Banking agencies issue examiner guidance for major disasters

By J. Preston Carter, J.D., LL.M.

The federal financial institution regulatory agencies, in consultation with the Conference of State Bank Supervisors, have jointly issued guidance outlining the supervisory practices to be followed in assessing the financial condition of supervised institutions affected by a disaster that results in the President’s declaring an area a major disaster with individual assistance. Such disaster areas generally experience extensive damage that will continue to affect the business activities of the institutions serving that area for an extended period of time.

The Interagency Supervisory Examiner Guidance for Institutions Affected by a Major Disaster describes factors that examiners should consider when assessing the financial condition of a supervised institution affected by a major disaster. In addition to providing information on assessing the various ratings components, the guidance directs examiners to review management’s effectiveness in addressing the immediate aftermath of the disaster as well as longer-term changes to an institution’s business markets and strategy. In assessing a financial institution’s management of problems related to a major disaster, examiners should consider the institution’s asset size, complexity, and risk profile.

The guidance indicates that examiners will consider how management at affected institutions conduct initial risk assessments and refine such assessments as more complete information becomes available and recovery efforts proceed. The guidance also states that examiners must consider the extent to which weaknesses in an institution’s financial condition are caused by external problems related to the major disaster and its aftermath.

The supervisory agencies will work with institutions affected by a major disaster to determine their needs, reschedule any examinations, consider extensions for filing quarterly Reports of Condition and Income or other reports, and address capital declines due to temporary deposit growth, as needed.

The Financial Deposit Insurance Corporation notified its supervised institutions of the guidance in FIL-62-2017. The Federal Reserve Board issued notice of the guidance in Supervisory Letter SR 17-14. The Office of the Comptroller of the Currency published a news release and OCC Bulletin 2016-61 to inform institutions of the guidance.

For more information about financial institutions' operations after major disasters, subscribe to the Banking and Finance Law Daily.

CFPB to reexamine mortgage reporting requirements, prepaid rule

By Andrew A. Turner, J.D.

The Consumer Financial Protection Bureau plans to reconsider aspects of its mortgage data and prepaid rules. The CFPB also said that it does not intend to assess penalties for errors in mortgage data collected in 2018 and to delay the effective date of the prepaid rule. The prior actions had been issued under former Director Richard Corday, while the change in direction is taken under the leadership of new acting Director Mick Mulvaney.

HMDA reporting requirements. The Bureau will not require data resubmission under the Home Mortgage Disclosure Act unless data errors are material or assess penalties with respect to errors for data collected in 2018 and reported in 2019. The CFPB’s public statement recognizes significant systems and operational challenges that are needed to adjust to the revised regulation and the extended submission deadline is intended to help institutions identify compliance weaknesses. The Bureau will credit good-faith compliance efforts.

The Bureau also announced it intends to open a rulemaking to reconsider various aspects of its 2015 HMDA rule, such as the institutional and transactional coverage tests and the rule’s discretionary data points. Beginning on Jan. 1, 2018, financial institutions will submit HMDA data collected in 2017 and beyond using the Bureau’s new online platform.

Similar statements regarding HMDA implementation have been issued by the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and National Credit Union Administration.

Legislative support. While Sen. Mike Rounds (R-SD) is supportive of the CFPB’s action to delay enforcement of the HMDA data reporting requirements, he hopes that the temporary reprieve will give the Senate enough time to consider the Banking Committee’s economic growth legislation. This includes Rounds’ provision of an exemption for small financial institutions that originate 500 closed-end mortgage loans or 500 open-end lines of credit from HMDA reporting requirements. “This will allow banks to focus on servicing consumers rather than on complying with unneeded federal reporting regulations.”

Expressing his gratitude to acting Director Mick Mulvaney, Rep. Randy Hultgren (R-Ill) said that the delayed enforcement will protect community banks and credit unions from “burdensome” reporting requirements. Hultgren recently introduced the Home Mortgage Reporting Relief Act with Rep. Tom Emmer (R-Minn), who also applauded Mulvaney’s action, which would give community banks and credit unions additional time to comply with the new HMDA reporting rules.

