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Being a financial examiner means you juggle a lot of different pieces. It's a balancing act between regulations, deadlines, and not to mention your personal life.
This podcast is here to help you manage it all. Custom-designed for the professionals who are on the frontlines, we’re here to help you navigate supervision .
But we know you're more than just your job. You’re managing tight deadlines, traveling, and balancing the demands of your work with the rest of your life.
Each episode is designed to keep you informed, empowered, and supported—not just as an examiner, but as a whole person. We’ll dive into the business and the personal to help you manage stress, find balance on the road, and keep growing in your career.
This is the place you can connect with other examiners who understand your challenges, get the support you need, and thrive in both your role and your life. Stay in the loop, stay supported, and let’s navigate this together.
Bo Fears (00:00):
I think effective supervision begins and end with consumer in the non-bank space, begins and ends with consumer protection as the North Star.
Brandon Milhorn (00:08):
One of the things that I think about in the context of a market that is moving fast, that is evolving fast is how you foster innovation in the system. And unless we think differently about how we supervise institutions, we become a break on innovation. We become the anchor on innovation as supervisors. So we need to be able to examine at the speed of business.
Kareeme Tucker (00:31):
You're listening to In The Loop where we empower financial examiners with the insights, support and community to thrive in every part of their role. I'm Kareeme.
Derek Storms (00:43):
And I'm Derek.
Kareeme Tucker (00:44):
Hey, Derek. How are you?
Derek Storms (00:46):
Good, good. How are you doing, Kareeme?
Kareeme Tucker (00:48):
I am doing well. I'm so excited. This is our first episode of
Derek Storms (00:52):
Envelope. In the loop, I tell you, I honestly, I did not sleep well last night. I was up every other hour. I was like, you have your little book by the bed and you're writing down ideas. And I just kept writing down ideas and my wife was finally like, "Go to sleep." So I was excited. I'm excited. Excited me to go. Yeah. Yep. I'm excited. Got any big plans for the weekend? It's a big holiday weekend. Any plans?
Kareeme Tucker (01:13):
It is a big holiday weekend. I am hoping to relax, but I am actually going to go see my dad this weekend. He lives in South Carolina. So I'm excited and I'm looking forward to that. But I'm also hoping that while I'm gone, I don't get visited by the neighborhood Fox that keeps coming to my home. It was just in my driveway last night stretched out. Hold on.
Derek Storms (01:32):
Is it a good thing or a bad thing? I
Kareeme Tucker (01:34):
Know my
Derek Storms (01:34):
Daughter would
Kareeme Tucker (01:35):
Be like, that's awesome. I don't want it. So I'm hoping that it just goes away. It leaves me alone. It's been coming by for the last few weeks every other day, so I'm hoping it goes away while I'm going. I hear you.
Derek Storms (01:47):
I hear you.
Kareeme Tucker (01:48):
How about you? What friends do you have?
Derek Storms (01:50):
I live at the lake, like of the Ozarks. So it's Memorial Day weekend. We got to go to the lake. I've got some friends that got to both- A hundred percent. We'll go out there, go get something good to eat and hang out. Hopefully it warms up though. Today is 65, all that kind of stuff. I think Saturday and Sunday is going to be like mid 80s. It'll be an awesome weekend. Anytime on the boat is awesome, right?
Kareeme Tucker (02:10):
Oh, 100%. Oh, I envy that. I love, love, love the water. So whether it's a lake, an ocean, a river, at this point, I'll take a puddle. Absolutely. Absolutely.
Derek Storms (02:20):
Now listen, I'm excited about this show. Are
Kareeme Tucker (02:25):
You- Absolutely. I am 100% excited. We have two great guests. I can't wait to introduce them. In fact, why don't we go ahead? We're going to introduce you. Let's do it. We have Bo Fears, the commissioner of Georgia. Bo Fears serves as the commission of Georgia Department of Banking and Finance, where he oversees state supervision of banks, mortgage lenders, and other non-bank financial institutions. Commissioner Fears also leads the trust initiative, which is exploring strategies for strengthening state licensing and supervision. With nearly three decades of legal and regulatory experience, Commissioner Fears brings deep insight into the future of state supervision. Now, I know I said both fears, but little Birdie told me that his name is actually Oscar. Maybe we can ask him how did he go from Oscar to Bo. And then our other fantastic guest is none other than Brandon Milhorn. Brandon is the president and CEO of the Conference of State Bank Supervisors, where he leads nationwide efforts to strengthen the state banking system and modernize financial supervision.
(03:36):
He previously served as a lawyer at the Central Intelligence Agency. Huh, the CIA. Got some questions about that. That's pretty interesting. It was also in senior roles in the US Senate focusing on intelligence, homeland security and governmental affairs. In 2018, Brandon joined the FDIC where he served under Chairman McWilliams. As the chief of staff and under vice chairman, Hill as a deputy for policy. So without further ado, audience, let's welcome our guests, Bo Fears and Brandon Milhorn.
