standpoint. what's the outcome and work back from there, but when you put out the thousand page documents, it's riddled with.ó unintended consequences and i think that's the role of the industry to really have its

voice heard is part of what the aba is doingomment letters and pay attention to these things. i won't get into it right now, but it's very important that we speak up, as sort of point out, look, practically, here is what might happen and it needs to be taken into consideration. know, to that end, it's a cumulative total. it's not any one. each one you can poke holes at and i'm gratefu the aba barry standing up for us flexibly. people talk all the time. why aret there more de novo banks and people not coming into the industry? is it because of the regulatoryg frame work? why would someone want to put their capital into banking. you look at the largest banks, 10 to 12imes earning. what's the s&p 500 trading at,

10 to 25 times earning and regulation on regulation. i don't think that any of us on the stage are opposed to strong effective regulation, but we want to be able to compete in the marketplace and deliver a reasonable return to our shareholders. if we don't have the model re not having capitol coming into the industry and then consolidation of a number of banks in the long-term a bad for banking. >> there are a few-- and if you erode the industry. and by most consumers does pretty goodob if we offer free checking, offer a bank on certified products as well, but if you underline the structural profitability of the industry, how deliver that? i think it's going to drive more consolidation and the industry t technology. you have to think about unintended technologies. >> i'm going to say a couple of

things, one is that the good that is because it's had the effect of keeping out some who have a lot of money, who don't have good intent. and we need to be mindful of that. so regulation has played a positive role in this whole process and i've seen that firsthand and i won't call any names here, but i would also say to what brent said, it's about capitol. talking about oxygen and a capitalistic society. if we want banking to be a core component of the capitalistic society here in the u.s. we've got to track human talent and that's why i'm proud of what we do at aba, even the emerging leaders, i was in a class with them and while i'm talking so you can see the impact of the new leaders coming into banking. [applause] >> who will be sitting on this stage at some point in time leading this industry and it's important that we have emerging

leaders because we will not bel best way i could describe that, peter. as we think about regulation, i would tell you we go back to nashville, you and i, i believe, or rob may have been on the stage and we talk about basel 3, and bank at the size today i believe it will have an impact on us. as vice chair left the s a need the impact of that. what i'm grateful is that chairman powell did say they're going to pause a little bit on this. so the point making and i want to make to this audience is, our voices are being heard. be sure you're doing what john just talked about, being sure i street where you are, whether that's in mississippi, alaska, vermont. california, arizona, we need all of our voices so cohesively, shall i say rowing

the boat together, on the hill or registry agencies, they're hearing the exact same message. >> going back to brent's comment, it really is the cumulative impact when you think about higher capital requirements, lower fee incomes, because traditionally fees that we've charged for years are now under attack, and they're no longer abusive, and then at the same time, you're sending more to software and technology that's necessary to track 1071 and interchange revenue was also under attack, so it's■ com from all different directions, it's not just one registry agency that's writing a bunch of rules, it's a bunch of agencies writing a bunch of rules and it's not coordinated so it's coming out of all and it really does make bankers wonder if they have a profit me follow up there, and you were passionate about, and

inclusion. you've moved into neighborhoods in your marketplace to try and reach as many people as possible. the way you can do that is because you generate revenue in other places that allow you to pay for that. can you talk a little more about that and the effect of something like reg ai, the debit change cut that's been proposed? >> just about everybody in this country has a free checking accounts. guess what, checking accounts are not free. if costs for us to generate statements, to maintain them on our system and everythat, and we pay for that through revenue and other fees for other services that we offer within our institution. we are trying to get people into thesystem. we now cash checks for noncustomers and pay bills for cash payments. and we're developing other products to bring people into the banking system and using the free checking account as an opportunity to broaden people's access to financial services.

cra as a regular has as its goal home ownership, but consumers need to be in a bank and need to be bankable and how to use financial products to improve their life. so, there's a large continuum that's now being made on profitable business for us and it's going to make it hard for people to actually access the products. >> brent, i want to give you the chance to talk about one other item that may be flying lower on the radar screen, you mentioned to me back stage, governance and the the fdic. >> it sure has and if you look at the comment letters about the fdic government's proposal it's unbelievably strong against. i think that governance-- who doesn't believe in governance? to me this proposal is the wolf dressed in sheep's clothing.

there is-- if you have a holding company and a bank, you couldially have entirely separate boards. i think the vast majority of holding company boards and the bank boards are similar and the same individuals and you can, because of conflict of interest, because they would no longer be independent based on the new proposal, imagine that, imagine trying to recruit directors. the line is already blurring between what is the role and responsibility of management and the role and responsibility of the board of directors. in my mind it's very clear, the board is for oversight, the management is for setting strategy and execution and then the board can rein them in. those lines are blurring and we're getting it all the time. our regulators want regular meetings with our board members. what do they know? pretty soon the board needs to be literally a part of management so i think we need to strengthen those lines and i

think it's very insightful that county and state regulators put out a letter in opposition. they were so strong to the ic proposal, don't try to sweet this. just try to withdraw it in its entirety. i'm going to shift in our time remaining, not to regulation, no current state of business, but the future. tell me about your bank right now. what you're investing in. what you're excited about and john, i'll begin with you. you just completed a merger in the process right now. as you look at, even with the registry challenges, some of the economic challenges. what has you excited each day when you go to the office? >>■v■ wre investing in people and technology. all the challenges. at the end of the day we're almost like all of us in the ro. really bang for real people and we help people and help communities. we provide services and

financing, it's fundamentally and noble profession, i do not understand why we're in the cross hairs for the political debate and targeted, et cetera. at the end of the day we do a lot of good. i see it every day, clients coming up to me saying i love your bank, you do a gre job. the people, it's really all about the people and in the end, no matter the challenge, no matter what it is, it's all about the people so the merger with american national is the latest and greatest, and exciting. it's people business and we help people, we fundamentally do a lot of good hope people remember that that don't understand this industry. >> i'm asking you. >> the two topics, the people, human capital aspect of it and technology side of it. i share with our board. we'veeen doing this now for six plus years we have to act and behave like a technology company in the logistics of

