April 10, 2025 • 16 mins
ABA’s Washington Summit just wrapped up, and this episode — sponsored by Intrafi’s Banking with Interest — features a main stage conversation with Travis Hill, acting chairman of the FDIC. In this episode, Hill discusses:
- Revisions to the FDIC’s supervisory appeals process.
- Transparency in bank merger reviews by regulators.
- The future of bank capital policy after the Basel III “endgame.”
- Ethics and operational improvements at the FDIC.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Travis Hill (00:02):
the idea of having an independent office that is staffed by
people whose sole job is to hear appealsand are people who are experienced
with the examination process, Ithink that that concept has a lot of
appeal and at least for us would be,would be a big improvement over the
way thing, the way we do things now.
Evan Sparks (00:22):
From the American Bankers Association, this is the
A BA Banking Journal podcast.
Welcome back.
I'm Evan Sparks.
Today's episode is presented by Intrafi'sBanking with Interest Podcast and we are
just coming off the conclusion of theA BA summit here in Washington DC where
we heard from a lot of top officials in,federal agencies as well as in Congress,
(00:44):
including treasury Secretary ScottBesant , Financial Services Committee
Chairman, French Hill, House SenateBanking Committee Chairman Tim Scott.
We heard from senator Rubin Gallego ofArizona, who's on the banking committee.
And several other folks, including theperson who you're about to hear from now.
Travis Hill, acting chairman of theFederal Deposit Insurance Corporation.
(01:06):
Acting Chairman Hill was one of thekeynote speakers, and then he sat down
with ABA president and CEO Rob Nicholsfor a conversation on the main stage.
And I'm gonna share that with younow so you can get a sense for some
of the issues that acting ChairmanHill is working on at the FDIC.
Thanks so much for listeningand enjoy the conversation.
Rob Nichols (01:26):
Thank you very much acting Chairman Hill for your comments
and I took some notes backstage andwanted to commend you on a couple
things before we get into somequestions for the next several minutes.
First, that your comments about addressingthe asset thresholds, I think have
been, will be incredibly well receivedby this audience chairman French
Hill and I just at these two chairs amoment ago had that discussion as well.
(01:46):
So thank you for that.
Given, let's get into some of theq and A here, given the, I want
to ask you about the, given what'shappening in the markets, all of the
turbulence following the announcementof last week I wanna ask you about
the health of the US banking sector.
You know, are, are the nation's banks ina good position, in your view as acting
chairman of the FDIC, to withstand thecrosswinds and the headwinds that are
(02:11):
impacting the sector at the moment, giventhe events of the last several days?
Travis Hill (02:16):
Yeah, so we are, we are closely monitoring conditions as
we always do, particularly wheneverthere's volatility in the markets.
Coming into this year, banks had verystrong capital and liquidity positions,
and so generally seemed to be wellpositioned for volatility to be able
to support the economy, et cetera.
That being said, it's our, it's our jobsto be attuned to the downside risks.
(02:39):
So we will continue tomonitor condition conditions.
Continue to to follow to the extentthere's volatility in the impact
on the, on the banking sector.
Rob Nichols (02:47):
Gotcha.
You.
Thank you.
You've been acting chairman for a bit.
You were an incredible senior leader therepreviously, and you identified some of the
priorities and work streams that are topof mind for you now, but broaden that a
little bit for our audience and talk aboutkind of your priorities as acting chair.
What are the things you want towork on and get accomplished?
And then we'll dive intoa couple other issues.
Travis Hill (03:08):
Sure.
Yeah, so we've, we've got a longlist of things that we're, we're
working on and, and wanna work on.
When I first took over asacting chair in January, I, I
put out a list of, of 15 items.
I mentioned a few of them today.
So new bank formation, resolutionreadiness, innovation, digital assets.
Those are, those are all issuesthat are, that are high on the list.
I also briefly mentioned a couple others.
(03:29):
Sup reforming supervisionreforms to the capital framework.
So I think, I think that coversa number of the, the big issues.
Improving the bank merger frameworkis another, another item I've
talked a lot about in the past.
So as I said, we, we've gota, we've got a long list of
things that we're prioritizing.
But at the same time, we also continueto do our, you know, sort of our core
mission of ensuring safety and soundness,resolving failed banks, et cetera.
Rob Nichols (03:52):
That's great.
