40 MAY / JUNE 2021 Robert S. Nichols President and CEO American Bankers Association nichols@aba.com @BankersPrez Consistent ‘Rules of the Road’ Requirement for a robust recovery FEATURE Over the course of the pandemic, the U.S. economy has been tested like never before and has more than proven its resilience. That’s thanks in no small part to our large and diverse financial system: a network of financial institutions of all sizes, charters and business models that are dedicated to providing the products and services that consumers and businesses need to thrive. The diversity of our financial system is something that is uniquely American. It is important that we preserve that diversity – but we must do so in a manner that ensures a level playing field among providers of financial services and that protects all consumers equally. In the American Bankers Association’s Blueprint for Growth – a banker-driven document that will serve as our advocacy north star in the months ahead – we identified the need to promote innovation and ensure consistent regulation as one of the top priorities for the industry in 2021. This is not a new goal, but it remains important at this moment in time as we confront the challenges of modern life – from emerging technologies to a changing climate to recovering from a global pandemic. Banks have always embraced innovation. Indeed, innovation has a vital role to play in increasing economic competitiveness, promoting financial inclusion and expanding access to banking services. But financial innovation only provides these benefits when undertaken in a safe, responsible manner. This means that a consistent set of regulatory standards must be applied to providers of financial services – be they credit unions, banks or fintech firms. Unfortunately, we’ve seen several instances in recent months of firms attempting to circumvent these regulatory standards by seeking charters that would allow them to access the banking system without being subject to the same rigorous regulatory standards that apply to the nation’s banks. A prime example of this is Figure Bank, which has filed an application for a national banking charter through the Office of the Comptroller of the Currency that, among other provisions, would allow it to operate without deposit insurance. If approved, this charter would enable Figure Bank to apply for membership in the Federal Reserve system while avoiding compliance with regulations like the Community Reinvestment Act. We’ll continue to oppose the approval of charters like these, and we’ll continue to push back against any efforts that would enable new entrants into the financial services marketplace to cherry-pick which rules of the road apply to them. We’ll also continue our efforts to advocate against further tilting the field for tax-advantaged entities like credit unions and the Farm Credit System. For example, we are pushing strongly against a recent National Credit Union Administration effort to further loosen field of membership restrictions – a move that even the agency’s former chairman blasted as “abandon[ing] rigorous and introspective analysis and its congressional mandate to stay clearly within the four corners of the Federal Credit Union Act.” And, should policymakers accelerate attempts to push the Federal Reserve or the U.S. Postal Service into retail banking, we’ll continue making the case that this kind of involvement is unnecessary, because consumers are already being well-served by a broad and diverse financial services sector. In 2019, the share of unbanked U.S. households reached a record low of 5.4%, according to the Federal Deposit Insurance Corp., and banks are working to close that gap through the Bank On movement. With a fast-growing number of banks signed on, Bank On-certified accounts are now offered
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