moving money. that's the mantra across our board and our business. having said that we've gone to a completely digital core system and we changed that inid that done, i would say on time, not quite under budget because the fees to unhook was a lot more than we budgeted and i hope most of you can appreciate that joke. when you look at the people side of it, peter, i talk about the emerging leaders moment ago, we had one here on our team and we actually, about five, right at five years ago, stood up a -- at that time it ae millennium advisory board. and i looked at the demographics of our customers, on the mature side, i'll say. we brought in a board of young entrepreneurs, et cetera, would give us feedback and we'd give them development and leadership

opportunities and opportunities about banking. i will tell you if you look at the history of those team members, many of them have participated in what you would call shark tanks detroit area and/or been placed in those. we're proud of that, but that's the ethos we're trying to bring into our-- bank. so we're very proud about the people opportunity because we're going to need human capital to come and sit on this stage five years from now, 10 years from now, but also technology and being sure that we're competitive with any other person or entity that wants to play in the financial services space. >> julie. >> i think i'll just echo what ken was saying, innovation has a lot-- there's a lot of opportunities for us to become more efficient in the institutions and products and services, easier, better. we'll have to dismantle a lot of things built the past as far as our operational processes so we can deliver better on behalf of our customers and customers, but it is the people and the here at a

brought in such rich talent s■o industry. people passionate about their communities and doing well in th doing well for others. >> we talked about resiliency for people over the past year and you've got a personal story of you've shared with some of the emerging leaders. what's your outlook for the future given what you've been so?ough over the last year or >> i could go on for a while. >> and not everyone knows your story. >> for those of you that don't know, about 14 months ago a pla that went down, and the person sitting from me to john passed on impact and i was left without a bright outlook and i'm here and before you and so grateful. i am the luckiest guy in the world and happy to have that

debate with anyone. i've said that before the plane accident because i do feel lucky because of what i get to do every day and who i get to do it with. i look at this stage and look at the people i'm surrounded with and they make me better, so, thank you very much, but you know. [applause] >> resiliency is a choice. it's a choice for each of us. stuff is going to happen. how are we going to overcome it. and that's what i love about the banking industry in the industry, right. a lot of it is david versus goliath. we're big enough to be relevant, small enough to be nimble and let's figure it out. to me that's resiliency, back to the previous question, what excites me, it's the passion, it's the■= caring, that the teas have. why do we do what we do? because we want to create a better future. future for our clients, a t

better future for our employees, our teams. i'm a big believer, you can't just sit back there and throw stones and pick apartwrong. we could talk all day long about what's wrong. the question as leaders, what are we going to do about it? how are we stepping up, how a, organization going to make a difference? that has me excited and re!9liency, we think we know what's going to happen. you know what we're sure of, we're going to be wrong and how are we going to adapt to that? washington in person, we have a whole host watching in the live stream. what's your message to them, both the folks in the room here and the folks at home a■y advocacy and getting involved and i'll end with our chair and i'll begin here with john and we'll go down the line. he to get engaged and don't just be a bystander. whatever matters to you, do somethgplish

a better outcome, and to your point, don't just criticize, that's easy, that's weak. leadership is really about taking a stand. you also need to be empathetic and try to understand the perspective of others. we can complain about regulations and part of why i try to understand what is the perspective of some of these regulations that are coming at us. what is it that we're trying to accomplish, get engaged anday attention, don't just be a bystander. >> i would say be authentic. live your values, and then tell the story. never go with just numbers. nobody-- numbers weren't going to save anything. tell your story, be engaged, make a difference in your community and how your bankers are making a difference. we have a great story to tell, andd of by our nature, bankers are humble. we want to take a back seat and the spotlight, where ty'ladies

to tell our story, spotlight. if we don't tell our story in the absence of us, in the you'll have all of the chicken littles telling everybody how bad things are. that's not the case. it is our responsibility, our obligation, as leaders, to tell the story and-- a story, not just numbers, not just, hey, 87% of the people think that's great. those are good and i to have thk pocket. we need to talk about what are we doing to help the lives and people in our mm to go back to finish my story and talk about the millennial advisory board. they wanted to rename ours selves, that name has a dirty ■a connotation. they've renamed themselves the next gen board. the reason i bring that up, sometimes we have to listen with two ears, versus talk,

sometimes with one mouth, and taking the message going forward as we talk about banking, meaning we really have to take a stand and look at how do we have a positive impact on the current situations. we've talked about all the regulatory issues that are taking place, but united as front, we can certainly row the boat together on this topic. >> julie? >> i'll just reiterate what's been said here. we're her we're coming from all of our districts, and we're here to bring the message of what the experience is for consumers on the ground, for our customers, for what we're doing for our industry and our community. we're actually where the rubber meets the road and getting that message here and talking about what the regulations impact is on that consumer, how they're goingo 1071, asking 80 questions of new applicants. how is that going to make it÷j easier for someone to start a

business or buy a home and we actually in the industry support. again, telling our story and making sure that we're connecting with people here so they see what their work here in d.c. does to the experience at home. >> we've got just a minute or so left here, one last question, because i like asking this to bankers. tell me a story, i don't need a name, a customer, an individual or business that your institution touched in some way this year that made a difference. a personal story that you shared in the office or you heard in the office that made you feel good about what you do. and i'm letting you off-- julie start with you this time and see if you've got one. >> sure, there was a developer ended up buying a building in a city that hadn't had a new 60 years. it is now a market of units sold o to low to moderate

income individuals and it's robust and the valuation, when it was imagined was at 7 million and now the valuation is at 12 million, so creating equity and putting it in people's pockets. that's what we do. >> great. we've got a customer in minneapolis who is i the mall of america, just outside of nordstroms. he actually got burned out on lake street as part of the unrest associated with george floyd's murder and had to sell clothing out of the trunk of his car. so we recently did some work with him, got a loan for him and he's now ope shop there inside of the mall of america, if you get a chance to go to minneapolis twin cities go by and visit him and buy something. >> brent. >> a consumer customer that had 12n their account. there was fraud. and same day they reached out to us, we're sorry that happened to you, fraud is prevalent. here is the money back into y, we'll