Industry support. Independent Community Bankers of America President and CEO Camden R. Fine strongly supports the CFPB’s actions, believing that if left unaddressed, these mandatory reporting requirements would divert critical community bank resources that would otherwise be used to serve American consumers.

Prepaid rule. The CFPB said that it expects to amend its prepaid rule “soon after the new year” and delay the effective date to allow additional time for implementation. The prepaid rule would affect error resolution procedures for unregistered accounts and digital wallet credit cards that are linked to prepaid accounts.  The CFPB’s anticipated action will be based on its review of comments received on changes that had been proposed to meet industry concerns.

The rule had been scheduled to take effect on April 1, 2018, but in June the CFPB proposed amendments to Reg. E—Electronic Fund Transfers (12 CFR Part 1005) to address what prepaid companies described as “unanticipated complexities” with the rule.

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UCC's Article 9 inapplicable to foreclosure of HOA lien

By Lisa M. Goolik, J.D.

The “commercial reasonableness” standard of Uniform Commercial Code Article 9 does not apply to the foreclosure of a homeowners’ association lien involving the sale of real property, the Supreme Court of Nevada has concluded. The “elaborate” requirements that an HOA must follow in order to foreclose on the real property securing a lien under Nevada’s Uniform Common Interest Ownership Act (UCIOA) override Article 9's “deliberately flexible” requirements regarding the method, manner, time, place, and terms of a sale of personal property collateral. As a result, the court’s standard for reviewing the foreclosure sale was limited to whether the sale was affected by some element of fraud, unfairness, or oppression.

Low sales price. The purchaser of the property at the HOA’s foreclosure auction had filed an action to quiet title against a lender, Nationstar Mortgage, LLC, that held a deed of trust in the property. Nationstar challenged the action, arguing the sales price of the property—$35,000—was commercially unreasonable as a matter of law.” In support, Nationstar provided an appraisal valuing the property at $335,000 as of the date of the HOA's foreclosure sale. Nationstar contended that the HOA foreclosure sale should be set aside as commercially unreasonable, as demonstrated by the low sales price.

The court agreed that, in the context of Article 9 sales, the secured creditor has an affirmative obligation to obtain the highest sales price possible, and if the sale is challenged, the secured creditor has the burden of establishing commercial reasonableness. However, after examining the statutory requirements of the UCIOA and Article 9, the court concluded that the “commercial reasonableness” standard does not apply to a foreclosure of an HOA lien involving the sale of real property. Accordingly, “inadequacy of price” was not a sufficient ground for setting aside the HOA’s foreclosure sale “absent additional proof of some element of fraud, unfairness, or oppression as accounts for and brings about the inadequacy of price.”


For more information about Nationstar Mortgage, LLC v. Saticoy Bay LLC Series 2227 (Nev. Sup. Ct.), subscribe to the Banking and Finance Law Daily.

GAO says CFPB’s bulletin on indirect auto lending compliance is a reviewable ‘rule’

By Thomas G. Wolfe, J.D.

 

In response to an inquiry by Senator Patrick Toomey (R-Pa), the U.S. Government Accountability Office (GAO) has issued an opinion letter concluding that the Consumer Financial Protection Bureau’s 2013 bulletin on “Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act” is a general statement of policy and a “rule” subject to the requirements of the Congressional Review Act (CRA). While the CFPB has acknowledged that its bulletin provides guidance and clarity, the Bureau maintains that it is nonbinding and has no legal effect on regulated entities. In contrast, the Dec. 5, 2017, GAO opinion letter, authored by GAO General Counsel Thomas H. Armstrong, asserts that the CFPB bulletin goes beyond the attributes of guidance and clarity and satisfies the CRA’s definition of a “rule” because, among other things, it is a “general statement of policy designed to assist indirect auto lenders to ensure that they are operating in compliance with ECOA and Regulation B, as applied to dealer markup and compensation policies.”

