“Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity,... (EventID=111090)

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Connect with the House Financial Services Committee Get the latest news: https://democrats-financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/FinancialDems/ Follow us on Twitter: https://twitter.com/FSCDems ___________________________________ On Thursday, November 12, 2020, from 12:00 p.m. (ET) Full Committee Chairwoman Waters and Ranking Member McHenry host a virtual hearing entitled, "Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity, and Accountability of Depository Institutions During the Pandemic." - - - - - - - - This single-panel hearing will have the following witnesses: • Mr. Brian Brooks, Acting Comptroller of the Currency, Office of the Comptroller of the Currency • The Honorable Rodney Hood, Chairman, National Credit Union Administration • The Honorable Jelena McWilliams, Chairman, Federal Deposit Insurance Corporation • The Honorable Randal Quarles, Vice Chairman of Supervision, Board of Governors of the Federal Reserve System Overview The responsibility for prudential regulation of insured depository institutions is divided among four Federal regulators consisting of the Board of Governors of the Federal Reserve System (Federal Reserve or the Fed), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and the National Credit Union Administration (NCUA). Section 1108 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) created the position of Vice Chairman for Supervision for the Federal Reserve and requires the Vice Chairman to testify before the Committee at semi-annual hearings. The FDIC, OCC, and NCUA do not have such mandatory testimony requirements. Most recently, the Committee held a bipartisan roundtable on May 13, 2020, where the four prudential regulators provided an update on their efforts to respond to the COVID-19 pandemic. This hearing memo will briefly highlight background on depository institutions, recent supervisory and regulatory developments as well as background on diversity in the banking sector. Background on Depository Institutions According to the FDIC, there were 5,066 FDIC-insured banks as of June 30, 2020. In the aggregate, these banks made nearly $19 billion in profits for the quarter and held $21.1 trillion in total assets, representing an increase of $2.9 trillion in total assets (15.9 percent) compared to the second quarter of 2019. The aggregate amount of loans and leases outstanding held by these banks rose by $696 billion (6.6 percent) to $10.9 trillion compared to the previous year. Most of these institutions are community banks; for example, 4,918 of these banks held less than $10 billion in total assets (97 percent). According to the NCUA, there were 5,164 NCUA-insured credit unions with 122.3 million members as of June 30, 2020. These credit unions held a combined $1.75 trillion in total assets, representing an increase of $229 billion (15.1 percent) in total assets compared to the second quarter of 2019. Total loans outstanding held by these credit unions increased $70 billion (6.6 percent) over the year to $1.1 trillion. Most credit unions are small financial institutions; for example, 4,807 of these credit unions held less than $1 billion in total assets (93 percent), and the average credit union held $339 million in total assets at the end of the second quarter. Diversity in Banking There are 143 minority depository institution (MDI) banks and 514 MDI credit unions, which represents a decline of roughly one-third of these institutions over the past decade.6 MDIs, as well as community development financial institutions (CDFIs) have played a key role supporting minority communities hardest hit by the pandemic. In February 2020, Committee staff released a report on the diversity and inclusion data and practices at America’s largest banks.8 The report noted that banks generally lacked diversity in their senior ranks, corporate boards, and provided limited data on their investment with diverse-owned firms. To improve accountability for tangible diversity and inclusion results, Committee staff recommended that, among other things, Congress consider legislation that would require banks and other financial institutions to disclose their diversity data to their respective regulators and the public. Pandemic Response by Prudential Regulators In early March 2020, banking regulators began encouraging financial institutions to work with customers affected by the COVID-19 pandemic. In addition, the agencies have issued multiple guidance on how banks should report on and account for loans that become nonperforming during the pandemic. A March 22, 2020 interagency statement clarified that loan modifications should not automatically be characterized as troubled debt restructurings (TDRs)—an accounting standard indicating the loan... Hearing page: https://democrats-financialservices.house.gov/calendar/eventsingle.aspx?EventID=406870