investigate it and take care of it. she reached out to me and wrote a letter, and brent, never in my life have i felt that my bank has had my bank. that's what we're about. why not give our customers the benefit of the doubt? sure there's bad actors■ that will take advantage, those are the minority. the majority of people like this fine woman that said, you know what? all i want is somebody that believes in me. r >> john, the last word. >> i'm thinking of -- i've got so many stories, a not for profit that supplies affordable housing and reached out in the end and said we couldn't have done this without you, your team's creativity, devotion, thank you for working with us. this will make a difference in people's lives. you know, to my point, mas what we do, this industry does a lot of good. people need to stay focused on that. >> all right. john, brent, kenneth, thank you the four of you, the leadership you provided aba as well and for sharing your stories.

[applause] >> please welcome the president of the south dakota bankers association, carl am. ♪♪ >> well, good morning. today is national ag when we commemorate the role that farmers produce in our economy. many of them are our banking customers. in south dakota, deeply commit today serving the ag daily. one way] nation's producers, championing the credit for rural economy act also known as acre. rob nichos opening remarks, it's all about giving ag and rural customers greater choices when seeking

credit. the bill would enable lenders to exclude from gross income the interest received on loans from farm real estate or agriculture facilities, along with interest on certain home mortgage loans in rural communities. this i turn allows banks to pass on lower rates to their ag and rural customers enabling them to stay competitive with other tax advantage organizations like credit unions and farm credit lenders. and in today's economy we all know what a difference that can make. here is a short video that helps us explain acre. let's take a look. >> inflation and rising costs, our farmers, renters and smalltown residents are struggling for businesses, or buying their own cre act will i rural lending markets and drive down costs when all lenders are required to compete on the same terms, agriculture and rural borrowers win, the lower

interest rates directly from lender of choice, meaning better rates and better service. learn more ataba.com/support acre. >> acre is the common sense solution that's garnesupport. to date 56 co-sponsors, including 16 democrats and 40 republicans. aba and the state associations are working to get this bill over the finish line, but we need your help. i want to urge you to visit aba.com back slash support ac. ag banker or not, this is legislation that we all need to support. thank y [applause] >> please welcome back to the state aba's rob nichols. ♪♪

>> thank you so much, carl. before we move onto the next session i'd like t echo some of carl's comments about acre. this is an incredibly important bill for our industry and one that's been an aba priority for several year■ó we're so pleased to see the tremendous bipartisan support this bill has garnered and we need your help to keep this issue on the front burner lawmakers, so please visit aba.com/support acre and send your letter of support today. g remark the regulatory landscape for our nation's banks has shifted significa■nntly over th past two years. our next session brings together former federal regulators to offer their perspectives about the ion of bank regulation and the path for america's banks moving forward. it is my distinct pleasure to welcome to the stage former cfpb director who recently

began her tenure as president and ceo of the florida bankers association, former fdic chair mcwilliams who today is a manager partner at crevasse, and vice chair for supervision, randy quarrels who is executive director of the syno sure group. please give our panelists a warm welcome. [applause] ♪♪ >> thank you, kathy. thank you, randy. thank you so much for taking time out of your incredibly busy schedules to visit with us. i can think of no three better executives to talk about the current regulatory land

basel 3, and i noted a full 90% of the comments that the federal reserve received were critical from a lot of groups, ag groups and housing and all sorts of groups. where do you see the debate around capital going and what do you think the likely outcomes could be? >> well, i think that the proposed capital rule to implement the last few sections of the basel agreement was obviously highly overcalibrated in the united states. it was contrary to what the basel group itself had said was the objective, which was to implement these last pieces without significantly raising the overall level of capital, it's contrary to how it's being implemented across the country, and it's contrary to the needs of the moment which is that particularly monetary policy is putting

pressure to contract the economy, you don't want to amplify that bymatically increasing capital levels in the united states. so, i think that's widely understood, as you said. i think the federal reserve has taken onoa enormous number of comments from across the political spectrum. so i think you'll see a significant down calibraon of the final capital rule when-- >> i suggested that it should be entirely and reproposed. do you think that may happen? >> i think that it should happen. i think given the changes that needed to be made under the administrative procedure t, pos change the original proposal enough to put it in line with what was expected by basel and what's circumstances without the law requiring it to be reproposed. >> thank you. i'll ask this next question of all of yo■u, b may start with you, the broader topic of the governance and oversight of

these regulatory agencies. ■a you led the fdic for a number of years effectively in our view. how effective is the congssional oversight process as a regulatory leader and what's your lens on the governance of these agencies today? >> so, i'll answer thi question not as the former fdic chairman, but the banking committee. very important. frankly, they're supposed to be checks and balances in the agencies, especially multi-member board agencies and the checks and balances are supposed to go like it is, and bring you evidence. preferably quantitative evidence why things need to be changed. you discuss thing internally and it comes up to you refine things internally and comes up to the board for a vote. and board members give input and hopefully that is better.

