Regulation Reimagined: Banking Beyond Partisanship

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You're listening to Leaders in Lending from
Upstart, a podcast dedicated to helping consumer

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lenders grow their programs and improve their
product offerings. Each week, here decision

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makers in the finance industry offer insights
into the future of the lending industry,

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best practices around digital transformation, and
more. Let's get into the show.

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Hi, you're here with Lynn and
Matt from Upstart, and we're happy to

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have Kelvin from the CBI on the
podcast today with Leaders of Lending. Kelvin,

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would you want to introduce yourself to
our listeners? Sure, thanks so

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much, Lynn, and listeners that
are on video, just be warned.

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I thought that this was a podcast, not a video podcast, which is

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why I'm dressed the way that I
am so. I recently joined the Consumer

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Bankers Association about five months ago to
help coordinate the policy work that we do.

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And so you know, we have
a new CEO, Lindsay Johnson,

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that y'all interviewed last February. And
you know, one of the things that

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among the changes that Lindsay made,
which I was super excited about, was

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she took our regulatory team, our
lobbyists, our communications function, and a

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new data function and put them into
one squad with a kind of recognition that

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advocacy these days has to go across
those different travels. And prior to this,

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I was at Barclays in the US
Consumer Bank, where I was in

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the ex CO, I was briefly
very leading the regulations policy function. I

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was at Capital One where I led
the bank regulatory and policy team for several

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years, and then I had roles
at the Federal Reserve Board, the CFPB,

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and the Federal Trade Commission, and
then I was allitigator in New York

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for several years. Oh wow,
so you've had quite a great experience.

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You're being like industry regulators, government
litigation. So a little bit about rething

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my eleven year old. It's very
worried that I can't keep a job,

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and I keep telling them that these
are like progressives, but it's like this

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is like the new economy. But
he's very old school. Yeah, always

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interested in banking. Or how did
you get into the CBA, the aggressively

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mortar banking? So basically everything after
CFPB was banking. Yeah, CFPV very

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topical. We had director of Choprah, we did and we did. What

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were your thoughts on his speech?
His remarks. Uh, and maybe tie

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that back to your experience at the
CFPV. Sure, I have to start

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by saying I love the CFPB.
Right, So I was part of the

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kind of first generation of CFPB ers
as was right. Oh see you were

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there when Quadra we're both from Ohio, part of Yeah, I actually before

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upstart met through politics. Oh why
gosh, yeah, yeah, but that's

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right. So like I did,
I did my my time at the Bureau

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under Rich Quadray, and you know, I am and continue to be a

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true believer of the CPB. I
did moral minors at the CPB than I

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did in several years. And I
have a practice in New York. But

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you know, uh, Lindsay recently
testified to me hearing on the Hill where

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the focus was the politization of financial
services regulation. And so as part of

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the wind up for that, you
know, we sat down with a reporter

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and they said, well, gosh, like, isn't all regulation politicized?

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What is it? What does this
mean? Right? How things changed?

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And it was a it was a
good moment to kind of stop and say,

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oh, how have things changed?
And you know what I would say

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is that back in my day under
Director Cordre, you would focus on facts.

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You had a bunch of resoarch economists, you had market analysts, and

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the facts were the facts, and
you'd set out kind of a good understanding

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of the market, and then you'd
lay out a menu of policy options,

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and then the director would choose from
those policy options, and politics would have

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to play because you'd have to figure
out like what would work and what wouldn't

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work. Then you write a headline
and you go to market. While from

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the outside in and understanding that I'm
on the outside now, it feels like

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the agency is starting with the headline
and then working backwards. Right, So

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you have an administration that is fixated
on junk fees and they recognize that among

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the electoral messaging, junk fees are
one of the few things that sticks.

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So then that message goes down to
the team saying, okay, give me

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some policies that you can sell politically, and so picking on big banks is

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something that politically sells. Then you
back up into that and say, okay,

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then what will be the policy interventions? And then perhaps the most concerningly,

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then you choose your facts, and
so you know, one of the

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things that I can go on for
like thirty minutes about this. But that

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we've been kind of really in just
very concerned about are just the facts that

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are coming out of the BUREAUM.
So the director today talked about competition in

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the credit card market, and there's
this notion that the credit card market is

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not competitive, and this is pervasive, right, This is why they justify

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their late fees rulemaking, this is
why people talk about credit card interchange.