Derek Storms (04:12):
Hey guys, thanks for joining the podcast.
Kareeme Tucker (04:14):
Yes. How are
Derek Storms (04:15):
You guys doing? All right. We shared our weekend plans. You guys got to at least give us something, a little nugget here, right? Come on. What do you guys got going on?
Bo Fears (04:23):
So yeah, I'm actually headed to Kiawah Island in South Carolina, so I'll be in the same near you, Kareeme.
Kareeme Tucker (04:29):
That's where I'm at. Yes. Yes. Come on, South Carolina. Okay.
Brandon Milhorn (04:33):
And I'm going to Georgia.
Kareeme Tucker (04:34):
Oh. You really?
Brandon Milhorn (04:36):
Yeah. I'm going to be in Savannah this weekend.
Kareeme Tucker (04:38):
Nice. I kind of feel
Derek Storms (04:39):
Left out guys.
Kareeme Tucker (04:40):
I know. We're Midwest. We're all in south.
Brandon Milhorn (04:43):
Well, I'm living on a lake.
Kareeme Tucker (04:45):
Yeah, you got to go where the water is. Hey, I'm not upset about that.
Derek Storms (04:50):
Awesome. Well, we've been talking about doing this podcast. We've been talking about the future of state supervision, all of that kind of stuff. And honestly, we just kind of want to jump headfirst into this topic and kind of what's going on here. So let's just jump in both feet and just kind of just get this thing started. And so I'm going to ask you guys, just decide between you guys who kind of wants to go first, but in a nutshell, what is the future of state supervision? So is it in jeopardy given the threats of some of the stuff that we're seeing right now, federal preemption, the OCC charter, Genius Act type stuff, what are we doing to address those kinds of threats and what is the future of state supervision right now?
Bo Fears (05:33):
It's interesting, Derek, how you frame that is kind of where are the threats to the state system? And I think there's undoubtedly there are threats to the state system, but I kind of tried to look at it as a lens or what are the opportunities for the state system. What can we do to ensure that the state system is still robust decades from now that we continue to do what we're doing? So Kareeme alluded to the trust initiative and I now, which is a working group that consists of about 10 commissioners and we've met about six times. And so I'm going to have to look at this because I always forget what the acronym stands for that shows you how creative we are. It is transforming regulation through united supervision for tomorrow. And I think that sort of captures it. I think also to me, trust was really important for two reasons.
(06:26):
One, if we are going to be successful in network supervision and moving forward, we have to be able to trust each other. The states have to be able to trust each other and rely on each other. I think also, Derek, you alluded to this. One of the significant threats that we are facing today is the OCC trust company and their expansive interpretation. So how are we going to address that? And so that's not all the initiative, the trust initiatives addressing. The reason that we have commissioners on board is the idea that they can make decisions about the future of their agency. And so trying to look forward looking. And so we are looking primarily at challenges at the federal level, but we're also looking at challenges at the state level. They did MACA op-out, fair access laws. And the goal of the trust initiative is to have these conversations and we will ultimately make recommendations to the CSBS board.
(07:25):
The board will vote on it and decide which path that we take. Now you mentioned two threats and so I need to talk about both of them a little bit. One is the OCC trust company expansive interpretation of OCC trust company powers, where essentially the OCC has said that a trust company can engage primarily in non-fiduciary activities. So how I like to view it is they can act as a bank, do everything a bank can except they cannot take insured deposits at least as of today. To me, I think if you look at legislative history, case law, the statute, and until the OCC decided to recently change the rules, the rules, this is an impermissible reading of the statute. It is incredibly expansive. And so to me, this sounds like massive bureaucratic overreach. So one of the things we're doing at the Trust Initiative is saying, "All right, is there a way to level the playing field for the state trust company charter?" What we have at a high level, what we've come up with is this idea of passporting, that if you have a state trust company charter, you want to go into a host state that you don't have to initially follow the limitations and restrictions that are in that law subject to a minimum floor.
(08:45):
And so there's a number of items such as complying with host state consumer protection laws, capital requirements, et cetera. So that's kind of the direction that we're headed in to address that issue. I'm
Derek Storms (08:57):
Going to cut you off because Brandon left you with- I told you it
Bo Fears (08:59):
Was going to take the entire podcast.
Derek Storms (09:01):
Yeah. You only have about 30 seconds left for this bit, but no, go ahead, Brandon. I want to hear from you. Same thing, state supervision, what does that look like and how are we addressing some of the things that Bo has really just brought up here in some of these situations that are going on in the industry right now.