Well, also, the de novo componentthat you surfaced, I think
is, is really important and.
Bringing new banks into the USmarketplace is something that we think
at the a BA is, is a, is noble purpose.
Certainly.
Let's talk a little bit aboutsupervisory appeals due process.
You've been an advocate for a fair andindependent supervisory appeals process.
Do you foresee any changesof how the appeals process is
(04:14):
gonna be handled going forward?
At the FDIC.
Travis Hill (04:19):
Yeah, so, so the appeals process is something I've,
I have a lot of experience with.
So at the, at the FDIC, the,the, the current and historical
processes, we have a board levelcommittee that hears appeals.
So one board member chairs the committee,and then other board members appoint
deputies to serve on the committee.
So when I, when I first started atthe FDIC, when I was working on the
(04:39):
staff for Chairman McWilliams, shewas the chair of that committee.
And so I sat through a bunch ofappeals and thought there were a lot
of, a lot of possible improvements.
And so I kind of came up with theidea of the Office of Supervisory
Appeals, which we eventuallyreplaced what we call the SARC with.
But before that new office, whichI'll explain in a minute, heard
any appeals, we left and then oursuccessors undid that and went
(05:02):
back to the, to the legacy process.
And then over the last two yearsin my role as Vice chair, I
chair the, the Appeals Committee.
So I think, I think the idea ofhaving an independent office that is
staffed by people whose sole job isto hear appeals and are people who are
experienced with the examination process,I think that that concept has a lot of
(05:23):
appeal and at least for us would be,would be a big improvement over the
way thing, the way we do things now.
And I think the bigimprovements are one, the.
The, in order to really fullyengage on the appeals, I, I think
it's important that you have peoplethat do that on a full-time basis.
Some of the appeals we get, the banks willsubmit hundreds of pages of documents.
(05:45):
And so in order to really give itthe time and attention it deserves,
it needs to be a, it needs to beyour primary, your primary job.
And we've talked about, you know,are there ways to put limitations
on the amount of information?
But the problem is some of these appeals.
The, these are things that go back years.
And especially if you're talkingabout, for example, a composite rating.
(06:05):
It's supposed to encompasseverything that the bank is doing.
And so again, I think having people who,who are doing it on a full-time basis.
And I think also having experience,you know, just because it bank
exams is such a specialized.
Area.
Having people who have experienceon the ground in bank exams, I
think has a lot of, a lot of value.
(06:27):
So in terms of where we go from hereI have a lot of interest in, in trying
to reform the process, I think wewould like to do it in a durable way.
And so trying to, tryingto think that through.
But this is definitely something thatwe're giving a lot of thought to.
Rob Nichols (06:40):
That's great.
Thank you.
Evan Sparks (06:43):
Evan Sparks here.
I'm gonna break in and share a thankyou message for our sponsor, banking
With Interest, a podcast by Intrafithat features in-depth analysis
and insight into the policy changesreshaping the banking industry with
insightful interviews and previewsof pending policy challenges.
And previews of pending policy changes.
The podcast is an essentiallisten for anyone connected to the
financial services interest industry.
(07:05):
Banking With Interest is hostedby Rob Blackwell, an award-winning
former journalist with more thantwo decades of experience as an
expert on financial services policy.
He's now Chief Content Officer andHead of External Affairs with Intrafi.
You can find out more@Intrafi.comand thanks so much to Intrafi
Banking with Interest podcastfor sponsoring this episode.
Now back to Rob Nichols.
Rob Nichols (07:25):
And before I get to my next question, another the, on the list of 15
things that you had prioritized when youwere named acting chair, and you touched
on it a second ago, is the idea of takinga fresh look at how mergers are approved.
I want to commend you for that too,because under the last several years
at a lot of banks, CEOs, many inthis room, we've call up and say,
Hey, we've had a merger applicationpending for an awfully long time, and
(07:45):
we're just not hearing anything back.
And just, it felt like the goalpostmight have moved a little bit and
that there wasn't the degree of.
Transparency around merger review.
And we know that, you know, somemay not get granted and some will,
but just some transparency, opennessabout how those will be reviewed,
I think is, is, is important.
So I'm pleased that you were ableto, or you put that on your list
of things that you would focus on.
(08:06):
So thank you.
Leverage ratio reform.
I know that secretary Besson,others, you have been thinking
about giving that a fresh look.