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And the thing I would note is
that one there four thousand issuers in the

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credit card mark. You guys know
this better that you're your listeners know this

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better than anyone else, you know. The director talked about concentration of the

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twelve largest issuers, like I can't
imagine any industry that has twelve of anything,

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right, like twelve leading airlines,
twelve leading computer manufacturers, twelve leading

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cell phone manufacturers. But there are
also like fifty billion dollars in billion transfers

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all using CFPP datum. And then
I'll just a little bit more on this,

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then I'll stop, just because I
get really fired up about credit cards,

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you know. The director also talked
about how consumers are apparently firing more

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poorly credit cards when they talk about
like super high interest rates. But in

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the speech today he repeated something that
they'd said in their data before, where

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they said that the amount of subprime
card holders has remainconsistent, and that's simply

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not true. Like, if you
look at the cpeb Z owned Card Act

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data, the number of subprime card
holders has gone up from like sixty two.

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Sorry, the percentage of people that
are the subprime space that have credit

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cards has increased about basically ten percent
from twenty fifteen to twenty twenty twenty two.

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But then to the deep subprime space, we've seen massive inroads in underwriting

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to deep subprime consumers while keeping them
paying their bills at good rates. So

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like that's financial inclusion working well.
Actually you're seeing more more borrowers of the

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subprime space, not people kind of
falling down to subprime, but actually like

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a growth of barrowers coming up to
receiving credit, you know, and that's

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who may not have before. That's
right, And that's the last part of

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my rant. And indeed, it's
like I'll stop at this, but you

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know, there's this notion that you
know, because you're bringing in and record

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numbers of deep SOB prime consumers but
they're doing better than they ever have been

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before. So the Bureau also has
charts where you're looking at basically the number

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of people that transact. Those numbers
are all times highs. And then you're

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looking at the balance is that the
progress people are paying into their balances.

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And when the Card Act was first
on in twenty fifteen, people are basically

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paying off like twenty eight percent of
their loans each month, and we celebrated

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that. Under Director quadrat Well,
they're paying thirty nine percent of their loans

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off each month. Right, And
so again, like you can that's that

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whole kind of Daniel Patrick mornand thing
where you can have your own opinion but

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you can't have your own facts.
And that's where we're at right now.

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So I'll stop there. Thank you
for letting me get that off my chest.

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So I like that. It seems
like part of maybe your critique is

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that it wasn't a balanced view,
right, So really focus on fees,

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deep on that versus understanding the whole
consumer landscape and how each consumer is using

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the product and the need of the
product and how we're better serving It's part

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of that, right, But it's
also even if you're going to focus on

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fees, stick to object effects.
Sure about the fees and how consumers are

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very One of the interesting things that
that was part of the comments today was

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that the difference between a rewards versus
non rewards credit card. And I don't

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know if you heard that, but
it was kind of a you know,

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a nuanced that could be interpreted as
consumers aren't aren't smart enough to choose whether

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they want their rewards versus versus maybe
having a card with less cost but no

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rewards. So that was I think
an interesting distinction to make was even not

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just the fees in general, but
the very specific types of cards that are

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offered to do so, where do
you see innovation coming from? Like it

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seemed like part of his message too, was like the government is necessary to

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drive innovation by creating some more parity
or transparency. How do you feel about

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that? I struggle with that as
well. I mean, I think the

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main thing I would look to just
from the innovation space, and maybe it's

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just because it's less flashy and people
don't talk about it as much. If

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you think about all the innovations that
have taken place in underwriting folks, and

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so you see that like to double
down on this notion, like the deep

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penetration into the deep subprime space while
ensuring that they're paying off their balances like

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at better and better rates. Like
that requires a lot of like alchemy and

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data science and risk splitting, and
it's I think it's kind of remarkable,

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and that's why I really bulk when
we have policymakers that are kind of then

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bringing a chainsaw to something that is
so delicately created. Yeah, I think

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and that you know, I know, you have been both kind of private

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and public sector, and so it
kind of leads into into Map's question then,

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like you know, how is being
on really both sides of that really

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kind of shape your perspective on kind
of regulatory affairs and policy development. Yeah,

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I think that. You know,
the interesting thing about financial services,

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so they're kind of two things that
drive my personal career. One is even

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going as basic as like having grown
up a minority in the Deep South,

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like I have a deep respect for
what policy can do to making sure that

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people are treated fairly, particularly federal
policy, So I think that's enormously important,

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particularly so in financial services. On
the other hand, you know,

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when I was at the Bureau after
we got through that first space of big

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rigs, you know, I started
to see kind of the Bureau kind of

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moved to arguably kind of less impactful
things. At the same time we saw