Brandon Milhorn (09:17):
When I wake up in the morning and come into work at CSBS, one of the things that excites me about the job is the impact that our supervisors have on their local communities. The choice of a charter, whether you choose to be a state charter, whether you choose to be a national bank, whether you're licensed as a money transmitter or mortgage originator, our state supervisors have a tremendous impact on the economic wellbeing of their states and that local control, that local decision making, really the local accountability of supervisors of our state supervisors to their financial institutions really is a hallmark of the US dual banking system. And one of the things that concerns me about where we're headed now is this false premise I think that you have to have one size fits all standards, one size fits all supervision to allow for innovation and to provide for certainty.
(10:20):
If you want to talk about innovation, then you all look at the history of the state system, ATMs, check cashing, peer to peer payments, the stablecoin networks that were developed over the last decade were all due to state supervision.
Kareeme Tucker (10:36):
Absolutely.
Brandon Milhorn (10:37):
And so when you ask me about the future of where we're headed, I say we need to have a vital state system
(10:47):
Just to push back on this one size fits all perception that that's what's necessary to encourage innovation in the system. It's just a false premise. Absolutely. And as a consequence, I think we can build up state supervision. We can continue to increase the effectiveness and efficiency of our system, make sure that our examiners are well trained, understand the institutions they're supervising. That's what CSBS lives for, to provide the technology training and policy support that our state supervisors need to create that future state system that sustains local control and local accountability for financial- You're doing it. I'm very excited about this. I'm going to keep talking. I'm going to talk about you. I'm going
Bo Fears (11:37):
To say I want to grab one of Brandon's thread here, but you're not even going to let me do that.
Kareeme Tucker (11:41):
No, but
Derek Storms (11:41):
That's a great point. You make a point here about innovation of the state system here and what are some of the big forces that are reshaping how we supervise these technologies. We've kind of talked about the federal preemption right now, market consolidation, consumer expectations. What else is there with the technologies? And Brandon, I know that you're excited about the technology bows. How does that affect the state level on the regulatory side? Kind of talk about some of these big forces that are reshaping our supervision right now.
Bo Fears (12:10):
One thing when I was thinking about this podcast, laying awake at night, taking notes, was to me consumer expectation drives a ton of this. And so I was like, if I had to pick one, I think that's really what drives it. Because if you think about unbundling of banking, taking these financial services out of banks, it was driven by two things. One's sort of federal regulations that's incenting the movement of providing financial services such as mortgages, making residential mortgages out of the banking system. But number two is the demand by the consumer, faster and easier, right? Earned wage access, Peer to peer, buy now pay later. It's moving there. And so how do you have to do that? You have to have the technology to do it. And then on top of that, when you start having faster and thinking about the payment system, you take out friction, guess what?
(13:02):
That means you have faster fraud and then you have to have more expensive fraud technology. So you've got that all of a sudden the expenses are going up, that pushes mergers and consolidation because you got to get synergies. And then on top of that to go grab a little bit on Brandon's comment, then you have to push from these non-banks that are now that, "Hey, I want one set of rules because from a technology perspective, it's easier to have one set of rules as opposed to 50." You think here it's direct. Now where I would question that or where I would challenge that premise is the fact, well, today you may have one set of rules, but when there's a change in administration, you're going to have another set of rules. And oh, by the way, sometimes those rules aren't in rules. Sometimes they're not even in guidance.
(13:53):
Sometimes it's by enforcement, sometimes it's by press release. That is a really tricky proposition.
Derek Storms (13:59):
Absolutely. You guys are talking about things are changing, technology is moving so fast, all of that stuff. How would you define in this new environment that we're approaching quickly, where we've probably been in it for many years, how would you define effective supervision of non-banks in today's environment? Has that definition changed over time? Do you think it's going to continue to change? What is that definition of effective supervision?
Bo Fears (14:24):
I think effective supervision begins and end with consumer in the non-bank space, begins and ends with consumer protection as the North Star. And so I think how it's evolved just from a Georgia perspective in late '90s, early 2000s, Georgia was number one for mortgage fraud, so we focused on mortgage fraud. That was what our exams were. Post great recession, Dodd-Frank, mortgage frauds died. So then it's just strictly compliance. And now we're moving to a risk-focused exam and some of the things we're looking at is bigger picture. We're looking at IT because if there's a breach, consumer data is loss, PII is out there looking at financial condition. If a mortgage servicer fails, you're impacted. If a money transmitter fails, there's an impact. So that's kind of how we're evolving in that regard and what we look at and how we conduct an exam, but consumer protection's always the north star for us.
Derek Storms (15:18):
Absolutely. Brandon, what effective supervision? What do you got?
Brandon Milhorn (15:22):
One of the things that I think about in the context of a market that is moving fast, that is evolving fast is how you foster innovation in the system. How do you help institutions encourage innovation while still maintaining, as Bo said, those safety and soundness and consumer protection controls that are so critical to the trust that consumers need to have in the system. And then as I said, I had a national security background as Karim noted at the beginning of the conversation. And when I came to the FDIC and they told me what the exam model was, we get these quarterly call reports and then in 12 to 18 months we go in the institution and we do an exam and then we tell them what they need to fix. And then we look at the quarterly call reports, then 12 to 18 months we go back in.