What's your, what's your take on thatissue and the direction it's going?
Travis Hill (08:17):
Yeah, so that's something that, that we are
actively working on right now.
As you noted, it's a, it's apriority of the Treasury Secretary.
The Fed chair has talkedabout it a number of times.
It's something that the agencies have beentalking about for, for a number of years.
So I think that's something that is,that, that we are actively working
hard on and would expect actionin the relatively near future.
Rob Nichols (08:37):
And where do you wanna see that go?
Travis Hill (08:39):
Yeah.
So I think you know, I think one of thechallenges with the leverage ratio over
time, especially when we're talkingabout the largest institution, is that
it has become increasingly binding.
Whereas the, the initial intent frommost people who worked on it years ago
was that this is intended as a backstop.
And so I think part of the, part ofthe objective is to kind of return
the leverage ratio to a back, to abackstop gen as a general matter.
(09:02):
You know, the leverage ratio,again, especially for the, for
the largest institutions, is.
It creates significant disincentivesto sort of low risk, low margin
businesses like treasury marketintermediation and, and things like that.
And so I think, I think from ourperspective, the focus is trying to
reduce the binding this of the leverageratio and trying to remove impediments
(09:23):
to, to treasury market intermediation.
Gotcha.
Rob Nichols (09:26):
I asked chairman House Financial Services committee
chairman French Hill earlierabout Basel three endgame.
You obviously FDIC one of theagencies intimately involved in
the direction of, of that rule.
You know, given your backgroundand concerns around credit
access what are your thoughts onwhere it's gonna go from here?
(09:47):
Where do you want to see it go?
And I know you guys are deep inconversation about this right now.
Travis Hill (09:53):
Yeah.
So so, so as you said at thispoint, I mean the, we're we're
having conversations about this.
It's, it's stillpreliminary at this point.
I think in terms of the tracks, I thinkthe leverage ratio is, is moving more
quickly as a, as sort of a, you know,a track in terms of capital reform.
As you know, I, I voted against the,the 2023 proposal and was, and was
(10:13):
pretty critical of, of it at the time.
It went well beyond what was inthe, the international agreements.
I think if that had gone to effect,would've had a, a number of, of
negative consequences from higher costto consumers, increasing migration
out of the, out of the banking sector,putting our banks at a competitive
disadvantage internationally.
So I think it was a, a very positivedevelopment that that did not go forward.
(10:35):
The.
The re proposal in September of last year,which was never published, but which got
a lot of attention within the agencies.
I think that was a, a big improvementover the, over the 2023 proposal, but
still had a number of issues that,that would have needed to get resolved.
I think maybe the biggest issue waswith respect to market risk, where
(10:56):
there were relatively small changescompared to some of the other components.
And I think either there needs to be.
A rethinking of the global market shockor more significant changes to, to the
market risk piece of the, of the proposal.
But again, at this point in terms ofthe interagency conversations, this is
all, this is all somewhat preliminaryand still need to, to kind of see
(11:18):
where this, where this plays out.
Rob Nichols (11:19):
Right.
And I know we have fedGovernor, Miki Bowman, who has
her hearing later this week.
And then we need to see aconfirmation there, which we
encourage the US Senate to do.
And Jonathan Gould has had his hearingat the OCC and we encourage the full
Senate to advance that confirmation.
So I know we have somepeople still in place, right?
Obviously a couple more questions.
You have a room acting Chairman Hill fullof senior bank executives, many CEOs,
(11:43):
pretty much everyone in the C-suite.
Over 1400 people here, standing room only.
And culture and vision is somethingthat is really important to all the
women and men here in this room.
So I want to ask you a littlebit about the future of the FDIC.
And what you envision for it.
And, and, and I ask that in thecontext of some of the challenges
(12:04):
that have been had widely reportedby the Wall Street Journal.
Those investigations of, of,of discrimination and employee
complaint got a lot of news inthe financial regulatory press.
Now you're, you're nowbrand new acting chairman.
Some of this you're having to clean up.
Take a few minutes about the culture andthe vision of the FDIC and what you wanna
(12:25):
see it look like in the weeks, months,and years ahead, given, you know, the
reputational stain that you inherited.
Travis Hill (12:33):
Yeah.
So so the FDIC is as, as youindicated, has been through a
lot in the past few years on the,on the cultural transformation.
There's a lot of, a lotof work to do there.