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the smartphone changing the world. Right, So I imagine like so many of

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the guests that you've had on the
show, like head platforms that were built

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on or enabled by that one device. And so you know, I remember

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sitting at the Bureau thinking, oh, I'll work like another two years and

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another rule that might like move the
needle a little bit, whereas like these

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people in California are making the pie
larger for everyone. They're changing lives,

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and so just a real recognition that
you need the rules and you need to

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understand them in financial services, but
that the only thing that makes the HIE

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larger for people and the only thing
that really advances financial health to many products

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for it. Yeah, and so
trying to mar the two has been kind

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of where I try to take my
career since then. Well, and maybe

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describe a little bit for those who
aren't familiar with the CBA and the different

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committees, like what what is your
role as had a policy? Like what

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does what does that entail? And
the day to day to week to week

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base with sure. So the Consumer
Bankers Association is a banking trade group.

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We focus primarily out of retail banks
and increasingly on banks that are ten billion

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dollars or more so banks is that
are just above like the Durban threshold all

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the way up to the very largest
banks. We have, as map points

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out, a wide range of committees
in which basically bankers get together and just

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compare notes in an anti trust compliant
way on how the world is changing,

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right, and so you know that
the example I would use there is during

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the pandemic, like a lot of
people are trying to figure out like is

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it safe to like reopen branches,
but then how do we serve our customers

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and you know, how do you
handle cash? And so we created a

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new committee that still stands now that
helps people compare notes on that and just

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ensure that there's best practices there on
the other side of the house. And

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that's regulatory change, and so you
know, the goal there is to understand

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what regulations are coming down the pipeline
and how they'll impact the banking industry and

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most importantly banks and ability to serve
their consumers. And so we run data,

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we talk to the hill, we
work with the regulators, and ultimately

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like try to even talk to consumers
so that we can help people understand how

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that regulatory change will path through lives
and in some cases maybe impact the regulatory

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changes. I definitely think like your
background, certainly in kind of consumer protection

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payments. I think payment space vans
are about credit cards a little bit,

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but just payments in general, not
being able to maybe go into branches for

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people who don't have internet access at
home during the pandemic. I think what

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are you seeing is kind of the
evolution of the payments landscape there. I

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think there's a proliferation of payments providers, and some of it's pretty concentrated still

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in some of the big banks.
But like, what are some of those

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key considerations you think about, like
policies, it relates to payments that would

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be good for the industry but also
help innovation continue. It's a great question,

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Lynn, You know, when I
think about payments, I think of

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it as like one example of why
silos are so dangerous in regulation in payments

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right now. In many ways we're
kind of typified by fraud, right,

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and so that's one of the things
that we're all focused on the making industr

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orty is just and you hear stories. I mean, it's it's not uncommon

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to just hear whispers of institutions saying
that credit losses are now like rivaling fraud

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losses because proud losses are so high. The thing I would note there is

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that you know, we have from
like an advocacy and really a communications issue

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in the space, because when people
think about broad in this space, there

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a lot of concerns are like a
lot of people are looking backs to fix

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things, and a lot of people
are thinking about even reopening long standing regulations

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and that have governed the payment space
since quite literally since I was born,

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because I guess Rege and the electronic
funds transfer active done in seventy eight.

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The concern there is that there's this
line in New jack City, right,

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this is bigger than you know Brown, right, And I think a lot

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of people don't really don't seem to
appreciate, particularly for people that are folks

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in the banking sector, that a
lot of the problems in this space exist

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outside the banking space. And so
there are things that will involve the telecommunications

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companies, they'll involve the social media
companies, they'll involve other government actors and

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so well, we're going to have
to really work hard in the near future

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the de silo all that be able
to start addressing these issues. So are

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you able to participate with those groups
outside of the CBA or bringing some of

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those in or house collaboration go on
with some of those. We're working on

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it. But I think that the
thing that's interesting about REGs it's kind of

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different a business, is that in
the government there's literally like a reg E

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part eight person at the bureau and
like a Reggae Part B person of the

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bureau, and you coexist by like
not not getting each other a stamp base,

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right, And you know, and
the thing about fraud is kind of

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typified by its ability to arc over
Like who would have thought, yeah,

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that like telephone companies would be the
gateway for security for financial services, right,

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And so you know, trying to
encourage people that to be more open

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minded and kind of learn across disciplines
is we're all gonna have to learn that

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together. Yeah, I think we've
certainly seen that. I know some of

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our attorneys and people in the government
affairs space have been at industry events where

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a lot of the payments processors now
are are companies like Meta or or really

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what you think of the social media
companies not not specifically a payments processor.

