WASHINGTON — President Trump deeply impressed the community bankers he met with Thursday, listening attentively to their concerns while demonstrating a willingness to pull out all the stops to help get them regulatory relief, according to multiple participants.
The president also openly consulted with his top economic advisers during the meeting, pondering the future of Consumer Financial Protection Bureau Director Richard Cordray while repeatedly asking whether he could fix community bank concerns through new executive orders.
In interviews with participants, they described Trump as engaged and empathetic to the plight of community banks, willing to dive into specific concerns while pledging to deliver relief as fast as possible.
“He just opened it up and said, ‘Hey, we want to help.’ And we really just had an open discussion on the table about whatever they could do to help community banks,” said Scott Heitkamp, CEO of the $214 million-asset ValueBank Texas in Corpus Christi, who was at the meeting along with eight other community bankers and two top industry representatives.
Rebeca Romero Rainey, chairman and CEO of the $220 million-asset Centinel Bank of Taos in New Mexico, said the president was “very curious, wanting to know specifics about what he and his administration could do.”
“He was seriously interested in our industry and the viability of community banks,” Rainey said.
The conversation, which took place in the White House’s Roosevelt Room before Trump led the group on an impromptu tour of the Oval Office, lasted roughly an hour and covered a range of issues.
That included a discussion of Cordray’s future and that of the CFPB. At one point, Trump expressed to the group that many had urged him to oust Cordray, but the president was not sure it was worth the political backlash. But Trump was apparently under the impression that Cordray’s term would be up soon.
Informed by Treasury Secretary Steven Mnuchin, who attended the meeting along with Gary Cohn, the White House’s chief economic adviser, that Cordray’s term lasts until July 2018, Trump asked whether anything could be done before then. Cohn said he and Mnuchin were working on the issue, while raising the prospect that Cordray could voluntarily depart to run for office in his home state of Ohio, according to participants in the meeting.
Top Republicans have urged Trump to fire Cordray directly, but his authority to do so is unclear. Many observers believe the administration is awaiting the outcome of a legal battle between the CFPB and a mortgage servicer over its constitutionality.
They also discussed the structure of the CFPB. Republicans have sought to replace the single director with a five-member board, though their enthusiasm for that idea has waned after Trump won the election.
“Both Treasury Secretary Mnuchin and Mr. Cohn were very engaged with CFPB,” Heitkamp said. “We talked about a five-member board and [Trump] was very engaged with trying to understand” the benefits of a five-member board.
Dorothy Savarese, CEO of the $3 billion-asset Cape Cod Five Cents Savings Bank in Harwich Port, Mass., said the CFPB’s method of regulating through enforcement came up. Community banks struggle with the idea of reading “the consent orders to understand the guidance.”
At times during the meeting, Trump asked whether he could solve individual problems raised by community bankers by issuing executive orders. Mnuchin noted that some would require legislative fixes while others could be solved by putting their own appointees at the regulatory agencies.
Trump urged Mnuchin and Cohn to move quickly in making new appointments, seeking action within the next three to six months. Trump indicated that his administration would soon nominate the community banking slot for the Federal Reserve Board.
Savarese said Trump and his advisers made it clear they were seeking nominees with “real-world experience who understand the intended and unintended consequences of regulation.”
Several participants said the president eagerly dove into the details to find out where he could help. Rainey said the president specifically asked about community banks’ efforts to obtain “qualified mortgage” status for loans held in portfolio and to raise the threshold at which bankers would be considered.
“He was looking for ways to increase that threshold,” Rainey said. “He wanted to know if there was a legislative fix, or something he could do” directly.
Heitkamp added that they also discussed Basel III capital rules and how many rules intended for large banks trickled down to smaller institutions. Trump thought many rules were “pretty much big-bank stuff,” asking, “How does that apply to you all?” Heitkamp said.
Savarese said they discussed the “significant trickle-down of rules that had larger institutions in mind,” including extensiveness of data-gathering. She said much of the discussion came from bankers at the meeting in response to questions Trump asked.
They discussed how it is “important to have a regulator that meets banks where they are; banks are trying to do the right things,” Savarese said.
The president also made it clear he was not trying to repeal all of the Dodd-Frank Act, but instead focused on fixing its problems.
“The focus was not on repealing Dodd-Frank, but how do we take what we have in terms of structure and make it work,” said Luanne Cundiff, CEO of the $363 million-asset First State Bank of St. Charles in Missouri.
Participants also said there was no discussion of reinstating the Glass-Steagall Act, even though White House Press Secretary Sean Spicer stated later in the day that the president still supported the reinstatement of the Depression-era law separating commercial and investment banking.
Overall, participants said it was a productive discussion, one in which the president appeared to be solicitous.
“He did a great deal of listening, was very empathetic,” said Cam Fine, president and CEO of the Independent Community Bankers of America. “He was engaged and not scripted.”
Many left optimistic the president was going to help them.
“It was a great exchange,” said Rob Nichols, the president and CEO of the American Bankers Association. “The president definitely demonstrated — as did Cohn and Mnuchin — an understanding that there are challenges for bankers, particularly for small banks. He demonstrated an enthusiasm for helping us to address those challenges.”