(16:15):
And I said, "You know what? That sounds a lot like how we used to do cybersecurity." For those of you that were around in the 2000s, early 2000s, we used to get that annual cybersecurity report. But by the time you wrote that report, the systems had evolved, the threat had evolved, your network had evolved. You're writing a book report about the past, not about the future. And unless we think differently about how we supervise institutions, we become a break on innovation. We become the anchor on innovation as supervisors. So we need to be able to examine at the speed of business. We need to be able to supervise at the speed of business, otherwise the risk grow so significantly in the time that we're not there that you can't mitigate them, that consumers are harmed. So to me, as the industry evolves, as the industry seeks to innovate, the first question we have to answer is how we encourage that innovation while protecting safety and soundness and consumer protection.
(17:16):
And then the next question becomes how do we use technology to effectively supervise our institutions so we don't become the anchor on innovation in the system.
Derek Storms (17:27):
You guys are really speaking to kind of I think a great transition into our next section and that is the evolution of the examiner role and what that looks like. Kareem, I know you've got a couple of things, thoughts on this for these guys. I'll let you ask a couple of those questions.
Kareeme Tucker (17:44):
I do, because I've heard a lot about evolution and exams and things of that nature. And obviously with exams, we need examiners to do the examinations. And so with that being said, Bo, I'll start with you. How do you see the role of the state examiner evolving over the next five to 10 years? I know we talked a lot about innovation and technology, but from your perspective as a commissioner, how do you see the role evolving over the next five to 10 years?
Bo Fears (18:11):
Yeah, that's really interesting. I think part of it where we're making a move already in Georgia and we're probably far behind some other states, but we're moving to a risk-focused exam. We're going to spend more time on those entities that pose the greatest risk to Georgia consumers. And before it was very compliance focused, is there a violation of law? Yes. How many violations? And then here's their fine, here's your administrative action. So that is what we're doing. And I think that there are a number of states, we're kind of late to the department, but I think there's another states that still aren't doing that and that's really basic and fundamental. I think Brandon alluded to this, I think that there's so much that you can do in the technology space as well, that really what we can empower our examiners to really focus on more meaningful review as opposed to just check the box and kind of where we go with AI and all those other, to me that is really exciting.
(19:13):
And I know Brandon, there's a ton of stuff that CSBS is doing that is also really exciting.
Derek Storms (19:19):
Perfect transition, Bo. I mean, exactly, Brandon, what is CSBS's role in helping the examiners as they evolve over the next five, 10 years? What do you think?
Brandon Milhorn (19:29):
So my first bank exam I went to was in 2019 down in Arkansas. I went to this exam and I walked into the room and there was a computer and a printer and a computer and a scanner. What are we doing here? And we were printing out information from the bank's computers and scanning it into the FDIC's computers, literally two computers sitting side
Kareeme Tucker (19:54):
By
Brandon Milhorn (19:54):
Side in a room and that was how we were doing a data transfer. At the FDIC, we spent 400,000 hours a year doing loan review
(20:05):
To look at a sample of loans. Now it's a risk-based sample. It's designed to be risk scope and focus on the most risky loans, but it's still just a sample. And again, I go back to moving at the speed of technology. Chairman McWilliams used to say the call report is like going to the doctor and then four months later getting the results of the exam. And I just think technology can change the way examiners can do their business. We're always going to need smart, focused, inquisitive, curious examiners in the system. We're working on training at CSBS to improve that, but I want them to be examiners. I want them to focus on the analytics of the problem, to focus on the risk that are facing an institution. I don't want them to be data clerks. And so if we can develop tools and technology that help them get more regular access to data, get more granular data, think about risk in that context, it completely changes the way we do exams.
(21:12):
It moves us from the quarterly annual model to a much more, I call it continuous engagement model. Not because I need real time access to institutions information. I don't think we need that, but if we're working with them regularly over time, we can identify risks sooner. They can mitigate those risks more effectively and ultimately everyone is more effective and more protected in that environment. So I'm very excited about what technology in the hands of a well-trained, smart, inquisitive examiner can do and whether it's the technology side of it with the catalyst initiative at CSBS, what we're working on in SES, the tools that we're trying to build in SES, all the training work we're doing, not just on the bank side, but on the non-bank side at CSBS to increase the level of expertise within the state examination system just makes me very excited to think about the tools we can put in the hands of our examiners over the next several years because of technology.
Kareeme Tucker (22:21):
That's a great point right there. And as one of the instructors for CSBS, I concur with that wholeheartedly. I love what CSBS is doing along with AARMR and other sister associations that are doing to ensure that examiners' skillsets are improving or increasing each year. And so with that being said, what skills do you think specifically that state examiners need today that weren't emphasized before? So I heard a lot about Bo, you're saying that the exams would be more risk scoped versus less of a compliance review, but more risk associated. So today, what skills do you all believe that state examiners need that weren't as emphasized in the past?