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And I think some of the some
of the friction put in even by some

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of the banks to protect consumers can
then make it hard to transact. So

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finding that balance is certainly hard.
Do do does this see being involved in

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anything related to digital assets or anything
crypto or is there something kind of outside

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of your space today? It's we
care about it to the extent that it

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intersects retail banking, which right now, you know, most of the crypto

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conversation is more of nastic class or
you know, kind of the background rails.

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I will say, like when I
I'm a member of there's a group

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called the Digital Dollar Project that does
some really interesting work thinking about a central

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bank issue digital currency. And you
know, one of the questions I often

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raise in those conversations is, you
know, what is the need that they're

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addressing and the thing that kind of
take it back to the advocacy discussion.

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People will often point to financial inclusion, the point to ubiquitous and faster payments,

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and you know, I'm stuck thinking, well, gosh, like we

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have a banking system that like we've
got record levels of people being baked,

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we have record levels of subprime card
penetration, and said, we're doing historically

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well. And I'm you know,
taking my kid on travel overseas and like

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I'm not taking cash because like I
can take this thing intab it anywhere in

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the world and I get points back, all right, and like like we're

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not talking about that, all right. And so one of the things we're

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realizing as a banking industry is we
have to tell our own narrative matter because

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if we don't, like people are
painting a picture of us, if we're

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not paying that picture for them.
So what are some ways that you're able

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to do that being more proactive about
that's a great question. Some of it

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is like, as you can tell, I get like really excited talking about

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this stuff. Some of this is
really taking the facts in and educating folks.

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So if you think about it's kind
of before we start up with the

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credit card space, like we have
a deck where we are going through and

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say, Okay, here's all the
things that our regulators have said that's that

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their own data is incorrect. About
que cards, and we are taking that

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to reporters, We're taking that to
modern democrats on the hill and just educating

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people and just kind of sitting them
down and kind of nerding out with them

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and showing the charts. The other
thing I would note, you know,

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I used to say this when I
was in government, is that the average

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American has to hear a song seven
times where they like it right. And

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depending on what you think of government, regulators are either better or less than

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average. And so it takes time. But we're doing that work, trying

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to pay into building those relationships and
trying to earn that trust with folks being

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received well or I think so,
I mean, I think the thing is

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and this is the beauty of facts. And this is why I really worry

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a lot about just about the future
of the CFPB. Like the data is

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the data, right, and so
if you go in there and you're earnest

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with books, I mean, we
go in there with some of the most

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hardcore like super progressive offices, but
like the old heads that like help write

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the Card Act, if you sit
down with them and you show them the

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data, like they're the ones that
are most willing to engage because they kind

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of see the patterns, they see
the numbers. Do you see most of

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that happening at the federal level or
we're seeing even some activity at the state

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level in terms of great exportation or
trying to bring control of the banking industry.

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It's it's tricky in the states,
goodness. I mean, we don't

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do a lot of work at CBA
in the state space, but I will

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note like like increasingly everything from state
legislation that would impact state tax and interchange

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to things like fair access requirements.
It's just a very tricky space to navigate,

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you know. I think we've we've
certainly heard that from from banks as

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they kind of crushed that gurban threshold
and then have to pay the interchange fees

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where before they were exampt from them
is a is a pain point. It

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sounds like the CBA many of the
bank members are above that. So there

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you know, any any thoughts about
those those kind of banks that are kind

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of right at the edge like where
they you know, it's kind of a

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little bit above in assets and being
subject to those is pretty painful versus like

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do you keep your assets a little
bit low and need to do an acquisition

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to grow or how are the members
thinking about that, about navigating that transition

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between those two two and aligns on
the interchange space. That's a great question.

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I can't speak to necessarily how the
members are thinking about it, but

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what I would say is that that
is a great example of how regulations can

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lead to kind of unnatural, like
like business practices. I had dinner last

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night with a group of CEF and
B alumni, including a fellow that was

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in the most recent team, and
we lovingly got into almost like a real

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Housewives like table flipping argument because there's
just a regulation on open banking, right,

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and they have this regulation that we
kind of dream up this entirely new

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world that would have like they literally
have two new definitions of consumer, one

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of which doesn't include natural consumers.
Right, So it's like a very complex

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rule set that in many cases like
they have weirdly specific definitions and then other

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cases weirdly vague spaces. And I
use the Durban example that you just raised

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trusted look like when the Fed and
Durbin did that ten years ago, I