 

In March 2013, the Bureau issued its bulletin on Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act (CFPB Bulletin 2013-02) as guidance to both depository and nonbank institutions. The CFPB sought to assist indirect auto lenders with ECOA compliance in general and to provide guidance to auto lenders who permit dealers to increase consumer interest rates and compensate dealers with a share of the increased interest revenues. Noting the incentives that these markup and compensation policies create, as well as the discretion they permit, in the indirect auto lending industry, the Bureau discerned “a significant risk” that these existing policies would “result in pricing disparities on the basis of race, national origin, and other prohibited bases.”

 

Letter highlights. In his opinion letter on behalf of the GAO, Armstrong observes that Toomey had asked whether the CFPB’s March 2013 bulletin “is a rule for purposes of the Congressional Review Act.” In concluding that the CFPB bulletin “is a general statement of policy and a rule under the CRA,” the GAO letter underscores that CRA requirements may sometimes apply to general statements of policy.

 

In particular, the letter notes that the CFPB bulletin:

• provides information on the manner in which the CFPB plans to exercise its “discretionary enforcement power;”
• expresses the Bureau’s views that certain indirect auto lending activities “may trigger liability” under ECOA;
• advises the public “prospectively” of the manner in which the CFPB proposes to exercise its discretionary enforcement power;
• sets forth the Bureau’s expectations that indirect auto lenders “take steps” to ensure that their practices do not result in “pricing disparities on prohibited bases;”
• is designed to prescribe the Bureau’s policy in enforcing fair lending laws regarding indirect auto lender markup and dealer compensation policies; and
• asserts that the Bureau “did not raise any claims” that its bulletin would not be a rule—for instance, that the bulletin fell within the CRA’s specified “rule” exceptions. 

For more information about rules impacting the financial services industry that are subject to the Congressional Review Act, subscribe to the Banking and Finance Law Daily.

New York effort to block OCC fintech charter is premature

By Andrew A. Turner, J.D.

 

Since the Office of the Comptroller of the Currency has not reached a final decision on whether to grant special-purpose national bank charters to financial technology companies, a New York regulator’s challenge to the OCC’s authority to grant fintech charters failed on standing and ripeness grounds.

 

A federal district judge said that the New York Department of Financial Services’s purported injuries are too future-oriented and speculative to confer standing. Similarly, the claims are unripe because they are “contingent on future events that may never occur” (Vullo v. Office of the Comptroller of the Currency). 

 

The issue first arose when the OCC began considering the possibility of issuing special-purpose national bank charters to fintech companies under its regulations. To support its position that a fintech charter decision had been reached, DFS relied on several OCC documents:

 

• a White Paper—Exploring Special Purpose National Bank Charters for Fintech Companies;
• a speech by Comptroller Thomas J. Curry touting innovation in the fintech industry as a vehicle to expand financial inclusion for low-income individuals;
• a summary of public comments about the possibility of issuing charters to fintech companies; and
• the “Comptroller’s Licensing Manual Draft Supplement: Evaluating Charter Applications From Financial Technology Companies”

 

Since the OCC has not yet determined whether it will issue charters to fintech companies, nor received any applications, DFS claims that the OCC had determined that it has the power to issue these charters were an insufficient basis for a claim. Without a decision that such licenses will be considered and potentially granted, in the court’s view, the application process remains purely hypothetical.

In fact, the proposed issuance of fintech charters companies, a policy first discussed by an appointee of President Obama, has become increasingly uncertain under President Trump’s two Comptrollers of the Currency, Keith Noreika and Joseph Otting, the court noted. By waiting for a decision, the court would be saved from issuing a decision that may turn out to be unnecessary if the OCC never issues a fintech charter or does so under an altered framework.