Bo Fears (23:03):
I think one thing is, at least from Georgia's perspective, when we're doing compliance reviews, those kind of eliminated a great deal of discretion. So now I think we want to bring in the discretion, what are meaningful violations. So we want to look at that. I also, and Brandon alluded to this, I think a great example is how technology has changed. And if you look at the digital asset space, let's take money transmission, for example. In the last decade, our money transmitter examiners have had to be digital asset experts, right? Everyone's talking about the OTC in GENIUS. No, I mean, we are where it's at. We're the experts. And so there's a lot of complexity there. I mean, it's unbelievable. You talk about smart contracts, staking, the interrelationship. And I think that that's really a microcosm. And when you look at digital assets of all this changing in technology.
(23:52):
And so we have to have our examiners have to be really flexible and take the core principles that they have been taught, examination principles and apply that to a vastly changing environment. And that is challenging, right? That's challenging. I think the other thing that our examiners have to be able to do is I say the shutting out the noise because our licensees are engaged in multiple activities and it's really cutting edge and half the time they're an American banker about something, but really we need to focus on the core service that's being provided, right? That financial service that we regulate, is it being conducted in a compliant and safe and sound manner? And that's also really hard because there's a lot of noise out there.
Kareeme Tucker (24:41):
Well, with that being said, do you think realistically that there's a future where examinations will become shorter and more targeted or even continuous rather than episodic?
Bo Fears (24:49):
I think there is a future. I think what we're doing in our risk focus exams is those exams that pose, in our view, pose the least risk to consumers, they already are shorter. Before we were doing the exact same thing for every licensee. So let's say every exam took a week to 10 days. Now with those that pose less risk, one examiner one day. Those that we think pose greater risk, they're going to take two to three weeks and it's going to take four to five examiners. So most of our exams are going to be shorter, some of them are going to be longer. Continuous exams, I do think that is a possibility. And why I think that's a possibility is I look at what we do on the banking side. We have continuous exams for our large banks. So I think if I go and look at our really large, systemically important non-banks, I think that we can see that as well in the bank space, you have targeted exams, targeted reviews, four to six, and then you'll have a roll-up to me.
(25:52):
Now what I will say is that it's going to be very challenging for an individual state to do that, a continuous exam. And that's when network supervision working with our state is so important and makes that possible. I think that is a direction that we have to go with.
Derek Storms (26:09):
I was going to bring that up. So you were talking about individual states, one examiner one day, four examiners, where is that opportunity on a multi-state level? How do we start integrating the network supervision idea and philosophy on a nationwide scale and that's the states maybe Georgia has one examiner one day, one examiner, and then we get 50 states accepted or like think of the risk-based exams we could do with all those additional resources and man-hours. Brandon, where does CSBS fall in on the network supervision or that national goal of helping states be able to leverage each other's resources and time in this area?
Brandon Milhorn (27:00):
It starts off on the policy side of the House, not technology. It especially starts off, I think, on the policy side. So we have money transmission model law that about 30 states have adopted now. We have Prudential standards for mortgage servicers that about 20 states have adopted now. But if we can take those standards and incorporate them into multi-state workflows in the state examination system, which is the supervisory component of NMLS, if we can move those standards and make them more consistent, if we can provide workflows and requests for information that are consistent across multiple states that every state sort of asks without being duplicative, we can really focus exams more effectively. And if Georgia does a great exam of an entity that's also doing work in North Carolina and North Carolina can leverage that exam to focus their efforts instead of doing a full exam or just accept it because it meets all the standards that the states have already agreed to, that is an incredibly powerful tool and it sort of allows commissioners like Bo to do exactly what they want to do.
(28:15):
So instead of focusing attention on the less risky institutions that have met the requirements that have been examined by other states, they can start really focusing resources on those entities that are most complex present the most potential for consumer harm. And if we can do that in a multi-state fashion, not so it's just one state making that decision, but by the states working jointly together, that is a tremendous opportunity for the state system. And more importantly, the companies that are licensed and working multi-state want that. They don't want to go through 20, 30 individual exams. One company, one exam means something to them.
Derek Storms (29:00):
It does. And Bo, I saw you, Brandon's talking about the consistent supervision and on the multi-level and you're shaking your head, yeah, yeah. From a state's perspective, from your vantage point, what does consistent supervision really mean in the multi-state system?
Bo Fears (29:16):
So what it's not is states having the exact same laws and applying it the same way. And I think that- And that's
Kareeme Tucker (29:23):
Important to state that so that there's no confusion about that.