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think no one anticipated that you would
have bang intentional was staying below the number,

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Like no one anticipated the rise of
these neo bakes, right, Like

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who wouldn't want to grow? Right? And like I think no one really

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thought about the impact like that has
now been demonstrated of free checking and so

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then when you come in and like
you kind of pan outside the lines of

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your statute and create all these new
rules, just having a little humility to

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think about gosh, like what are
the unintended impacts? Like what are the

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weird places we might to be pushing
the market. It's just something that I

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think regulators have to keep in mind. Yeah, it you know, we

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push ourselves to like test and iterate
so fast. Like do you see that

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happening in the government again, like
recognizing where a law maybe was good for

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a time but needs to be adapted. Is it is there a faster rate

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of change do you think happening?
I wish and you know, and this

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is where I really want to have
some empathy to regulators, you know,

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with the increased like politization and polarization
that we're saying, and to some degree

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industry we did a little bit of
ourselves. So there was a big lawsuit

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called Celia Law where we said,
hey, ceefp of this five year term

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you should really be appointed by the
executive and removable by the executive. But

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then like we then can't really complain
then when then like the CPP is like

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more aligned with the executive and importantly
is on a four year term. And

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so you know, I've done it
where you know that you know that the

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administration flips, you have four years, you know, and then it's just

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a race to get the regulations done
because you're worried, like my rule actually

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got undone by a new Congress because
we didn't get out of the gate fast

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enough. And so you know,
they're just kind of breaking off the mirrors

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and all the regulatory Of course they
can to get to the end, but

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it doesn't lead to great results too. And we've depitate been I think it

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is kind of peering and seeing some
of that. But the regulators, knowing

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this as an election year, what
does make the regulation sticky? Then,

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like how do you differentiate between you
know, kind of things that are put

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in place between now and maybe a
change of administration and what can stick or

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it's really everything up for rescinding it
that if the leadership changes. Gosh,

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that's a great question. You know
that you can teach a whole lot of

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I've even tried to draw out like
a lawsul law school syllabus. I'm like,

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if you had a class, I'm
like, how do you make a

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persistent regulatory change? I mean,
I think the biggest thing, ideally would

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be to to start with consumer need
right, start with the data like where

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the market actually drives you, and
then try to lead to a space where

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people can serve their customers in a
productive manner. I think once you go

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beyond that to kind of broader designs
around the economy and kind of forcing it

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into natural spaces, your regulations necessarily
get more brittle. Is that a consideration

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as you're going through the is like
hey, I want this to last wherever,

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or you're just thinking like here's the
problem in front of me, let's

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solve it and move on to the
next thing. Or when when you're writing

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rights around here on our side of
it. Either, Yeah, I mean,

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ideally, when you're writing regulations,
you're thinking about like how do you

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kind of get the market in a
natural space in a better equilibrium. You

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know. The one thing under director
Coadre that I mean many things that I

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thought that was really kind of smart
is that he would often look at the

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industry and say, okay, is
the industry getting to a better place on

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its own right? And then so
where do I then need to nudge right

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or provide clarity to get it there? You know? I think it's when

348
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you kind of again depart from that
that it starts to get a little dangerous.

349
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Yeah. And I think with the
maybe we had some folks from the

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Fair Responsible Banking Committee on the podcast
as well, the chair and vice chair.

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And I think fairness of lending has
been obviously a key topic. And

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I think particularly with AI. Any
thoughts on the Executive Order of AI last

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year that came out and it was
pretty broad and not necessarily industry specific,

354
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but I think, how did you
message that within the CBA or any feedback

355
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from the banks? Yeah, I
mean I can do better than that.

356
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I'll tell you how we messaged it
when I was in the government. Like

357
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so, when I was at the
FED, I did a speech with Leel

358
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Brayer, who was amazing, and
we did a speech in twenty seventeen about

359
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kind of where we saw artificial intelligence, where she saw artificial intelligence going in

360
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financial services. And one of the
things that then Governor bring Her said was

361
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look, you don't always need to
reinvent the wheel. You need to stop

362
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and kind of look and see what
toolskits you already have and then see what

363
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needs to be again kind of the
early point we made right like what are

364
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the incremental fixes you need to make? And in banking, as it turns

365
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out, there are a lot of
regulations and guidances that apply to the use

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of artificial intelligence. There's model risk
management, there's for a lending, there's

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guidance on third part of risk management. There's guidance on adopt bringing in new

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technologies and products, and so there's
a lot of great talking collaboration needs to

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happen there, but there's a lot
of good tools to start with that you