In my mind, I think the biggest, thebiggest issue is accountability for
people who are, who commit wrongdoing.
I think that was the biggestroot cause of, of the problems.
I think the FDIC had a history of theway I look at it as doing the, the
(12:56):
easy thing rather than the right thing.
And so what happened all too oftenwas people would come forward with
complaints and the, the solution wasto pay a settlement to the person
who made the complaint and not imposeany discipline on the person who
was the vic, you know, who was the.
Who's accused of wrongdoing.
And so I think what is, what iscritically important is to set up
(13:16):
a process to adjudicate complaintsin a way that is fair and credible
and trusted by the workforce.
And so that process is underway.
We've set up two new offices.
The our new Office of ProfessionalConduct is now up and running and
is live and hearing and processingcomplaints and, and imposing discipline.
(13:36):
And so I think, I think there's a lotof work to do, but I think that's,
that's really the most fundamentalof the, that's the most fundamental
thing that, that we need to fix.
Rob Nichols (13:45):
Thanks.
Appreciate that.
Again, you have 1400 people whocare passionately about the culture
of their own, their own individualinstitutions, and I, and I know
that's something you care about.
Final question for you.
As our time's expiring, you've servedunder several different FDIC leaders each
have their own different leadership style.
You've served, served underdifferent political climates as well.
(14:05):
You served on Capitol Hill.
How has all of that background shapedyour philosophy of how you intend to.
Lead the FDIC going forward.
Travis Hill (14:14):
Yeah.
So that's a big loaded question.
I
Rob Nichols (14:16):
know, I get it.
Travis Hill (14:17):
Yeah.
So, yeah, as you said, so I've beenat the FDIC for, for a bunch of
years now, under, in different rolesunder different administrations.
Been through a, a number of sortof a number of, I don't know,
I guess I'll call them events.
There was covid in, in 2020,there was what I'll call the, the
board coup at the end of 2021.
There was the, the bank failures in 2023.
(14:38):
The, as you mentioned before,the, the Wall Street Journal
stories in, in the fall of 2023.
And I think all of those were verydifferent experiences, but they
were all sort of 20, 24 7, allhands on deck type type experiences.
And so I think, I think through thoseexperiences, I, I definitely have, have,
you know, kind of seen the full, thefull gamut when it comes to the FDIC.
(14:59):
In my, in my initial roleworking for Chairman McWilliams.
I was her.
I was her policy deputy, and soI was sort of in the trenches on.
On most of the policy work thatwe were doing, and so I, I got to
know very deeply the, you know, thepeople involved, the issues, the, the
interagency process, sort of how to kindof cut through the, the bureaucratic
forest to, to get things done.
I think experiencing covid andkind of being in the thick of
(15:21):
it, that was a, that was a timeperiod where we were pumping out.
Rules and, and policy policydocuments in, in a matter of days.
And so I think that feltlike hourly basis for me.
Yeah.
Yeah.
And so I think that reallydemonstrated the ability to get things
done very quickly if we need to.
On the other hand, I've also seen thebenefits of trying to be thoughtful
and, and deliberative and make surethat you're not making mistakes or,
(15:43):
or, you know, not seeing unintendedconsequences and things like that.
So this is maybe a long answer to yourquestion, but I think overall from
a, from a philosophical standpoint.
I mean, my, my view is we just wantto be smart about things and just try
to bring common sense to the table.
You know, I think all the issues areunique, but ultimately we want a system
that, where the banking sector is safe,sound, and resilient, but also pushing
(16:07):
forward in helping the economy growand serving, serving customers and,
and all the other things that are, thatare important to the, to the economy.
Rob Nichols (16:15):
Well with, with that, we are in heated agreement.
Thank you for your being here today.
Thank you for your leadership at the FDIC.
Ladies and gentlemen, please joinme in thanking acting Chairman Hill.
Evan Sparks (16:26):
If you're interested in hearing more from the ABA summit, go to
aba.com/summit where you'll be able tofind video livestream videos of all of
our general session speakers, and you'llalso be able to find more information by
going to aba.com/news bytes where you can
find our Newsbytes coverage
of, of all of the summit speakers.
Lots to talk about inWashington DC these days.
(16:48):
A lot going on on Capitol Hill.
And so, so stay tuned . Thanks againto Intrafi's Banking With Interests
podcast for sponsoring this episode.