 

CSBS litigation. Similar litigation brought by the Conference of State Bank Supervisors in the U.S. District Court for the District of Columbia remains pending. In April 2017, the CSBS filed suit against the OCC for deciding to create a new special-purpose national bank charter for financial technology and other nonbank companies. The CSBS alleged that the fintech charters would exceed the OCC’s authority under the National Bank Act.

 

Most recently, the CSBS filed a response in opposition to the OCC’s motion to dismiss claims against the agency for lack of jurisdiction and failure to state a claim. In its latest filing, the CSBS addresses a number of procedural issues related to standing, ripeness, finality, and timeliness in addition to the larger issue of whether the OCC even has the authority to issue nonbank charters to institutions that do not accept deposits.

The CSBS asserts that the OCC has the power to charter a national bank only if it is organized to carry on the "business of banking" (which, under current law, requires taking deposits, at a minimum) or where Congress has provided specific authorization to charter an entity to carry on a special purpose. The CSBS contends neither of those apply here.

 

In fact, the CSBS argues that the NBA expressly bars the OCC from issuing national bank charters to entities that do not lawfully engage in the business of banking. To lawfully engage in the business of banking, the CSBS asserts, an entity must comply with the Federal Reserve Act by becoming an insured bank under the Federal Deposit Insurance Act. To do this, a bank must actually take deposits, absent special Congressional exemption. Under this interpretation, the OCC could not rightfully issue charters to nondepository fintech companies.

 

The CSBS further relies on the legislative history and historical context of the NBA as well as the Bank Holding Company Act’s definition of "bank" to support the conclusion that a national bank must exercise the power of receiving deposits.

 

The term "business of banking" cannot be considered in a vacuum, the CSBS cautions. The OCC’s reliance on the argument that "business of banking" is not expressly defined in the NBA ignores the conflicts its interpretation creates with the FRA, FDIA, and BHCA.

 

Courts have repeatedly struck down the OCC’s attempts to charter entities that would not carry on the business of banking, and the OCC has been required to obtain specific congressional authority before doing so. For example, specific legislative authorization was required for both trust banks and banker’s banks to receive special purpose charters.

 

The CSBS alleges that the OCC improperly relies on case law that pertains to the inner limits of the business of banking and not the outer limits at issue here where the OCC is trying to expand its authority and that the OCC unreasonably equates the business of banking with the definition of a bank branch in an impermissible construction of statutory authority.

 

Commenting on the New York decision, CSBS said that it stands by its arguments in the District of Columbia case, “confident that the courts will determine that Congress has not given the OCC this authority.”

For more information about banking charters for fintech companies, subscribe to the Banking and Finance Law Daily.

New York Fed’s Stiroh highlights ‘misconduct risk’ at financial firms

By J. Preston Carter, J.D., LL.M.

Federal Reserve Bank of New York Executive Vice President Kevin J. Stiroh addressed the issue of ‘misconduct risk’—the risk of illegal or unethical conduct by employees at a financial firm—in recent remarks at the Culture Roundtable Session with Business Schools and Financial Services Industry. Stiroh expressed concern that such a risk remained inconsistently addressed across the financial sector, posing a threat to prudential and financial stability.

In a speech titled Misconduct Risk, Culture and Supervision, Stiroh noted that financial firms had lost $320 billion in fines since 2008, a number that could arguably be attributed, in part, to individual misconduct. In addition to fines, he told the roundtable that such misconduct undermined confidence in the financial sector, citing Gallup research in 2016 that showed such confidence had fallen in the prior decade.

He encouraged firms to quantify what he called their "cultural capital." Unlike physical or human capital, cultural capital represents how a firm does businesses. Though he conceded cultural capital was intangible, he argued it was possible to measure and assess cultural capital’s impact. A firm with high cultural capital would see processes that produce results "consistent with the firm’s stated values," rewarding employees who act in accordance with those values. By contrast, he said, a firm with low cultural capital would establish values that "do not reflect ‘the way things are really done.’"