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don't need to reinvent. We see
the CFPP increasingly leaning in on the use

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of AI in financial services, so
they're calling for whistleblowers data thing today where

372
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they're calling from our technologists. The
concern that I have is that the CFPV,

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among other things, was created to
basically ensure that consumers get the same

374
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protections whether they're with banks or non
banks, but the Bureau, when they're

375
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thinking about AI releasing, is focused
on big banks, where in many ways,

376
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like there's already like a good framework
or tools, Like in the non

377
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bank space, non banks have no
understanding of model risk management because there's no

378
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there's no regulator there, they aren't
regularly examined for a co there's no TPRM

379
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guidance, third party risk management guidance, there isn't this guidance on new products

380
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and services, and so like I
would like, there's so much good that

381
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the bureau could do if they would
just like take that framework and start talking

382
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to non banks. It just doesn't
seem to be that that's not putting their

383
00:24:22.200 --> 00:24:26.079
chips there, which is a little
concerting. Do you think they're just kind

384
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of staying where maybe the I guess
clientele is more comfortable that they're not ready

385
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to because I know the CFPB has
made some statements and that you know,

386
00:24:34.839 --> 00:24:37.880
if there is a possibility of consumer
harm, then they feel like they do

387
00:24:38.039 --> 00:24:42.279
have had a regulatory oversight over that, and they've gone after some non bank

388
00:24:42.359 --> 00:24:48.599
lenders recently. Do you think that
they're just not quite ready to jump that

389
00:24:48.640 --> 00:24:52.200
farther, expecting an industry reaction or
or what do you thinks holding them back

390
00:24:52.240 --> 00:24:56.359
from doing that. The CFPP for
all the reasons they discussed before is very

391
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politically savvy. I'll give you the
cynical view, and I'll give you the

392
00:25:03.000 --> 00:25:04.839
positive view. So the positive,
the positive view is that consumers, a

393
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lot a lot of consumers used to
be banks. Said you beat up on

394
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a couple of big banks, then
you theoretically address a lot of consumers.

395
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That more cynical view of that would
be. I used to tell this story

396
00:25:15.799 --> 00:25:19.279
when I was at Barklays where there
are two pieces of bipartisan legislation at the

397
00:25:19.319 --> 00:25:23.799
time that Tim Scott and Shared Brown
were we're sponsoring. One was stopping fencible

398
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and then the other was taking executive
conversation away from big banks. Right.

399
00:25:27.359 --> 00:25:30.839
So like that, I would say, welcome Bakers, like the one area

400
00:25:30.880 --> 00:25:36.119
where there's bipartisan support, is you
infencible and not something you've would have been

401
00:25:36.160 --> 00:25:40.759
along, right? And so I
think the bureaus like smartly realized and you

402
00:25:40.759 --> 00:25:42.079
see this in their messaging right kind
of when they started out by saying,

403
00:25:42.079 --> 00:25:45.640
hey, we're after big banks,
not relationship banks, right, And you

404
00:25:45.640 --> 00:25:48.599
see these carbouts with overdraft, we
see these carbouts with late fees, like

405
00:25:48.640 --> 00:25:53.279
they thoughtfully kind of triangulated that if
we beat up on this sector, that

406
00:25:53.319 --> 00:25:56.799
we're going to basically get a free
pass on both sides. And so that's

407
00:25:56.799 --> 00:26:00.640
something that again like if that's the
best politics. But I mean, I

408
00:26:00.680 --> 00:26:03.799
think I said it's perfectause like i'd
write, it's my job to gribe like

409
00:26:03.920 --> 00:26:07.319
heard who cares about what spirit of
banks? Right? It's not good for

410
00:26:07.359 --> 00:26:11.000
consumers, like because because every consumer, like you could, you know,

411
00:26:11.759 --> 00:26:14.200
Plaid has an update where they say, hey, like more people are using

412
00:26:14.240 --> 00:26:17.559
fintech than are using screening services,
right, Like, we need the bureau

413
00:26:17.680 --> 00:26:21.400
there, like that's why the bureau
exists, and so you know, I'm

414
00:26:21.400 --> 00:26:26.359
hoping that the bureau gets there.
I was reading an interesting article earlier this

415
00:26:26.400 --> 00:26:30.200
week. I think I shared internally
in our slack channels that many people who

416
00:26:30.279 --> 00:26:33.200
work for FinTechs have not the majority
of people who work for FinTechs actually use

417
00:26:33.240 --> 00:26:37.960
a traditional bank for their banking services
though, and have not poured it over