We'll be back with you again very soon.
the idea of having an independent office that is staffed by
people whose sole job is to hear appealsand are people who are experienced
with the examination process, Ithink that that concept has a lot of
appeal and at least for us would be,would be a big improvement over the
way thing, the way we do things now.
Evan Sparks (00:22):
From the American Bankers Association, this is the
A BA Banking Journal podcast.
Welcome back.
I'm Evan Sparks.
Today's episode is presented by Intrafi'sBanking with Interest Podcast and we are
just coming off the conclusion of theA BA summit here in Washington DC where
we heard from a lot of top officials in,federal agencies as well as in Congress,
(00:44):
including treasury Secretary ScottBesant , Financial Services Committee
Chairman, French Hill, House SenateBanking Committee Chairman Tim Scott.
We heard from senator Rubin Gallego ofArizona, who's on the banking committee.
And several other folks, including theperson who you're about to hear from now.
Travis Hill, acting chairman of theFederal Deposit Insurance Corporation.
(01:06):
Acting Chairman Hill was one of thekeynote speakers, and then he sat down
with ABA president and CEO Rob Nicholsfor a conversation on the main stage.
And I'm gonna share that with younow so you can get a sense for some
of the issues that acting ChairmanHill is working on at the FDIC.
Thanks so much for listeningand enjoy the conversation.
Rob Nichols (01:26):
Thank you very much acting Chairman Hill for your comments
and I took some notes backstage andwanted to commend you on a couple
things before we get into somequestions for the next several minutes.
First, that your comments about addressingthe asset thresholds, I think have
been, will be incredibly well receivedby this audience chairman French
Hill and I just at these two chairs amoment ago had that discussion as well.
(01:46):
So thank you for that.
Given, let's get into some of theq and A here, given the, I want
to ask you about the, given what'shappening in the markets, all of the
turbulence following the announcementof last week I wanna ask you about
the health of the US banking sector.
You know, are, are the nation's banks ina good position, in your view as acting
chairman of the FDIC, to withstand thecrosswinds and the headwinds that are
(02:11):
impacting the sector at the moment, giventhe events of the last several days?
Travis Hill (02:16):
Yeah, so we are, we are closely monitoring conditions as
we always do, particularly wheneverthere's volatility in the markets.
Coming into this year, banks had verystrong capital and liquidity positions,
and so generally seemed to be wellpositioned for volatility to be able
to support the economy, et cetera.
That being said, it's our, it's our jobsto be attuned to the downside risks.
(02:39):
So we will continue tomonitor condition conditions.
Continue to to follow to the extentthere's volatility in the impact
on the, on the banking sector.
Rob Nichols (02:47):
Gotcha.
You.
Thank you.
You've been acting chairman for a bit.
You were an incredible senior leader therepreviously, and you identified some of the
priorities and work streams that are topof mind for you now, but broaden that a
little bit for our audience and talk aboutkind of your priorities as acting chair.
What are the things you want towork on and get accomplished?
And then we'll dive intoa couple other issues.
Travis Hill (03:08):
Sure.
Yeah, so we've, we've got a longlist of things that we're, we're
working on and, and wanna work on.
When I first took over asacting chair in January, I, I
put out a list of, of 15 items.
I mentioned a few of them today.
So new bank formation, resolutionreadiness, innovation, digital assets.
Those are, those are all issuesthat are, that are high on the list.
I also briefly mentioned a couple others.
(03:29):
Sup reforming supervisionreforms to the capital framework.
So I think, I think that coversa number of the, the big issues.
Improving the bank merger frameworkis another, another item I've
talked a lot about in the past.
So as I said, we, we've gota, we've got a long list of
things that we're prioritizing.
But at the same time, we also continueto do our, you know, sort of our core
mission of ensuring safety and soundness,resolving failed banks, et cetera.
Rob Nichols (03:52):
That's great.
Well, also, the de novo componentthat you surfaced, I think
is, is really important and.
Bringing new banks into the USmarketplace is something that we think
at the a BA is, is a, is noble purpose.
Certainly.
Let's talk a little bit aboutsupervisory appeals due process.
You've been an advocate for a fair andindependent supervisory appeals process.
Do you foresee any changesof how the appeals process is
(04:14):
gonna be handled going forward?
At the FDIC.
