Walker names new top financial regulator
Risch is believed to be youngest ever in position
Like many industries, banking is changing quickly, thanks to technology.
Consumers use mobile apps to access their accounts. Deposits are made over the internet instead of in person. Customers talk via ATM video screens with bankers who are miles away instead of face to face in a branch, hastening a reduction in brick-and-mortar branches.
But as technology makes banking faster and more convenient, some rocksolid banking standards remain. Underwriting for loans is as crucial as ever. Net interest margin — generally the difference between the interest rate a financial institution pays for deposits and what it charges borrowers for loans — is important to earnings. Banks must stay wellcapitalized. Bank security and vigilance is a must.
In this dynamic banking industry environment, Jay Risch last week became the new secretary of the Wisconsin Department of Financial Institutions.
At 39, Risch, appointed by Gov. Scott Walker, is believed to be the youngest person to be named the state’s top financial regulator. He succeeds Lon Roberts, who Walker appointed to the Public Service Commission.
Risch, a University of Wisconsin-Madison political science major who had been DFI’s deputy secretary since mid-2015, also previously worked as government relations director for the Wisconsin Bankers Association. In addition, he worked for state Sen. Alberta Darling and former state Sen. Cathy Stepp.
As he begins his new job, Risch, an Oconomowoc native, views the financial services landscape in Wisconsin — banks, credit unions, investment firms — and the overall business climate as good and improving.
“Banks and credit unions are lending. The ratios you want to see going up are going up. The ratios you want to see going down, like past-due loans, they’re going down. People are starting new LLCs and corporations with our office at a very healthy clip,” Risch said.
The Journal Sentinel recently interviewed Risch about his new position. Here is an edited version of that conversation.
Q. Banks and credit unions frequently complain about being over-regulated, especially when it comes to requiring that smaller institutions follow the same rules as large ones, and the uneven expenses that creates. Is that complaint valid, and can DFI address it in any way?
A. “There is validity to that complaint. The over-regulation is coming out of Washington, not Madison. We definitely feel it’s one of DFI’s responsibilities to represent the interests of our stakeholders — banks and credit unions — at the national level. The good news is that I think there is a real tangible optimism that the new administration out in Washington is going to do something to deliver on the promise of a lower regulatory burden. The Dodd-Frank Wall Street Reform and Consumer Protection Act was billed as “we’re going to get tough on Wall Street.” Well, it actually made things tougher on Wisconsin’s Main Street financial institutions and their customers.”
Q. If consumers in Wisconsin have a legitimate dispute with a bank or credit union and feel like they’re in a David vs. Goliath situation, is there anything DFI can do for them?
A. “Absolutely. The good news is that DFI gets very few complaints about the banks and credit unions, and when we do get them, very often it’s a misunderstanding about fees or the terms of a contract, or say, an overdraft fee. There certainly has been and continues to be a place for DFI to help with consumer protection. If it’s something the consumer doesn’t understand, we try to educate. If it’s something that a regulated entity did that they shouldn’t have done, we work to correct it.”
Q. Wisconsin has seen a lot of mergers among banks and credit unions over the past few years. Do you expect that trend to continue, and is that good or bad?
A. “It appears that’s going to continue into the foreseeable future to some degree. I sort of differentiate between what I call natural reasons for consolidation. And that would be economies of scale, or sometimes there’s a lack of clear succession planning at a bank or credit union, or
you’ve got shareholders who are just looking to cash out. That’s just natural market forces. What I would view as an unnatural reason for consolidation, that gets back to that over-regulation from Washington. That’s where I really hope we can get some reform and kind of rightsize the regulations so that we don’t have unnatural consolidation. The compliance burden is major.”
Q. It seems there’s never a shortage of investment scams out there. What can DFI do to warn consumers about them?
A. “We’re part of the solution here, and we’re
trying to track it from a variety of different angles. We’re pretty active on social media, trying to get the word out when we uncover a scam. We are getting more involved in getting out and talking to seniors groups, trying to educate them on some of the scams that are out there. And that dovetails in with our Office of Financial Literacy, just trying to get the word out because financially literate consumers, that is the best consumer protection you can have.”
Q. DFI’s Office of Financial Literacy just launched a unit concerning the problem of student debt, didn’t it?
A. “Again, it comes down to education and trying to get the word out. Here again is one we’re trying to tackle it from a few different angles.
I would be remiss if I didn’t plug our new website, lookforwardwi.gov. That is our website for our college affordability specialist. We’ve got a lot of real good information on there trying to give folks that already have incurred debt ideas on how to manage it, (and) trying to give folks — whether they are parents or students about to plan for higher education — giving them information about decisions they can make to save now and minimize the amount of debt.”
Q. What are your thoughts about being the state’s youngest ever Department of Financial Institutions secretary?
A. “My hair is thinning and turning gray at the temples, so I think I’m old enough.”