"Employees do not speak freely when they have concerns, and senior managers or the board of directors do not find out about improper conduct until it is uncovered by the authorities," Stiroh said of such organizations. "All of this increases misconduct risk and potentially damages the firm and the industry over time."

Stiroh said the Federal Reserve Banks should use supervision, rather than rule-making, to control misconduct risk. A regulatory change, he said, would be difficult to develop, given the "hard-to-define and evolving nature of behavior" of misconduct.

"Part of the role of supervisors is to close gaps in the rules," he said. "Issues like misconduct risk and culture likely fall in these gaps because they involve the attitudes, norms, and behaviors and suggest a critical role for supervisors in addressing these risks."

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Accountants’ assistance no excuse for not filing FBARs

By Richard Roth

Two individuals who admittedly failed to file required Reports of Foreign Bank and Financial Accounts were unable to convince a U.S. Court of Federal Claims judge that there was a reasonable cause for their omission. The judge said explicitly that having tax returns prepared by tax professionals would not, by itself, be an excuse for not filing FBARs. In the absence of such a reasonable cause, the Internal Revenue Service was permitted to penalize both of the individuals for their failure (Jarnagin v. U.S.).

The married couple admitted that they maintained an account at a Canadian bank. The husband is a dual U.S. and Canadian citizen, while the wife is a U.S. citizen with Canadian residency rights, and they own businesses in several U.S. states and in Canada. Under the Bank Secrecy Act, they were required to file FBARs as part of their yearly tax returns, but they conceded that they failed to do so for 2006 through 2009. As a result, the IRS assessed penalties of $10,000 for each year against each individual, for a total of $80,000.

Reasonable cause. The BSA requires that reports of accounts maintained at foreign financial institutions must be filed by U.S. citizens and residents and by anyone in and doing business in the United States (31 U.S.C. §5314(a)). However, a person whose failure to file was due to a reasonable cause cannot be penalized (31 U.S.C. §5321(a)). The individuals wanted to take advantage of the reasonable cause protection.

The judge first noted that neither the BSA nor its implementing regulations provide any guidance on what constitutes reasonable cause for failing to file. Neither was there much judicial precedent, she added. However, sections of the Internal Revenue Code and its regulations did offer a definition that applied in the context of tax compliance.

Based on the IRC and its regulations, the judge decided that the individuals needed to show that they had acted with “ordinary business care and prudence” in order to show a reasonable cause for the failure.

Care and prudence claimed. According to the judge, the individuals relied on three claims to show they acted with ordinary business care and prudence:

1. They hired a competent certified public accountant to prepare their tax returns.
2. The financial information they gave the CPA revealed the existence of the Canadian bank account.
3. They actually, and in good faith, relied on the CPA.

That was not enough, the judge decided.

No reasonable cause. The individuals never discussed their tax returns with their U.S. accountants, the judge pointed out. They did not review their tax returns before signing and filing them, did not explicitly draw their accountants’ attention to the Canadian bank accounts, and never sought any professional advice about their resulting filing obligations.

The judge relied heavily on the tax return language in which the individuals said they had read the returns and supporting documents and asserted that everything was complete and correct. Had they actually read the returns, they would have seen that the tax returns said, explicitly and incorrectly, that they had no interest in any foreign bank accounts. Moreover, after seeing that language, they would have asked their accountants about the accounts, the judge said.

Reliance on the advice of a tax professional can show reasonable cause for failing to follow tax laws in some situations, the judge conceded. However, these individuals had never asked the accountants about their FBAR filing duties, and the accountants had never offered them any professional advice on the subject. The individuals “cannot use as a shield reliance upon advice that they neither solicited nor received,” the judge concluded.

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CFPB’s Deputy Director continues fight to lead agency, seeks preliminary injunction

By Charles A. Menke, J.D.