Travis Hill (04:19):
Yeah, so, so the appeals process is something I've,
I have a lot of experience with.
So at the, at the FDIC, the,the, the current and historical
processes, we have a board levelcommittee that hears appeals.
So one board member chairs the committee,and then other board members appoint
deputies to serve on the committee.
So when I, when I first started atthe FDIC, when I was working on the
(04:39):
staff for Chairman McWilliams, shewas the chair of that committee.
And so I sat through a bunch ofappeals and thought there were a lot
of, a lot of possible improvements.
And so I kind of came up with theidea of the Office of Supervisory
Appeals, which we eventuallyreplaced what we call the SARC with.
But before that new office, whichI'll explain in a minute, heard
any appeals, we left and then oursuccessors undid that and went
(05:02):
back to the, to the legacy process.
And then over the last two yearsin my role as Vice chair, I
chair the, the Appeals Committee.
So I think, I think the idea ofhaving an independent office that is
staffed by people whose sole job isto hear appeals and are people who are
experienced with the examination process,I think that that concept has a lot of
(05:23):
appeal and at least for us would be,would be a big improvement over the
way thing, the way we do things now.
And I think the bigimprovements are one, the.
The, in order to really fullyengage on the appeals, I, I think
it's important that you have peoplethat do that on a full-time basis.
Some of the appeals we get, the banks willsubmit hundreds of pages of documents.
(05:45):
And so in order to really give itthe time and attention it deserves,
it needs to be a, it needs to beyour primary, your primary job.
And we've talked about, you know,are there ways to put limitations
on the amount of information?
But the problem is some of these appeals.
The, these are things that go back years.
And especially if you're talkingabout, for example, a composite rating.
(06:05):
It's supposed to encompasseverything that the bank is doing.
And so again, I think having people who,who are doing it on a full-time basis.
And I think also having experience,you know, just because it bank
exams is such a specialized.
Area.
Having people who have experienceon the ground in bank exams, I
think has a lot of, a lot of value.
(06:27):
So in terms of where we go from hereI have a lot of interest in, in trying
to reform the process, I think wewould like to do it in a durable way.
And so trying to, tryingto think that through.
But this is definitely something thatwe're giving a lot of thought to.
Rob Nichols (06:40):
That's great.
Thank you.
Evan Sparks (06:43):
Evan Sparks here.
I'm gonna break in and share a thankyou message for our sponsor, banking
With Interest, a podcast by Intrafithat features in-depth analysis
and insight into the policy changesreshaping the banking industry with
insightful interviews and previewsof pending policy challenges.
And previews of pending policy changes.
The podcast is an essentiallisten for anyone connected to the
financial services interest industry.
(07:05):
Banking With Interest is hostedby Rob Blackwell, an award-winning
former journalist with more thantwo decades of experience as an
expert on financial services policy.
He's now Chief Content Officer andHead of External Affairs with Intrafi.
You can find out more@Intrafi.comand thanks so much to Intrafi
Banking with Interest podcastfor sponsoring this episode.
Now back to Rob Nichols.
Rob Nichols (07:25):
And before I get to my next question, another the, on the list of 15
things that you had prioritized when youwere named acting chair, and you touched
on it a second ago, is the idea of takinga fresh look at how mergers are approved.
I want to commend you for that too,because under the last several years
at a lot of banks, CEOs, many inthis room, we've call up and say,
Hey, we've had a merger applicationpending for an awfully long time, and
(07:45):
we're just not hearing anything back.
And just, it felt like the goalpostmight have moved a little bit and
that there wasn't the degree of.
Transparency around merger review.
And we know that, you know, somemay not get granted and some will,
but just some transparency, opennessabout how those will be reviewed,
I think is, is, is important.
So I'm pleased that you were ableto, or you put that on your list
of things that you would focus on.
(08:06):
So thank you.
Leverage ratio reform.
I know that secretary Besson,others, you have been thinking
about giving that a fresh look.
What's your, what's your take on thatissue and the direction it's going?
Travis Hill (08:17):
Yeah, so that's something that, that we are
actively working on right now.
As you noted, it's a, it's apriority of the Treasury Secretary.
The Fed chair has talkedabout it a number of times.
It's something that the agencies have beentalking about for, for a number of years.
So I think that's something that is,that, that we are actively working
hard on and would expect actionin the relatively near future.
Rob Nichols (08:37):
And where do you wanna see that go?