Bo Fears (29:26):
And I think sometimes the industry thinks that. And so to me, that is what it's not. So I think consistent supervision primarily entails the individual state, here are the guardrails and they let the industry know what the guardrails are. They're clear with their laws, their rules, their guidance, and they let the industry play in that space. That is a very important distinction from our federal counterparts who when the pendulum swings, when there's a change in administration, the rules change. And sometimes they're going to be ... Yeah, sometimes statute rule sometimes, but sometimes you don't know. It's just moving on a case by case basis. So that is something that's very important. Even when states differ as long as they are clear, as long as they're clear and you know the rules of the road, that's great. One very important caveat to that is sometimes states will have laws or rules that it's impossible for an entity to comply with both.
(30:27):
In that case, it is incumbent upon the states and the state system to figure out a way to make it possible to comply. Otherwise, what we are doing is, well, a business can't operate if it's impossible on a nationwide basis and that is not a workable solution and I appreciate everyone's a sovereign, but the other thing is that's exhibit A when these entities want to go to Congress and claim federal preemption.
Kareeme Tucker (30:54):
Correct. And we want them to want to do business in our state, but we want them to be able to do business in our respective states as well. So that's important. So with that being said, what sort of progress have you seen in coordination among state regulators? And according to you all, in your opinion, and I'll send this one to Brandon, where is this the room for improvement?
Brandon Milhorn (31:15):
First of all, I've been here for three years at CSBS. There are many commissioners and members of the staff here at CSBS that have been here longer. I just say in the three years that I've been here, I feel like we've made tremendous progress from a consistency standpoint. And I agree with you, Bo. I hate standardization. We do not do standardization. We do consistency. That means directionally we're aligned while allowing states to be sovereign, choose their own path to the extent that they can and to the extent that they want to. That's incredibly important from my perspective. So have we made progress? Absolutely. Using tools like SES, increasing the number of leveraged and accepted exams, the work we're doing in one company, one exam on the mortgage side, the work we're doing that we worked with AARMR so hard to develop, we're doing fantastic work with MTRA and the Money Transmitter Regulator Association.
(32:15):
We're building risk-based scheduling tools. We're working with them to get their workflows into SES so they're comfortable using those multi-state tools and we're getting more and more states that want to use those tools, not just because it's effective from a supervisory standpoint, but also because it takes burden off their IT budgets. If CSBS can provide technology to the states that makes it easier for us to work together, that takes pressure off their budgets back home. And to me, that's an important role part of what we do here at CSBS.
Kareeme Tucker (32:47):
And that's a win for everybody, both states and industry.
Derek Storms (32:50):
We've talked about a lot today. Let's look forward. Let's look kind of at the future here. If you guys, you're sitting down in your man cave, it's long week, it's a weekend, you're just hanging out and you're kind of thinking about like, what could we do to design the ideal state supervision model? One or two things, what would it absolutely have to include?
Bo Fears (33:14):
So I think we've talked about a lot of these, Derek. And I think we've got the framework and it's a matter of executing, right? I mean, one company, one example accepting and leveraging, I think that it is a massive win, but we have to get uniform standards. States have to be willing to maybe do more on their initial exam so it's possible that 49 other states can either accept or leverage and narrow it. It's a win for everybody.
Derek Storms (33:40):
You say it's a massive win, but who's it a massive win for? States, industry, consumers? Talk about that a little bit.
Bo Fears (33:49):
Yes, yes and yes. It's not
Derek Storms (33:51):
Just for the regulators so they can free up some resources, but the industry's getting a massive win from it also with the one company one exam model. I mean, kind of address your thoughts, Brandon or Bo on that kind of stuff. What is a massive win on this stuff?
Bo Fears (34:07):
Yeah. So one company, one exam. Let's talk about that real quick. I think that's a great example. Take the largest companies. Quite candidly, it would be a challenge for us, Georgia, to do an incredibly meaningful review of the one large company. We're coming in and that's probably true for most states. But all of a sudden, if we can come in, combine our resources, we are going to be able to conduct a significant meaningful review of that entity at a meaningful examination. So A, you got your consumer protection because all of a sudden a more meaningful review has been conducted. From a resource perspective, instead of 20 different states going in, instead of I having to go in Mike, Georgia going in, North Carolina having to go in, Missouri having to go in, we can consolidate, take one or two examiners, knock that out. And for the company, even though it is going to be significantly more in- depth review, it's one versus 20 and you're protected for a year and accepting and leveraging the same thing.
(35:09):
Although I may have to put in when it's my exam, Georgia exam, I may have to put in more time. If the other states can rely on that or leverage so they only have to look at one or two state specific items, again, massive time save and for the company as well, because then that's one exam, another exam you don't have to set aside time for. It's a win-win-win, in my view.
Derek Storms (35:33):
Brandon, ideal state supervision model, one or two things that you absolutely have to include in this.