when that breaks down two checks and balances in the system and one is congressional oversight and■on other one is judicial and i often say this to people who matter at these agencies, i hope you get sued. and they say well-- i do appreciate the agency, i love the agency, but i get sued and i hope you lose. the reason is when you promulgate rules and basically the ■4downfall of the practice that i outlined or the downfall of the administrative procedures act that randy just spoke, that's reasonable, that you only have two outcomes left, judicial and congressional and god help you ifarves out your future, you hope you go to court. [applause] >> thank you. kathy or randy, anything to add on the governance of the agencies before i get into some other topics? >> no, i think that jelena is

right. i was a congressional staffer, and then worked in the executive branch. there are three branches of government for a reason and taking advantage of the judicial arm is the police we find ourselves, again, as regul are really standing well beyond the scope that was given to them by congress. congressional oversight is important and certainly plays a role, but we are also watching what's happening in congress right now and what they're unfortunately not able to get across the line on. so there are a lot of other things that congress is spending time on and so the ability to really get in the weeds and understand these things, i think basel three, the end game is a fantastic example what you can do as a coalition. breaking that down and capital y it impacts communities and how it impacts actual, small businesses and communities and getting that together and bringing that forward, the fed

has to respond to it and that at least■ is a very positive example. but if they decide to move forward anyway, then, yes, we have to take that judicial remedy into consideration. >> and i think suing the regulators is not a declaration of war. in my view, it's consulting the dictionary on a disputed scrabble play. [laughter] >> well, we apparently are doing that four mes. >> it's a useful discipline. when my sister knows if she puts down-- i' dictionary and it constrains her. >> i like that. randy, i'll start with you■z we're about a year after the spring bank failure, so i'd be interested in everyone on the things that we've seen that we think is a little alarming is

what appears to be kind of a move away from tailoring, which we tho was a very sensible approach from a registry supervisory standpoint so i'll ask an open-ended question, what do you think we've learned over the last year, and are our impressions that tailoring is-- we are moving away from tailoring, do you agree with that and are you equally as concerned? i'll start with you and move this way? >> yeah, obviously the capital proposal and in general, i think the mindset of the regulators particularly has moved away from the tailoring concept and i do think that's a most concrete example of it, but i think supervisory practices as well have moved away from the concept of sort of risk based approach. i don't think -- i think that's a misunderstanding of the lessons to be learned from fcb, for example, that was an

entirely■ different issue than tailoring. and it exposed certain issues that have existed for a long time in bank supervision. but most significantly, that was simply a result again of monetary policy as the same as the savings and the whole savings and loan industry in the 80's was a result of the monetary policy of the 1970's. i think we're learnq g the wrong lessons and they're applying them quite asiduously and i think that the ideas benefits from the range of financial institutions that is supported by a tailoring approach. both in regulation and in supervision. many other countries around the world have a handful of banks and you know, and we bef from the fact that we have a great variety of banks all across the country.

and that's put in danger if you abandon the approach to tailoring. >> thank you. >> so i think the main issue we have is that world of bank regulations supervision and enforcement has become incredibly political. and politicizing thatce actuall and dangers and one of them is that when you have situations like we were march when liquidity was draining out of these banks, that the outflowyb7■ner hour ba that hasn't been seen before in the banking world. and i think that putting anybody on the spot here, and we can't really see you so i'm not putting you on the spot, but hardly anyhe room kind of outflow of deposits. so i do think that the issue

really is we can do as, y post-, would could have been, should have been done, how to do it in the really the unfortunate thing whenever you have an event like that this a town like this, political forces kick in first. and whei first joined the united states senate i was told about this imagery shelf and the imagery shelf is not as imagery as you would think. kind of you put a different provisions that you're going to put into law on the shelf. and then you need a■r crisis so that you can go that one, that one, i can get that one through now because we have a crisis, so i do think to your question on tailoring, there was no nexxis that has been established in an objective way between tailoring and what was

done in these banks. se to make changes that you want to make. so i think that's a problem. if you really want to talk about what should have been, could have been done differently, maybe we don't politicize the issue of bank mergers in this country. maybe we allow market forces to do what market forces do in a market economy and that's something that frankly, has not been a part of this discussion, at least not openly. >> and just picking up on■zhe importance of tailoring and how it has gotten us to this point in terms of robust banking system and service that is we have in this■w country. that's the dynamic that i really hope that regulators take into account and in doing cost benefit analysis. that's what they're supposed to do. and that's taking into consideration the wider impacts that many of our comment letters certainly harp on, is not just about, you know, banks providing these services, we know what's happening. the more the regulators put

their, you know, hands around ourneck, the more things squeeze out the other side and we've got, again, all of these-- and i will say unregulated. i did work for the tech industry for a little while myself, so i appreciate the differently regulated whether it's credit unis or fintec's or big tech. and it needs to be taken into consideration and impact again, what that does to the services that are available and the protections in place for consumers. >> so, i'm going to start this next question with u, started the capital question with randy. and the events of last year sparked the dialogs around the future ofe system and there have opinion calls and debate around modernizing that system and perhaps changing it. in dodd-frank we lifted the number 14 years ago to 250,000. the question now, should it be higher or higher for

noninterest bearing perhaps payroll accounts. obviously the fdic here, the central figure in this debate, but they can't do it without congress. what's your take on that debate, if you had utopia, what the systems should look like? >> if i had a magic wand i would use something else. [laughter] >> so, i'll say that on the deposit insurance, i have been asked this question before and when i was a chairman of the fdic, i didn't actually know this coming in, how complex the deposit assessments formula is for different institutions. , formula, for large banks, more complex, and a lot of things going in, your ratings, your business model, you know, the risk of your portfolio, et cetera. so, it's actually more complex than people think. it's not like you look at $100 million and times this and you get the x amount.

the one thing i've heard frankl i love to pay more. you know that. if you would like to pay more, let me know, i'll have-- i can speed dial the people who matter. the truth of the matter is that there is a cost to all of ifthi. >> right. >> and the cost is usually born by the entities and then some passed on to consumers, maybe not dollar for dollar, but in some form. so i think that that's the events of last march were-- you can name em, label them however you want, unfortunate should not have happened, didn't have to happen, could have been prevented, but truth of the matter is that all banks ended up paying for the special assessment that was imposed on the banking industry as a result of the failures of these banks and the government's frankly, handling of the resolutions, and receiverships.

