BOCA RATON, Fla.–Once called a “smart, biting and unreconstructed libertarian Republican,” William Cooper, TCF Financial chairman and chief executive, actually has a few kind words for the Consumer Financial Protection Bureau.
“At least so far the big boogeyman that they expected to come out of that thing hasn’t come out of it,” Cooper said in an interview during a retail financial services conference March 11.
“A lot of the abuses of the banking system occurred not in banks, and maybe those things do need some regulation,” Cooper said, pointing for example to the bureau’s crackdown on payday lenders. “And their looking at that cleans up our image. Because to the degree the mortgage banker that’s not a bank is creating this bad image, I get the image. It’s all bad bankers. So if we can clean up some of that, that’s good. And some of these practices do need to be cleaned up.”
But Cooper is far from having a political change of heart.
Even in the wake of TCF’s withdrawal of a lawsuit to overturn the Durbin amendment in the Dodd-Frank law, which capped debit interchange fees, Cooper says he believes the new rules could be overturned after the elections this November. “Assuming there’s a change in Congress and a change in the White House, this is now a pretty unpopular bill, and in connection with repeal of portions of Dodd-Frank I think this might go with it,” he says. “It hasn’t had the results people wanted it to have.”
While the suit was not successful, he argues it did help push the Fed’s cap to around 24 cents, up from a proposed 12-cent cap, he adds (see story).
“I think our lawsuit did result in the [Federal Reserve] increasing the price [cap]; they doubled what they said they were going to do,” Cooper said, adding on March 12 in a keynote address that the lawsuit “forced them to examine some of the legal issues of how that fee was being proposed in the legislation.”
During that speech, the head of the Wayzata, Minn.-based bank estimated that compliance and regulation now account for upwards of 15% to 20% of operating expenses. Those costs could lead to greater bank consolidation, he added.
“You put two banks together, and the cost of compliance doesn’t increase proportionally,” he said.
Cooper also said the bank had lost some customers by adding new checking account fees, though he said the ultimate effect has been mixed.
“The vast majority was people who had a secondary account who merged them into primary accounts. So it looked like there was a lot of shrinkage of accounts, but there wasn’t a shrinkage in revenue,” he said. “But account acquisition has been more difficult. It’s been more difficult for everybody.”
TCF’s chief executive also questioned how some of the largest banks have gone about raising fees. He noted that Bank of America Corp. “had just screwed the pooch” with its failed plans to unveil a $5 debit card fee last fall (see story).
“It slowed the process that was really going along towards re-pricing for the debit card,” he said. “And the big banks who are scared of government in general have really backed off on those pricing changes. They’re occurring but on a much slower rate.”
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