Following the denial of her request for a temporary restraining order that would have prevented President Donald Trump’s designee, Mick Mulvaney, from becoming acting director of the Consumer Financial Protection Bureau, Leandra English has filed an amended complaint and motion for preliminary injunction. Former CFPB Director Richard Cordray appointed English as Deputy Director, intending that she would become acting director upon his resignation. Trump, however, appointed Mulvaney to the position pursuant to the Federal Vacancies Reform Act. U.S. District Judge Timothy J. Kelley ruled that English failed to demonstrate a substantial likelihood that she would prevail on her claim that, as deputy director, she automatically succeeded Cordray pursuant to the Dodd-Frank Act.

Relief sought. In her amended complaint and motion, which are supported by a memorandum and affidavit, English generally seeks the same relief as previously demanded in her request for temporary restraining order. According to English, Mulvaney’s appointment by Trump violates the Dodd-Frank Act’s mandatory succession plan and independence requirement, as well as the Separation of Powers and the Appointments clause of the U.S. Constitution. English asserts that any actions undertaken by Mulvaney as Acting Director are therefore unlawful, and seeks to set aside these actions and compel action unlawfully withheld or unreasonably delayed pursuant to the Administrative Procedure Act. English also asserts she is entitled to declaratory and equitable relief.

Appointments Clause. While renewing the arguments proffered when seeking the temporary restraining order, English argues that under the Appointments Clause, the President has only two means of appointing officers—with the advice and consent of the Senate, or pursuant to a statute. English contends that “there is no clear statement in the FVRA that supplants the Dodd-Frank Act’s rule of succession.” Further, “the FVRA’s appointment provision does not apply by its own terms” but, even if it did apply, “it is overridden by mandatory language in Dodd-Frank.” As a result, there is no statutory basis for Mulvaney’s appointment and the appointment therefore violates the Appointments Clause.

Independence requirements. English additionally argues that even if the FVRA would apply to the CFPB Acting Director appointment, Mulvaney’s appointment is invalid because as CFPB Acting Director, Mulvaney would also be a member of the Federal Deposit Insurance Corporation Board pursuant to the Dodd-Frank Act. As a result, Mulvaney’s appointment not only undermines the CFPB’s independence from the Office of Management and Budget, but also defeats the intent of Congress to make the Federal Deposit Insurance Corporation independent from the OMB.

Briefing schedule, hearing. Defendants have until Dec. 18, 2017, to file their opposition to English’s motion. English must file a reply in support of her motion by Dec. 20, 2017. A hearing on the motion is scheduled for Dec. 22, 2017.
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Credit Union sues to block Mulvaney from acting as CFPB director

By Katalina M. Bianco, J.D.

In response to President Trump’s designation of Mick Mulvaney as acting director of the Consumer Financial Protection Bureau, the Lower East Side People’s Federal Credit Union has filed a complaint seeking declaratory and injunctive relief barring this appointment and any other CFPB acting director appointment by the president absent Senate approval. The credit union filed its suit in the federal district court for the Southern District of New York, alleging violations of the Dodd-Frank Act and the U.S. Constitution, naming the President and Mulvaney as defendants.

The complaint alleges that "President Trump has attempted an illegal hostile takeover of the CFPB, throwing the Credit Union and other credit unions and banks into a state of regulatory chaos. Even worse, defendant Trump has purported to appoint an Acting Director whose mission is to destroy a Bureau that protects thousands of the Credit Union’s members."

The credit union contends that the Dodd-Frank Act calls for the deputy director of the CFPB to serve as acting director until the president appoints and the Senate confirms a new director, and this law, rather than the Federal Vacancies Reform Act (FVRA), under which Mulvaney was appointed, applies. According to the complaint, Leandra English, who was named deputy director by former CFPB director Richard Cordray, became the Bureau’s acting director when Cordray’s resignation took effect.