Travis Hill (08:39):
Yeah.
So I think you know, I think one of thechallenges with the leverage ratio over
time, especially when we're talkingabout the largest institution, is that
it has become increasingly binding.
Whereas the, the initial intent frommost people who worked on it years ago
was that this is intended as a backstop.
And so I think part of the, part ofthe objective is to kind of return
the leverage ratio to a back, to abackstop gen as a general matter.
(09:02):
You know, the leverage ratio,again, especially for the, for
the largest institutions, is.
It creates significant disincentivesto sort of low risk, low margin
businesses like treasury marketintermediation and, and things like that.
And so I think, I think from ourperspective, the focus is trying to
reduce the binding this of the leverageratio and trying to remove impediments
(09:23):
to, to treasury market intermediation.
Gotcha.
Rob Nichols (09:26):
I asked chairman House Financial Services committee
chairman French Hill earlierabout Basel three endgame.
You obviously FDIC one of theagencies intimately involved in
the direction of, of that rule.
You know, given your backgroundand concerns around credit
access what are your thoughts onwhere it's gonna go from here?
(09:47):
Where do you want to see it go?
And I know you guys are deep inconversation about this right now.
Travis Hill (09:53):
Yeah.
So so, so as you said at thispoint, I mean the, we're we're
having conversations about this.
It's, it's stillpreliminary at this point.
I think in terms of the tracks, I thinkthe leverage ratio is, is moving more
quickly as a, as sort of a, you know,a track in terms of capital reform.
As you know, I, I voted against the,the 2023 proposal and was, and was
(10:13):
pretty critical of, of it at the time.
It went well beyond what was inthe, the international agreements.
I think if that had gone to effect,would've had a, a number of, of
negative consequences from higher costto consumers, increasing migration
out of the, out of the banking sector,putting our banks at a competitive
disadvantage internationally.
So I think it was a, a very positivedevelopment that that did not go forward.
(10:35):
The.
The re proposal in September of last year,which was never published, but which got
a lot of attention within the agencies.
I think that was a, a big improvementover the, over the 2023 proposal, but
still had a number of issues that,that would have needed to get resolved.
I think maybe the biggest issue waswith respect to market risk, where
(10:56):
there were relatively small changescompared to some of the other components.
And I think either there needs to be.
A rethinking of the global market shockor more significant changes to, to the
market risk piece of the, of the proposal.
But again, at this point in terms ofthe interagency conversations, this is
all, this is all somewhat preliminaryand still need to, to kind of see
(11:18):
where this, where this plays out.
Rob Nichols (11:19):
Right.
And I know we have fedGovernor, Miki Bowman, who has
her hearing later this week.
And then we need to see aconfirmation there, which we
encourage the US Senate to do.
And Jonathan Gould has had his hearingat the OCC and we encourage the full
Senate to advance that confirmation.
So I know we have somepeople still in place, right?
Obviously a couple more questions.
You have a room acting Chairman Hill fullof senior bank executives, many CEOs,
(11:43):
pretty much everyone in the C-suite.
Over 1400 people here, standing room only.
And culture and vision is somethingthat is really important to all the
women and men here in this room.
So I want to ask you a littlebit about the future of the FDIC.
And what you envision for it.
And, and, and I ask that in thecontext of some of the challenges
(12:04):
that have been had widely reportedby the Wall Street Journal.
Those investigations of, of,of discrimination and employee
complaint got a lot of news inthe financial regulatory press.
Now you're, you're nowbrand new acting chairman.
Some of this you're having to clean up.
Take a few minutes about the culture andthe vision of the FDIC and what you wanna
(12:25):
see it look like in the weeks, months,and years ahead, given, you know, the
reputational stain that you inherited.
Travis Hill (12:33):
Yeah.
So so the FDIC is as, as youindicated, has been through a
lot in the past few years on the,on the cultural transformation.
There's a lot of, a lotof work to do there.
In my mind, I think the biggest, thebiggest issue is accountability for
people who are, who commit wrongdoing.
I think that was the biggestroot cause of, of the problems.
I think the FDIC had a history of theway I look at it as doing the, the
(12:56):
easy thing rather than the right thing.
And so what happened all too oftenwas people would come forward with
complaints and the, the solution wasto pay a settlement to the person
who made the complaint and not imposeany discipline on the person who
was the vic, you know, who was the.