418
00:26:37.039 --> 00:26:41.720
their kind of day to day banking. So I do think that like,

419
00:26:41.799 --> 00:26:45.559
FinTechs have made inroads in a lot
of a lot of places, but many

420
00:26:45.599 --> 00:26:49.920
consumers are still working with the major
banks or the regional banks on their their

421
00:26:49.920 --> 00:26:53.839
standard banking. So what are some
of the current I mean other than you

422
00:26:53.839 --> 00:26:57.160
know, the things we've talked about
credit cards, interchange fees, certainly a

423
00:26:57.160 --> 00:27:02.720
lot of a lot of complexity in
headwinds. Anything else that are you see

424
00:27:02.799 --> 00:27:06.680
is like current pressing, trends,
challenges, things you're hearing from the membership

425
00:27:07.319 --> 00:27:11.200
that they're worried about that you know
what's next on the horizon. Yeah,

426
00:27:11.240 --> 00:27:15.400
I mean, I think the thing
that I would note is that you know,

427
00:27:15.400 --> 00:27:19.720
we're seeing such a caste of regulatory
change in an uncoordinated manner, Like

428
00:27:21.039 --> 00:27:25.039
in my limited government to a career, I've never seen so much change happening

429
00:27:25.079 --> 00:27:27.359
from so many different places in a
non talk together way, right, Like

430
00:27:27.359 --> 00:27:30.720
at Dodd Frank at least there's like
one piece of paper that it was all

431
00:27:30.759 --> 00:27:33.440
on, like one PDF that you
download. In this case, like if

432
00:27:33.440 --> 00:27:37.000
you take them, if you think
about like the banker that we've got that's

433
00:27:37.400 --> 00:27:41.200
trying to make sure that he or
she can provide low cost checking account services

434
00:27:41.200 --> 00:27:44.400
to consumers. Right, so this
is like a mitzvah, right, Like

435
00:27:44.440 --> 00:27:48.599
you're just like low cost checking accounts
for people. That's like a platform that

436
00:27:48.799 --> 00:27:52.079
consumers can build their lives on.
They've got a P and L that you're

437
00:27:52.079 --> 00:27:56.079
trying to manage down to like the
penny. You've got the CFPV coming at

438
00:27:56.079 --> 00:28:00.000
you with overdraft regulation that could limit
it to anywhere from three to fourteen dollars

439
00:28:00.079 --> 00:28:03.440
or something of this kind of CPB
said price. At the same time,

440
00:28:03.599 --> 00:28:07.039
you have the Federal Reserve coming in
cutting debit interchange rates by a third.

441
00:28:07.440 --> 00:28:15.160
You've got possil rules that would require
you to hold capital against this CFB overdraft

442
00:28:15.200 --> 00:28:18.480
credit. And then you've got the
CPB requiring you to create APIs for third

443
00:28:18.480 --> 00:28:22.519
parties that you're supposed to pay for
for free forever. And then this ten

444
00:28:22.599 --> 00:28:25.240
thirty four C thing, we're supposed
to give away any records to consumers for

445
00:28:25.279 --> 00:28:27.680
free whatever they may ask for.
That's kind of this unbounded manner. I

446
00:28:27.759 --> 00:28:32.400
just I don't see how that's sustainable, right, And I don't think And

447
00:28:32.440 --> 00:28:33.960
the worst part about it is,
I don't think the regulators should like really

448
00:28:34.000 --> 00:28:37.240
feel the need to even say,
oh, like what are you doing?

449
00:28:37.000 --> 00:28:40.480
Like what are you doing? Like
let's think about like like get it all

450
00:28:40.480 --> 00:28:42.640
on one page and then think about
like what's happening to the consumer. Do

451
00:28:42.680 --> 00:28:47.039
you think that'll lead to lawer consolidation, more merger and acquosition activity. I

452
00:28:47.039 --> 00:28:49.240
mean, if that if the cost
of operating get more expensive and you really

453
00:28:49.279 --> 00:28:55.400
need that size and scale, it
feels like things would I know that the

454
00:28:55.440 --> 00:28:57.400
CBA is primarily that you know,
ten billion out of buff banks, but

455
00:28:57.759 --> 00:29:03.200
feels like the opportunity for community banks
and even smaller banks for ones on that

456
00:29:03.240 --> 00:29:10.400
threshold and gets even harder. So
so, and this is where I can

457
00:29:10.480 --> 00:29:14.960
only see problems. I can't see
answers right now. We have this weird

