FDIC’s McWilliams cites reg burden, chartering, underserved as top priorities

Jelena McWilliams, the new chairman of the Federal Deposit Insurance Corp. (FDIC), holds reviewing small banks’ regulatory burden, improving the pace of her agency’s review of bank charter applications and helping banks bring new products to underserved areas as her top priorities, according to an article Monday in The Wall Street Journal.

FDIC Chairman Jelena McWilliams addresses the agency’s Community Bankers Advisory Council in July.

Regarding new products, McWilliams said she favors having pilot programs to permit new-product testing, echoing a recent Treasury report that proposes regulatory “sandboxes” to try new products and services, according to the article. “If we can create a framework where that green light is given in a way that is safe for the consumers, why not?” she is quoted saying.

As for capital rules, she said it would be “appropriate for the three banking agencies to sit down and take a look” at these rules “with a new eye,” the article states, including with respect to small and large banks.

The article says McWilliams declined to take positions on rule changes proposed before she joined the FDIC, such as an April proposal to ease leverage capital ratio requirements (specifically, the “enhanced supplementary leverage ratio” for global systemically important banking organizations, or GSIBs). The article notes the Federal Reserve Board and Office of the Comptroller of the Currency (OCC) endorsed the proposed rule but that then-FDIC Chairman Martin Gruenberg (who remains as an FDIC Board member) opposed it. (Note: The Fed Board issued the proposal on a vote of 2-1, with Gov. Lael Brainard voting against it.)

Regarding that proposal, McWilliams is quoted saying she has asked her staff for background on her agency’s position and indicated a desire to see all three of the banking agencies working together.

The article also says McWilliams:

  • agrees that the current Volcker Rule is too complicated;
  • supports updating Community Reinvestment Act rules to provide more clarity about qualifying activities (including small business loans), though she said banks’ branch locations should still be considered;
  • for new (de novo) bank applications, is considering allowing preliminary, confidential filings so banks can get feedback before submitting formal applications for deposit insurance, which she said is similar to what OCC allows.

McWilliams is also quoted noting the agency’s effort to reduce duplication of documents related to community bank supervision and the FDIC’s current review of whether to rescind deposit advance loan guidance (also addressed in the recently released Treasury report, which suggests reconsidering such guidance and issuing guidance similar to OCC’s on small-dollar loans).

McWilliams, during her first public comments as FDIC’s chairman this June, said she planned to go on a five-year “listening” tour to determine the impact and future of the agency’s regulatory regime. Speaking during a “fireside chat with the FDIC Chairman” at the Prudential Regulation Conference in Washington (sponsored by SIFMA and The Clearing House), McWilliams said this listening tour would visit all states over the next five years and that she intended to speak to banks, thrifts and other regulated entities, as well as consumers.

During that discussion, McWilliams advocated more-frequent review of agency rules and discussed reopening rules, bringing a “fresh eye” to interagency rules under consideration, marijuana banking, de novo charters, and revisiting the CAMELS examination scoring system.

WSJ: New FDIC Leader Joins Push to Re-Evaluate Banking Rulebook (subscription required)