Violation of Dodd-Frank. The complaint cites Dodd-Frank as providing that the Bureau’s deputy director, who is "appointed by the Director," "shall serve as acting Director in the absence or unavailability of the Director" (12 U.S.C. § 5491(b)(5)). According to the credit union, this designation of the deputy director as the "acting Director" reflects Congress’s deliberate choice to depart from the default procedure for naming an acting official under the FVRA. The credit union points out that an early version of Dodd-Frank that passed the House of Representatives in December 2009 did not provide for a deputy drector, and instead explicitly stated that a temporary replacement for a director would be chosen "in the manner provided by" the FVRA. But the Senate bill, introduced and passed months later, contained the present statutory language.

In addition, the complaint continues, the president’s Vacancies Reform Act appointment powers "shall not apply" to any members of an independent multi-member board or commission (U.S.C. § 3349c(1)). The acting director of the CFPB is an automatic member of an independent multi-member board or commission—the Federal Deposit Insurance Corporation board (12 U.S.C. §§ 1812(a)(1)(B), 1812(d)(2)). Therefore, the credit union argues, the FVRA does not apply to the appointment of the Acting Director of the CFPB

The credit union further argues that, even if President Trump could appoint someone as CFPB acting director, he cannot appoint a White House employee "who serves at his whim and pleasure to run this independent agency. A major purpose of the Dodd-Frank Act was to create a CFPB independent of the President and insulated from political pressure. The purported Mulvaney appointment destroys CFPB independence altogether."

Violation of Constitution. The complaint also alleges a violation of Article II, Section 2, of the Constitution, which provides that the president must appoint all "officers of the United States" with "the advice and consent of the Senate." By appointing Mulvaney in the absence of any Congressional statute so authorizing, the credit union contends, President Trump violated constitutional principles of Separation of Powers and the Appointments Clause.

For more information about the battle over the CFPB acting director, subscribe to the Banking and Finance Law Daily.

Joseph Otting comments on becoming 31st Comptroller of the Currency

By Thomas G. Wolfe, J.D.

Joseph Otting became the 31st Comptroller of the Currency, after being sworn into office by Treasury Secretary Steven T. Mnuchin on Nov. 27, 2017. Otting takes the helm at the Office of the Comptroller of the Currency in place of Keith Noreika, who had been serving as Acting Comptroller since May 2017 when Thomas J. Curry stepped down after completing his term as Comptroller. Commenting that it was an honor to have been nominated by President Donald Trump and confirmed by the Senate, Otting stated that he looks forward “to enhancing the value of national bank and federal savings association charters, reducing unnecessary burden, and promoting economic opportunity while maintaining the safety and soundness of the federal banking system.”

In his remarks after being sworn into office, Otting noted that “[j]ob creation and economic growth are part of the President’s agenda, and banks can support those goals by providing capital and financial services to the consumers, business, and communities they serve.” Otting commented that, based on his personal experience in the banking industry, he knows of “the challenges bankers face as they work to meet customer needs while coping with unnecessary regulatory burden that makes it more difficult and complicated than necessary.” Further, Otting said that “bankers support regulation, but effective regulation evolves with the changing needs of the nation and should be reviewed and modified as those needs change.”

Otting’s background. Otting, who worked for a number of regional banks during his career, most recently was managing partner of Ocean Blvd LLC and Lake Blvd LLC. While the White House observed that Otting previously served as President and CEO of OneWest Bank N.A. and as Vice Chairman of U.S. Bancorp., Otting’s nomination had been opposed by some Democrats, and some consumer groups, because One West Bank was the subject of a 2011 Office of Thrift Supervision enforcement order arising from its mortgage foreclosure practices. Further, according to Congresswoman Maxine Waters (D-Calif), when Otting was nominated as Comptroller of the Currency, One West Bank still was under investigation—stemming from the bank’s dealings with the Federal Housing Administration.

Otting holds a B.A. from the University of Northern Iowa and is a graduate of the School of Credit and Financial Management at Dartmouth College.

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