Brandon Milhorn (35:39):
I think about the importance of consistent standards. I think about the putting strong technology in the hands of our examiners to support multi-state reviews. I think about changing the tone around what a final exam looks like because if you've got more regular and granular access to data, if you create an environment of trust, not agreement, we should be disagreeing sometimes with our financial ... We're not always going to agree with our financial institutions on risk and other issues, but if technology, if common standards combined with technology can create a mechanism for trust between entities and we can engage and talk about risks in the system over time, it changes the way that final exam looks. It changes the risk scoping of that exam because you're getting continuous mitigation of risk. So I don't even ever say continuous exam. I say continuous engagement.
Kareeme Tucker (36:49):
I agree.
Brandon Milhorn (36:50):
Because I want that trust to develop between the regulated institutions and their supervisors so they have a conversation about risk over time. And then when we get to that final exam, it's just completely different. If I'm thinking about this on the weekend, I've got other more serious problems, but I do because I care about how effective we are because our supervision affects business models. Our supervision affects the cost of doing business at financial institutions. Our supervision affects the ability of consumers to access responsible products and services. And if we can get more efficient and more effective and that makes compliance a less costly endeavor for our regulated institutions, that means more credit can flow into the system. We can reach more underserved communities. I mean, to me, that is obviously real pie in the sky, high level, but that's what I like to think about whether we're talking about Prudential standards or talking about SES or talking about our training, that's how I like to think about, that's sort of my north star.
(38:01):
I always used to say at the FDIC, "Are we as good as we're ever going to be? "
Kareeme Tucker (38:06):
I like that. "Are we
Brandon Milhorn (38:07):
As good as we're forgetting?" And if the answer is no, then you've got to define where you want to go. And so Derek, when I think about where I want to go, that's exactly what I want to think about is that efficient, effective system that's dropping the cost of a compliance, that's making us more effective and it's putting more credit, more responsible credit in the hands of consumers.
Kareeme Tucker (38:25):
I like that. Dropping costs while still being more effective. I like that. So different viewpoints, that's not a bad thing. Just gives opportunity to come to common ground on some other areas. I love all of that. So great things. And like you said, CSBS is doing a lot of great things in terms of training and different other initiatives as it relates to that. So great stuff.
Derek Storms (38:47):
Any last parting words you're like, "Hey, I just got to say this. Anything you don't think you covered. If you've covered it all, that's fine, but we can't let you go yet. We have a couple fun things for you guys, but I want to give you an opportunity to say one last couple of things if you really have something to say.
Kareeme Tucker (39:03):
I do have a question and I'm curious about if they could give an answer to it though, Derek, before we go into the fun questions. So what advice would you give to a licensee who's struggling with different expectations during examinations? I know we talked a litle bit about looking forward and you may have touched a litle bit on it, but I'm just curious to hear what your thoughts are. What advice would you give them?
Bo Fears (39:23):
I would probably say two things and one dovetails exactly with what Brandon is talking about or the progress. Be patient with us Because if you look at what we have done, if someone steps back the state system in five and 10 years, how we have reached alignment, it's amazing. It really is. It really is. Now, are we done? No, we're not done, but we have come a long way. Be patient, we're going to get there. The second thing I would say is this. There are situations when it's, I think I mentioned this before, where it's impossible to comply with two laws, two different state laws, or it's incredibly expensive. I think those are really legitimate concerns to raise. Don't water down your legitimate concerns by raising really minor issues. And I think unfortunately we do see that a lot. And so if you keep what's really important top of mind, we're focused on that and we can address that as opposed to considering other issues.
Kareeme Tucker (40:26):
I agree with that because we're here to partner with you, collaborate with our industry folks because at the end of the day, like I said earlier, we want to do business with you. We want you to want to do business in our respective states. So have that patience because we are, we've come a long way, even from the time that I began. So I love that. And Brandon, I'd love to hear your perspective on any advice that you would give to a licensee who's struggling with different state expectations.
Brandon Milhorn (40:54):
The beauty of the state system is commissioners are available. You're not talking about a nameless, faceless bureaucrat sitting behind a desk inside 495 in Washington DC. These are commissioners that care about their states.
Kareeme Tucker (41:09):
Yes.
Brandon Milhorn (41:09):
Reach out, talk to your state commissioner about what your concerns are, what you're seeing, what you're trying to balance. And this happens on both sides of the aisle is if we view this as a contentious relationship, if we have to resolve every issue by resorting to lawyers, and I say that as a recovering lawyer, then we're not doing a great job, not just on the state agency side, but on the regulated institution side, we have to be able to work through issues together. We have to trust each other enough to talk to each other about solutions. And to me, that's the power of the state system. It's not just everything we're doing to be more efficient, be more effective. It's the accessibility and accountability of our state commissioners and their willingness to talk to their regulated institutions about the issues that they're wrestling with. To me, that's a powerful tool in the quiver of the state system and it's just because our members of CSBS are accessible to their regulated institutions.