Who's accused of wrongdoing.
And so I think what is, what iscritically important is to set up
(13:16):
a process to adjudicate complaintsin a way that is fair and credible
and trusted by the workforce.
And so that process is underway.
We've set up two new offices.
The our new Office of ProfessionalConduct is now up and running and
is live and hearing and processingcomplaints and, and imposing discipline.
(13:36):
And so I think, I think there's a lotof work to do, but I think that's,
that's really the most fundamentalof the, that's the most fundamental
thing that, that we need to fix.
Rob Nichols (13:45):
Thanks.
Appreciate that.
Again, you have 1400 people whocare passionately about the culture
of their own, their own individualinstitutions, and I, and I know
that's something you care about.
Final question for you.
As our time's expiring, you've servedunder several different FDIC leaders each
have their own different leadership style.
You've served, served underdifferent political climates as well.
(14:05):
You served on Capitol Hill.
How has all of that background shapedyour philosophy of how you intend to.
Lead the FDIC going forward.
Travis Hill (14:14):
Yeah.
So that's a big loaded question.
I
Rob Nichols (14:16):
know, I get it.
Travis Hill (14:17):
Yeah.
So, yeah, as you said, so I've beenat the FDIC for, for a bunch of
years now, under, in different rolesunder different administrations.
Been through a, a number of sortof a number of, I don't know,
I guess I'll call them events.
There was covid in, in 2020,there was what I'll call the, the
board coup at the end of 2021.
There was the, the bank failures in 2023.
(14:38):
The, as you mentioned before,the, the Wall Street Journal
stories in, in the fall of 2023.
And I think all of those were verydifferent experiences, but they
were all sort of 20, 24 7, allhands on deck type type experiences.
And so I think, I think through thoseexperiences, I, I definitely have, have,
you know, kind of seen the full, thefull gamut when it comes to the FDIC.
(14:59):
In my, in my initial roleworking for Chairman McWilliams.
I was her.
I was her policy deputy, and soI was sort of in the trenches on.
On most of the policy work thatwe were doing, and so I, I got to
know very deeply the, you know, thepeople involved, the issues, the, the
interagency process, sort of how to kindof cut through the, the bureaucratic
forest to, to get things done.
I think experiencing covid andkind of being in the thick of
(15:21):
it, that was a, that was a timeperiod where we were pumping out.
Rules and, and policy policydocuments in, in a matter of days.
And so I think that feltlike hourly basis for me.
Yeah.
Yeah.
And so I think that reallydemonstrated the ability to get things
done very quickly if we need to.
On the other hand, I've also seen thebenefits of trying to be thoughtful
and, and deliberative and make surethat you're not making mistakes or,
(15:43):
or, you know, not seeing unintendedconsequences and things like that.
So this is maybe a long answer to yourquestion, but I think overall from
a, from a philosophical standpoint.
I mean, my, my view is we just wantto be smart about things and just try
to bring common sense to the table.
You know, I think all the issues areunique, but ultimately we want a system
that, where the banking sector is safe,sound, and resilient, but also pushing
(16:07):
forward in helping the economy growand serving, serving customers and,
and all the other things that are, thatare important to the, to the economy.
Rob Nichols (16:15):
Well with, with that, we are in heated agreement.
Thank you for your being here today.
Thank you for your leadership at the FDIC.
Ladies and gentlemen, please joinme in thanking acting Chairman Hill.
Evan Sparks (16:26):
If you're interested in hearing more from the ABA summit, go to
aba.com/summit where you'll be able tofind video livestream videos of all of
our general session speakers, and you'llalso be able to find more information by
going to aba.com/news bytes where you can
find our Newsbytes coverage
of, of all of the summit speakers.
Lots to talk about inWashington DC these days.
(16:48):
A lot going on on Capitol Hill.
And so, so stay tuned . Thanks againto Intrafi's Banking With Interests
podcast for sponsoring this episode.
We'll be back with you again very soon.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Las Culturistas with Matt Rogers and Bowen Yang
Ding dong! Join your culture consultants, Matt Rogers and Bowen Yang, on an unforgettable journey into the beating heart of CULTURE. Alongside sizzling special guests, they GET INTO the hottest pop-culture moments of the day and the formative cultural experiences that turned them into Culturistas. Produced by the Big Money Players Network and iHeartRadio.