so, we'rewhere. what's happening with the economy, people say we don't have real inflation, some people say we do. i don't know that how is the time toxtra cost. i don't know that i have a moral objection to raising the deposit insurance limits or not, but i want people to understand nothing is done in a vacuum. it's like a balloon you squeeze it here, it comes out there. before you squeeze it you better know what you're doing. >> randy,t topic? >> certainly, jelena is right, we're precarious position. while we call insurance on deposits, we in the room seems not the expectations to be in the public is. notion that alo be insured and the government is backing up these things and it's also something that isotun the taxpayers paying for failed banks, again, not understood in terms of all this is paid for

and comes incumbent to get that edge message out and clarifying it and that fulsome policy discussion and review and bringing facts to the table. they i do have my head of government relations is in the room and loves saying this, but every debate in tallahassee, well, the facts while interesting, are completely irrelevant to the polital conversation. [laughter] >> so that's where we find ourselves today, but i still believe we have a responsibility to bring those facts to the table. and hopefully, you kn when you pull those off the shelf when they get to be in the right argument at the time, that will carry today. >> some might say that's not just the case in tallahassee. >> randy, anything on deposit insurance modernization? >> i agree very much that we shouldn't move to-- into a system of universal deposit insurance, 100% deposit

insurance, it's too expensive for the industry. it would create moral hazard in the financial system. i think the answer reall -- is provision of liquidity from the federal reserve in a way that has really atrophied where they ensure their own liquidity, banks of every size, which result crisis after financial crisis, which is why we created the fed. it tries to restrain the likelihood of a fun, but if we're living in a world where that liquidity need is going to be greater because of changes in technology and communication and so forth, so that you just-- it's just going to overwhelm the system. we need to revitiz position of

from the federal reserve, which is the reason for the creation in the first place. i think that's a better answer than trying increase. >> i'm going to ask questions about fees and interchange quickly. you mentioned, randy, you do not think that the fed is obligated to update the rule around interchange. can you expand on that? this is hot debate right now. >> if you look at the-- if you look at the law and if you look at how the costs of the system i mean, the law requires that the federal reserve set the rules in light of the costs, but if you look at the costs across the entire industry, there's absolutely no need to try to bring down the sort of charges currently. that's, you know, you can interpret the law, i think+c

stretch, but the law does not require it as the claim has been. we're just following the law. so-- and i think that t consequences of doing so are quite, you know, are quite adverse. it was reasonable, i disagreed with i at the time, but it was a reasonable proposal to say, if you put these limits in place, that will shift some of the consumer surplus from the banks to the consumer. we've seen in practice that is simply shifts the surplus to walmart. ere's no particular r for the government to care about the surplus between the banks and walmart. that's up to the banks and walmart, so they should stay out of it. [applause] >> thank you. now on the subject of fe talked about that in the opening remarks, we have three different pieces of litigation

againstcpb. currently they're saying they're junk fees and looping them in with all other industrial take offense at tha we think that banks should be able to charge fees for services and disclose them and overseen and et cetera. how do you see this debate? i'll start with you, kathy, how do you see that debate going? do you think that calling them junk fees makes sense or we think that playing defense. ...

>> and it's a servi tpeople usi. from my standpoint it's really about those people who claim to be helped in this scenario are y the very people who will from the lack of the service being available to them. but that seems to be a o serving the regulators. so it absolutely is the right the court. the basis of consumer protection is transparency and disclosure. to go with udaap but that's also we've got decades of cases around a lease the unfair and deceptive acts and p documentedd consumer protection. so it really is about disclosure. provided to the consumer, thes consumer has a choice to make any competitive banking system, that should be their choice to make and it certainly is a

business decision how you recoup the business fees and cost of doing business and offering those services. so it is unfortunate but we plae that's the remedy we have to seek. >> are right. so cra,■pbe are suing your formr agencies, and banks are passionate advocates of lif alle united states. and have for a long time. do the should be modernized. we apsley think the rules should be modernized the way banks serve their customers and clients5rk could to go when the room will initially came about. but the role as proposed actually grades disincentives for banks to serve all their community spirit we are challenging this rule in the courts is quite recently. as you probably read about this

rule proposal, i will start with you, what is your take on this debate over cra? en you saw that proposed rule did you also, we are also skeptical of what was your take? >> as a veteran of many political in washington, d.c. at the federal reserve, and the united states senate and the fdic, i can tell you that one rulemaking that ruffled more feathers than many others, jenna, you say basel iii people think it's like, this spice you put in the suit. you say of their like -- do the right thing. so i do think that agencies should be challenged on how they are promulgated. and is in the, when internal assistance of checks and balances so you resort to traditional congressional

processes. and i do think the cra, this is one iteration now, fifth over the past six years? i think people are just whiplash of the changes. a think if we could frankly sensibly put politics aside and just work on what matters, which is does the new role produce is meant by law from 1977 to protect, right? which is are you helping the communities that are low and moderate income committees, are you providing banking services in a drive-in making services the committee's it's not that complicated. there are think that a complicated. any kind of a word again with this man is complicated. this is actually you know not that complicated. is it more or is it less? when we were in a process oro on the role when i was in the

office, i basically i did ask ceos, a few i said can you take the proposal as it, can you put it in your system, came to run the numbers and can you tell me is that more for the community or is it less? that should be the bottom line, right? and i don't know that that's where we are. i haven't seen if we are not there, then you should be pursuing whatever remedies you can pursue to challenge of the role. >> thank you. randy. your former agency had the pan here. >> i, i completely agree that the numberd ought to be done ino modernize see a. the practice have been come classified on certain set of things that you do. it was very formulaic, but again in place is

too complicated and complexity results in unintended consequences.d all of that was y i think. the closer you get to the issues that were relatively straightforward. >> kathy, anything further? >> just how political this is it gets unfortunate because the intention of cra is absolutely laudable. that's one minute he went into business to begin with, to serve your communities.■o capital system and the notion of this country for opportunity of providing opportunity, that's a we should be talking about. but, of course, that's that with the rule will actually do and that is the whole situation more complex. the last thing i will! see on te politicization is this was one fdic board meeting certainly while we were there where we had members of congress show up for the board many. i don't know if you have you remember that, but there is a

lot of passion around this, understandably given the purpose of the law. but we all know the outcomes are not matching with the purpose. >> so we running low on time. i'm going to give each of you an final word just on the kind of direction, the regulatory dialogue and climate around would not give covered. randy, i will start with you. >> i think that the, i guess for the lightning round, i think the relationship currently between regulatory and sobriety system in t banks is far too adversarial. and that is not good from the point of view of the public as well as from the point ofiew of the industry. when there is more interaction and cooperation to achieve the >> thank you.u get a

