February 10, 2020
The United States has never had a bank regulator like Jelena McWilliams. She is the Chairman of the Federal Deposit Insurance Corporation, and I’m delighted to say that she is my guest on today’s show.
In a moment you will hear Jelena tell her story, and I promise, you will see what I mean. Last year the Wall Street Journal ran a profile on her called, America’s Most interesting Bureaucrat. She was born in the former Yugoslavia, grew up in a Communist society, got herself to the US, bootstrapped herself into law school, worked in private practice, and at a bank, and at the Federal Reserve and then at the US Senate in the midst of the financial crisis. Her eclectic background has enabled her to look at today’s financial system from many angles.
As you will see, she is also a disruptive thinker with a unique style of leadership that, frankly, makes people want to follow.
The Chairman is putting all this to very good use. The exciting thing for our listeners is that she has made it her top priority to “transform” how banks are supervised. She wants to have that shift fully rooted in agency culture and processes before her term as Chairman ends, which will be in about three-and-a-half years.
It’s an ambitious agenda. How do you take the helm of a government agency that is nearly 90 years old, that was born in crisis and exists to avert risk, and, today, build on its deep wisdom and proud traditions to move it, rapidly, to the front edge of the Digital Age?
Chairman McWilliams has a game plan for this. It includes launching a new innovation lab. It includes recruiting tech people onto her team. And it includes thinking differently.
For our tech listeners, don’t miss her entertaining pitch, near the end of our conversation, about why she needs your talents -- and more importantly on why you are going to want to go work for the FDIC. It echoes one she made last year at our AIR tech sprint on financial crime, which she keynoted and where she served as a judge in our hackathon. A new era has started, driven partly by the fact that the regulatory realm, long regarded by the tech world as slow and not very interesting, is suddenly filled with fascinating, difficult, world-impacting problems, from inclusive finance to fighting human trafficking. And it’s ripe, now, for great new technology.
For listeners outside the US, the FDIC is one of our major bank regulatory agencies. Its main mission is to safeguard the insurance fund that guarantees the safety of funds that people deposit in banks. The US has a “dual banking system,” which means that some banks are chartered by the federal government (see our recent episode with the Comptroller of the Currency, which issues those federal charters) while other banks are chartered by the 50 state governments. All of them must carry FDIC insurance, so the FDIC has a key role in overseeing the whole system. Day-to-day, it is the primary federal supervisor of most of our small banks – of which there are several thousand.
The FDIC also has a lead role in the growing dialogue about whether and how new kinds of companies, including fintechs, should be able to get bank charters, because it can approve or disapprove a special type of state charter called an Industrial Loan Corporation, or ILC. In addition, most of the US “partner banks” that work with nonbank fintechs are supervised by the FDIC, which has put it at the forefront of much of the federal thinking about fintech innovation.
Before we turn to the conversation, let me share an update. As regular listeners know, I have launched a new nonprofit called AIR -- the Alliance for Innovative Regulation. Most of the work we have been doing over the years at Barefoot Innovation Group is flowing over to AIR where we’ll continue it, bigger and better. The Barefoot Innovation podcast will continue, and we’ll sometimes add my AIR Cofounder David Ehrich as a host. Like Chairman McWilliams, our team at AIR knows that transforming financial regulation for the Digital Age will take years – even decades – but also that it’s urgent to start now. Please come to AIR at www.RegulationInnovation.org, to see what we’re doing – including our soon-to-be published request for comments on A Regtech Manifesto.
I have been fortunate to have had numerous occasions to talk with Chairman McWilliams, and this one was the most thought-provoking, and the most fun. I know you are going to thoroughly enjoy my conversation with FDIC Chairman, Jelena McWilliams.
More on Jelena McWilliams
Jelena McWilliams is the 21st Chairman of the Federal Deposit Insurance Corporation. Previously, she was Executive Vice President, Chief Legal Officer and Corporate Secretary at Fifth Third Bank in Cincinnati. Prior to joining Fifth Third Bank, McWilliams worked in the U.S. Senate for six years, including as Chief Counsel and Deputy Staff Director with the Committee on Banking, Housing and Urban Affairs and as Assistant Chief Counsel with the Small Business and Entrepreneurship Committee. From 2007 to 2010, McWilliams was an attorney with the Federal Reserve Board. Before entering public service, she practiced corporate and securities law at Morrison & Foerster LLP in Palo Alto, California, and Hogan & Hartson LLP in Washington, D.C. McWilliams graduated with highest honors from the University of California at Berkeley, earning a bachelor’s degree in political science and law degree from U.C. Berkeley School of Law.
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We have wonderful episodes in the queue.
If you haven’t already done so, check out my recent thought-provoking conversation with Comptroller of the Currency, Joseph Otting. Up soon we have a fascinating discussion with Greg Becker, CEO of Silicon Valley Bank and a show with Jeff Dyer about his book, Innovation Capital. We have conversations with David Reiling, CEO of Sunrise Banks and Ellison Anne Williams of Enveil. And, soon I’ll be speaking with Sarah Willis of the Metlife Foundation and Allie Burns, CEO of the nonprofit Village Capital, as well as Albert Forkner, State Banking Commissioner of Wyoming.
If you would like to book me to speak to your group, contact firstname.lastname@example.org.
Meanwhile, I’ll hope to see you at these events:
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