458
00:29:15.000 --> 00:29:18.279
squeeze really, I think on the
regional banks, because you've got on the

459
00:29:18.319 --> 00:29:22.279
top end of the you've got prudential
regulations that are coming down, right,

460
00:29:22.359 --> 00:29:25.039
so you've got these like long term
debt requirements and such that are trying of

461
00:29:25.079 --> 00:29:29.079
trickling down to these resolution planning requirements
that are coming down to the regional bank

462
00:29:29.160 --> 00:29:33.920
level. At the same time,
you've got these this kind of massive and

463
00:29:33.960 --> 00:29:38.799
well and ultimately like basically potential regulations
saying hey, make less money on lending,

464
00:29:38.799 --> 00:29:44.039
make more money on fees, and
then you have consumer regulators coming in

465
00:29:44.079 --> 00:29:45.319
and saying, oh, you can't, you can't even make a revenue on

466
00:29:45.400 --> 00:29:48.559
fees. Like that's a whole thing. That's like a whole other podcast where

467
00:29:48.599 --> 00:29:51.680
it's like there you've got regulators saying
that you can only recoup your costs on

468
00:29:51.759 --> 00:29:55.200
fees, but then they're carving out
the smalls, right, and so like

469
00:29:55.240 --> 00:30:00.400
for overdraft, for late fees,
for REGII, smalls are carved at.

470
00:30:00.720 --> 00:30:03.759
So for those reagonal banks in the
middle, right, you can neither lend

471
00:30:03.960 --> 00:30:07.640
nor generate fee income. I don't
know what happens to them, And like

472
00:30:07.640 --> 00:30:11.160
like what if it's you know,
increasing when you're starting to hear even in

473
00:30:11.160 --> 00:30:15.160
public earning earnings polls, executives kind
of questioning like like do regulators recognize how

474
00:30:15.200 --> 00:30:18.920
hard it will be for them to
stay in the consumer retail space? And

475
00:30:18.960 --> 00:30:22.119
at the same time you have the
CPV coming out saying we don't want you

476
00:30:22.119 --> 00:30:26.079
to emerge. So I, well, I don't know what's going to happen

477
00:30:26.079 --> 00:30:27.279
there, but it's it's another good
example of work. We can like please

478
00:30:27.440 --> 00:30:30.759
sit everyone around a table, like
put it all on one piece of paper.

479
00:30:30.000 --> 00:30:33.680
Maybe that's a start. Any Uh, speaking of murders, any any

480
00:30:33.680 --> 00:30:37.920
hot takes on whether or not the
capital one and discover murders that to be

481
00:30:37.960 --> 00:30:47.400
approved takes it takes it home.
Yeah, we've learned there's some topics that

482
00:30:47.519 --> 00:30:49.960
people won't cover with a microphone.
Here. We won't put you on the

483
00:30:49.960 --> 00:30:53.680
spot on predicting or endorsing a candidate
either, but anything you see happening in

484
00:30:53.680 --> 00:30:57.200
the next four years, like or
you just kind of wait and see.

485
00:30:57.480 --> 00:31:00.599
Oh gosh, is it that by
are like you're saying that the polarization,

486
00:31:00.759 --> 00:31:06.039
like it's really that hard to tell
where you know where legislation may go or

487
00:31:06.079 --> 00:31:11.119
reaction to I mean, the thing
I would note is that this is unsustainable,

488
00:31:11.680 --> 00:31:15.240
right, Like this notion of like
a new administration coming in and then

489
00:31:15.279 --> 00:31:18.359
you spend all your time kind of
throwing out some things that happened in the

490
00:31:18.440 --> 00:31:23.240
last administration. It's it's not good
for the industry, but most importantly,

491
00:31:23.240 --> 00:31:26.480
it's just terrible for consumers. And
so I don't know what the answers are

492
00:31:26.480 --> 00:31:29.839
going to be, but we've got
to find some way to kind of come

493
00:31:29.880 --> 00:31:32.599
to more middle ground on these issues
and to kind of normalize this and get

494
00:31:32.640 --> 00:31:36.119
back to the facts. That's better. Whole thing that's matter. I've been

495
00:31:36.119 --> 00:31:40.480
put that on your shirt. Yeah, yeah, thank you very much.

496
00:31:40.599 --> 00:31:44.440
Calvin Briefinding exploring conversation. I didn't
realize how much like this is very cathartic.

497
00:31:45.200 --> 00:31:49.720
We're We're here the rest of the
day. If you don't, I'll

498
00:31:49.759 --> 00:31:55.319
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