>> i will say building upon what randy said, lay low. don't stick your neck out. that's actually too bad advice and give it because the imbibe is such a pity to do anything other thant plain vanilla stuff, you going to be in perilous situation and dire straits. so thi to be incredibly inventive, sadly, but serving your communities and just don't, , don't come up with anything new for now. [laughing] evolution highly overrated. [laughing] >> kathy, final word. >> i think part of this also as randy was touching on the relationship, i think we're finding ourselves in the police were again there's a generational change happening amongst the examination staff and there's an therefore so that opportunity to

be working with the regulators in concert in a way that is good for the overall banking system, it's not there. i will say there is patience as yellen has said, and patient still trying to have that good relationship by bringing them along to explain the business model. it's tedious. you all have to do it all the time, and so that i think work needs to continue. >> please join me in thanking randy, jelena and kathy for being here today. [applause] >> please join me in welcoming the president and ceo of lake central bank, brian. ♪ ♪ ♪ >> good morning, everyone. trule opportunity to introduce our

next speaker. representative tom emmer has represent minnesota sixth congressional district since 2015 and he has assert as a house majority whip since 2023. since he's been in congress i have been fortunate to have had the opportunity to get to know him well as a of this advisory advisory council providing kind of a underground perspective to him and to a step on the main issues facing banks today. as a member of the financial services committee, can't imre has always been willing to and n to our perspectives. where fortune to have them here today to share his views on banking poly it's going to be a fantastic conversation. so would you please join me in welcoming house majority whip tom emmer to the stage for conversation with aba's had a congressional relations, kirsten sutton. [applause] ♪ ♪

♪ >> can't good to see you. thank you for being here. for bankers and run, can't emmer hold a leadership position in the house of representatives. lots going on the house now with republicans. we occasionally see things in the news here and there, so the place is with and i wanted to get started off and explain a little bit of what that role entails? >> i will. first off, welcome to washington, d.c. great to be with a bunch of free market entrepreneurs the banking committee in this country. god bless you for what you majority whip, now, if we don't know what it is, it's funny,

most people one up as because they think i'm supposed to know all that. but you're not. the speakers in charge of the speaker is in charge of the capitol hill police. the speaker is in charge of the architect of the capitol. literally everything on the congressional campus is under the speakers direction including the agenda for the majority party. the majority leader is the two position, and ordinarily this is the great job because what majority leader our friend steve scalise from louisiana is he built a calendar for the year and then he builds out with, shares with different committees for schedule f w we're going to vote on what were going to vote on. and again i say that's ordinarily a pretty good job. the problem you majority is 218. right now we have 290. we started this congress with 222. the number three job in the house is the with job which i

have. it is without a doubt the best job in the house when you're such a thin majority.ix because we work with everybody. if you're going to get something across the floor, the speaker and the majorityeade have to do it through our office. and it's been very interesting. everybody is getting along so well. [laughing] a lot of love and trust in washington. >> easiest job in house, that's what i was thinking. has anyone seen house of cards? that is about the whip, exactly what your job is like to come right. >> was idle think that is exactly like -- >> that's not? that hasn't beenour experience? interesting. faceting for us is looking from the outside, leaders can set the for schedule of the legislation but openly your responsibility to be counted votes and knowing where people are which feels different this congress i think than the previous congresses. b news. we know former speaker

mccarthy went through a number of votes before he became speaker and that we have a new speaker. and so when you aspire to become more senior, when you were a freshman member of congress, i got toeeo give a house financial services committee, the best committee and the house, as you thought about what the throw what look like as you became m■a])e i'm guessing that the experience you had is probably not what you thought it would be but is that i could? how hasn'tct practice? >> i had to back different lives in congress. the first life is with the financial services industry. which i briefly mentioned it. i believe this industry is literally what to find freedom in this country. nowhere else in the world can do down the me walking with the business plan for the next harley-davidson, the next amazon, the next walt disney into a local bank and enter into a risky situation with somebody

on main street. just doesn't happen anywhere else. congress, your question is more about how did i i prepare to n this position. i say i live to separate life because one is a policy side which i refuse to give up. kevin mccarthy came to me after i was elected with eddie said you know you could spend your committee activit plenty by enough the whip's job and i said absolutely not. this is what i am in congress for an ongoing, i think you just have to manage your time well. at a a great team. but the other part of my life is that i spent thet five years, first as the chair of the national republican congressional committee which is the campaign arm for the house republicans. literally i traveled the country with kevin raising money, recruiting candidates in winning elections. we were the only ones to win at the last two cycle cycles. there's a formula which that's not what we're here for today.

it works but here's what it did for me. i learned every district in this country. i understanhe differences of not only the members but the people that their answering to at home. ority leader and the speaker. the reason we are key to what happens in the house is because i can have relationships with be considered right of center suburban philadelphia all the way to thomas massey who is a libertarian anarchist, he was a libertarian, from kentucky. everybody in between. and you need to know what drivem and can't do. i will tell you the other thing i did when you started, they thought because way i handled the campaign committee that i would be the secondom tom delay, who was affectionately nicknamed the hammer, came from your home state. because i'm rather blunt. i like to joke that minnesotans didn't invest passive aggressive behavior.

we perfected it. [laughing] but happen to be more aggressive side. i think that's what they thought they were getting. when i got elected term i made it clear, you will have two rules. the first ones you to give your people home. nobody in washington, d.c. voted for you. they are the people you need to care about the second goal is you take care of yourself. he said if you're not taking care of yourself we're not going to have you for very long. so you do those things undid you can be part of the team. and then you ask them what they they can't do, what they will do, what they will not do. our job then is to build that intersection of both of those inns of the political spectrum on our site of the aisle and be able to tell the speaker primarily this is where the intersection of the conference is. you remember the debt ceiling deal. that's how that happened. three months of individual conversations, small group meetings until we get find that intersection which is basically a year ago right n as were leaving for the easter break. i give kevin of one page and

said this is the intersectionf d turkey said well, you go and socialize the membership over easter weekend he said, and if they can pass we are going to do it us in his weekend when we get back. and you remember we did something that nobody expected we were going to be able to do. >> it's interesting how psychological your job is. i think as a member of congress we have here today knows the republican conference better than anyone else. youd touch on with our bankers that it want to come back to. your first point is what is going on in your district. are you taking care constituents? one of the things we tell our bankers the most powerful person in the halls of congress is a constituent. so we have a team of lobbyists thatreking with your team, with members of every committee really we've got so many issues and that work is important but it can't b the work of our bankers have left their families, banks to

come in d.c. you to a successful meeting but he wanted to thank you for holding on to spot of the house financial services committee because con amber has been a champion for they banking industry -- congressman emmer -- it is pretty uncommon the folks hold on to that responsibility bute're so incredibly thankful that you did that. as bankers are preparing to go a little bit of context just about what it feels like on the hill right now. we know the credit unions were just here. the retailers were just here and there are myriads of other groups that are sending tons of constituents up to the hill. the hill. there's a lot going on legislatively. i know it's busy but just helping our bankers prepare for it, they are walking to an office with that expre might feel that. banking issues may not be totally top of my for everyone we are meaty whisper it depends

on how you were dating it. first off, thank you. thank you for taking time away from your business, your family, not necessarily in that order, and for using your resources to be and be part of this. you are incredibly impactful. and descriptive everybody back after the so-called pandemic, because you can't get business done in washington, d.c. without having people here. this is an incredibly busy time. so just be prepared. i think two weeks ago there were 6000 people with different groups that have come in to washington. i think you were here at a summertime, right? i don't know if the numbers are the same but i know signifint number. everybody is impeding for time and understand your message i beeve, on the house side and only speak to the house because of a reference the senator from massachusetts who will not be

named, there are some who view what you do in your industry as innately selfish and greedy and arin of restrictions on it. you don't have quite as much in the house. the house whether it's republican or democrat, grated he got to be able to tell between the two where somebody is and you should find out whether at, which is pretty easy to tell on your issues. and i'm sure kiersten had a group of giving you some of this information. but just so you let somebody receptive to what you do on main street of you come from. you are the primary funder of new opportunities. you are the thing that keeps main street alive. i artie went into all these businesses that started in ia garage with some startup capital from a local bank or. that is s well with a lot of you in what you're doing and i think think you just have to remind the members this

is what we do, and by the way you could help u a lot by protecting this and making some changes, like we're trying to do, my friend brian bronze told that a couple years back when i started this job, you know, if minnesota's going to legalize marijuana, i should be able to make a legitimate basis for whatever reason the federal government has been slow to get that done. we almost had it done last time. >> thank you for your support for the safe banking act. >> but that's an example. [applause] >> bryant would not be satisfied until it is done. >> he's back there waiting just so you kno continue. but we've had a few challenges with republican offices who have concerns abouteg andn did. for industry it's was not about that. it's about the ability of banks to provide banking services tohy operating within that space. i know former speaker mccarthy was not a huge fan.

we've got other republicans in n set that are not this is a huge fans but in addition to thank you for your support and leadership on that it means a lot to a member both on the committee and serving in republican leadership supporting a priority of the banking industry. because of the members look,■étw member of congress, right, a legislative assistant or new member you usually three or four they cosponsored something. how congressman emmer is one of those people picks up means a lot to us that we have your support have any advice in a hoh house republicans we want more cosponsors on the bill. >> it's actually what is jumping on your words to say to you. a wannacry. >> you're not? >> no. [laughing] sorry. you would think i'm in congress, i'm stoned all thee, [laughing] it isn't my deal. jackie and i race seven kids and it's like to try to raise them

to make the right decisions. have a lot of concerns about this mind altering substance. that part of side, i think the message is it's not how you fee. it is whether or not it is illegitimate legal business. like it or not if your state has enacted laws creating this a legal entity that is legitimate, then our bankers should be allowed to bake it. that's my belief. i think that's the approach. is that what you are a water love her or hate her. it's more this is a legitimate bune been approved by the representative government of that state. >> that's right. 38 states to pick and board alsn the right and left telling banks you cannot link to this industry or you must link tonk banks shod be in the position to make the decision based on the business models, expertise. we really appreciate of your

help here. there's another financial services policy issued you been a leader on data want to raise, and that is this concept of central bank digital currency of our bankers and real. an idea being examined by the fed and one that you i think taken some stepping in and providing a retail that could be direct competitor with the private sector. i was one easy chair a little bit about your legislation related to see bcd and we see that moving or share which expenses been talked talt with colleagues. >> first off, this is the other thing for our bankers. you need to have the opportunity to benefit from the innovation that's out there, right? you can create all kinds of new opportunities if we encompass will sta to get some direction, especially comes to digital assets. but that part aside, the central bank digital currency, which

i've been working on this, this is by tensor encompassed eyster working on this nine years ago. the first time i offered digital currency was incentral 2017. but i was in the minority. i mean, this is how it works around you. it's like turning a supertanker at sea, you slowly start to educatou and democrats, as to why it is your take a position that's what i told one of our more extreme members, great person who are said to them one day come if you just a favor and direct all your attention to these guys over here and they are guys alone, and they said well, here, republicans got to grow a backbone, start flooding prices that may be true but you and i have an obligation to bring them with us. that's what we don't central started this seven or ages ago you've listened to republicans democrats on the financial services committee, you might rememberz. the first during whee

they all sounded the same. i mean this is where all the drug dealers hang out, this is -- that's all they knew. that. are the bad guys? sure, there are bad guys in there but cash is looking when it comes to this. so as thi what did they want? the existing structure needs to be able to be allowed to evolve into the 21st century, andy give government control over a central bank digital currency because that's the next step to a banking world that i do want to see. but more importantly, when it started it was like we are falling behind the chinese. we do not want to emulate the■!e using central bank digital currency, the digital juan to litera™ll s■ñurvey of the population. to create scores on whether they are living a properly and produ.

it's outrageous that we do not want to be the purpose of the legislation that kirsten is bring up, simply says the govent prohibited from creating a central bank digital currency unless and until they can create one thats transparent and the big one, private. we should not be playing with americans privacy. you can give up, you could give up of fear for your safety, and don't believe that the government is only one that can protect you. we are typically in my mind the best solution when it comes to making decisions how to protect ourselves. >> absolutely. yeah. [applause] >> so when we hear about congress, we are hearing a lot about drama amongst the parties entering a lot about government funding. so i know there's a lot of

challenges bringing things to the floor and building consensus that would be curious what you expect to see made out of house financial services committee. chairman mccain is retiring at the end of this term of what you expect to see legislated in committee? is of the possibility anything could be released to the four? >> i do. i think patrick has been an amazing job. by doing when you get any credit for statement of financial service committee, one of the reasons i've been able to dos f, patrick has been very helpful in helping me to maintain both theo because there's a sacrifice. i can't do everything you would normally do but he's allowed me to follow my passion and to thee about. he's got two pieces of legislation, he's got more, of the two that that i think are go find the way to the floor, the first one i believe is ready. his team has done an amazingingt

with all of our members on the market structure bill for digital assets. great start. he's also got some stablecoins legislation that he's been working on with democrats inwhid that one, too. >> that when has got some work still needs be done. i think patrick would tell you that. but he's trying to find a way to make that work because look, this is all about the future of the dollar. it's that just about the■ future of the greatest banking system in the world financial industry system, industry in the world. it's about the future. and if you got sta out there that literally are backed up by u.s. dollars, imagine the opportunities that will have around the world because peopleñ nt to dea in the dollar. stablecoins could be the answer to that where you've got, you got stablecoins.

examplet is used by howard which i love is when he says you would like to do businessl. with u.s. dollars but he has no access to them right now. if he had a stablecoins that was backed up by u.s. dollars, now even the brazilian taxicab driver can deal in u.s. dollars. it would be great for this country. he would be great for financial industry, it would be better for the world. >> we appreciate his leadership and taking something that's hard to do to try to create a path for thess member, with the federal reserve, treasury come some and partners interested in that. of course in the banking industry we want to ensure nonbanks are treated similarly to banks and we appreciate that a lot with with your office, with the children's office and members of the committee as isno conversations continue. >> bryan knows come again i'm picking on bryan bruns. he is the banker of the year, something like that. but he knows that when you talk

to me about issues that others are getting a benefit that you are not, i will hear often well, you should take away their opportunity. you know what i prefer? why do we get you? why don't we give you the same opportunity to do the things that these other entities are doing so that you cannot just survived but you can thrive well into the 21st century? >> we would love that. we would love that. two questions left her one will be kind of quick but i noticed there's been a lot, a lot of conversations going on tiktok and a note the house voted. so for bankers that maybe think about incorporating tiktok into their social media plans, any words of wisdom or advice? >> well, all i would say is to all of you is i been in the skiff so i have not had the confidential national security briefing pics i can't get in

trouble i repeating something i've never heard but i can tell you that as a guy who's responsible for that getting across the floor, it was very telling when you had 50 members of the energy and commerce committee, republicans and democrats, though havehi this is a this is a divestiture, the chinese communist party cannot control tiktok. i mean this world is all about data right now. they are collecting data, which is what the risk is. probably deeper than that but that's as much as i can say about -- >> dr. hill because if folks art the context is sorted in congress banning tiktok, assume there's more to the story there but as folks i be talking about it, wanted■h to get speed is its

not a band. just a moment it is not a banter they will have 165 days and that it makes it to the senate and the wider society, which the president has indicated he would, it will be when it is 65 days within which they would have to steven mnuchin and others are already talked talking a. whatever it is, just can't be owned by the chinese communist party. iould at this, kirsten, you've got to be very, , what, you have to pay attention to what immediately with some of these they should because the headline in a m minnesota gop members vote to ban tiktok. first it's not a bad, and second, two democrats voted with us. [laughing] >> this has been the fastest 30 minutes ever. we could talk to you for hours. my last question, to our bankers in the audience with so many issues coming at the banking industry. we just heard from former regulars who talk about the sl come from the

regulatory agencies that are members having to do with. we have legislative issues and recognizing it's hard to get are five issues we're trying to prioritize and talk about, i think you can come with acre, our act lending bill more money to ag committee spirit we would love to have hearing on credit union oversight, , more than 20 years and, of course, have deep, deep concerns over the way the bureau finalize the 1071 role. congress did cra on that. also durbin expended a lot of ground to cover. five issues. we try to narrow it down but that's still a lot. so for folks are getting ready to go to the hill this afternoon yo to to have a successful just understand, on the committee, patrick mchenry and ones were going to be pushing for. if anything, your representatives that your meeting with you want to encourage them to talk■z to

patrick about moving one or all five of these during this congress. the bigger thing i could tell he is jus understand the pressure that these numbers are going to be under. it's not just pressure from you. we have got the funding bills that had to be passed before the end of the week. their plates are going to be full. nesotan come not from the banking community, some of those with the goo, text me at say hey i'm in town tomorrow. got time for dinner? >> no, i'm saving that for the bankers obviously. >> at-bats, they're going to be under a lot of pressure because the days are going to be long because they're short, , right? you get basically three or four days before this thing shuts down. so it's got to get an. >> thank you so much. please join me in thanking congressman emmer. thank you so much. [applause]

>> just two weeks ago in the midst of a terrible tragedy on the potomac we saw again the spirit of american heroism. the heroism oficpé crash victims from icy waters. we saw the heroism of one when he saw a woman lose her grip on a helicopter line, he dived into the water and dragged her to safety. [applause] >> c-span. powered by cable. >> on wednesday, feder rerve chair jerome powell holds a news

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