Kareeme Tucker (42:11):
That's great. And I will tell you what we teach, especially new examiners, it's one of the things that we cover is that this should not be a contentious relationship. You welcome to it so that helps to ease any sort of pain points or anxiousness that industry may feel about us coming in. And so if you pick up the phone and have a conversation, it solves a lot of problems. So let's keep that communication flowing both sides. And the same with industry, pick up the phone, give us a call, let's have a chat. So we've had a lot of fun getting to know you all and talking to you about some serious concerns as it relates to state supervision, but I'm going to turn it over to Derek. Let's have some fun. Fun, some fun. Let's do it. Let's go on. Let's do it.
Derek Storms (42:58):
We got a couple quick questions that we want to ask all of our guests. We got to get to know you guys a little
Kareeme Tucker (43:03):
More. We call them fishbowl questions.
Derek Storms (43:06):
I have to show you something though. As a girl dad, my daughter got a 3D printer for her birthday and she's like, "Hey, you can use this as
Kareeme Tucker (43:15):
Your fisher
Derek Storms (43:16):
Questions." So I don't have any in here right now because she just gave it to me, but it's like, you know what? Maybe this becomes our fishbowl question.
Kareeme Tucker (43:23):
Way to go, and I love it. They get you
Derek Storms (43:26):
Every time.
Kareeme Tucker (43:27):
I love it.
Derek Storms (43:28):
Whatever they say they get. So that'll probably show up on some later podcasts. If you had to describe yourself in three words, what would they be?
Bo Fears (43:37):
Let's see. I can tell you the genesis of that name. I would say that I am thorough, uncertain and can be intense. All
Derek Storms (43:49):
Right. I got to follow up with at least intense.
Kareeme Tucker (43:52):
Yeah.
Derek Storms (43:52):
Explain a little bit more. Why intense?
Bo Fears (43:55):
Why intense? When I am doing something, if I'm walked in, I'm incredibly focused and I don't have a lot of distractions and I can be a challenge to work with at times.
Kareeme Tucker (44:06):
See, I was wondering why uncertain. That's a different description. I've not heard anyone describe themselves as uncertain. So can you care to share, elaborate a little further with why you describe yourself as uncertain?
Bo Fears (44:18):
Good Lord. This is going to be like a psychology session. No,
Kareeme Tucker (44:21):
No, no. We don't have to. Well, okay,
Bo Fears (44:23):
What's the hourly rate on this? I think part of it is I'm in a new role and trying to figure out how that ... I was the general counsel forever. And
Kareeme Tucker (44:34):
Congratulations to you as well. It's eight months in your new role as commissioner of Georgia. So congratulations. That's amazing. Thank
Bo Fears (44:41):
You. I appreciate
Kareeme Tucker (44:43):
It. You're
Bo Fears (44:43):
Welcome. And real quick, Oscar and Bo. Oscar, my middle name is Baldwin. Take the initials, OB, flip them. You got Bo. There
Kareeme Tucker (44:51):
You go. Oh, okay. Okay. I like it. I like it a lot. It's
Brandon Milhorn (44:55):
Like a differential equation. And how do you come up with nicknames in Georgia?
Derek Storms (45:02):
Well, we can't let Brandon go without kind of quizzing him a little bit too. How about this? How do you manage stress, Brandon?
Brandon Milhorn (45:08):
I don't really feel stress. I tell you, school, law school in particular was always more stressful than any day I've ever experienced on a job because there's tomorrow. On a job, there's tomorrow. Whatever happened today, there's tomorrow and you can adjust. People are fallible. We make mistakes. And the question is how you recover from those mistakes. If you aim small, miss small, right Derek, you hear me say this at CSBS all the time. If you plan ahead and you think about what you want to achieve, even if you miss, if the miss is small, you've got time to adjust and rebuild. So to me, I've never felt like a day at work was ever ... So I've got no calluses on my hands. I'm not digging ditches. There aren't missiles crossing in the night. Those are stressful jobs. I don't necessarily feel stress. I do feel urgency.
(46:04):
I think everyone, if you ask anyone at CSBS impatient would be right at the top of my list of one of my words, curious. I agree with Bo. Uncertain. I always tell people, I am always 100% certain that I'm about to make the wrong decision. And I live in fear of ... I would rather ... What do they say in Moneyball? I hate to lose more than I like to win. I hate to lose. I hate to be wrong. And so I am always feel like I'm on the cusp of the next mistake. And if you are curious and uncertain-
Kareeme Tucker (46:49):
You're
Brandon Milhorn (46:49):
Going to go far. That's a volatile mix of perspectives, but it gives you a drive to be better, which I sort of enjoy.
Kareeme Tucker (46:59):
I'm going to have to get a list of Brandonisms is what I'm going to call it, because that's some good motivation right there. Don't be stressed. There's always tomorrow. I like that. I like that. Yeah. I'm going to have to get a list of Brandonisms for sure.
Derek Storms (47:14):
There's plenty of those.
Kareeme Tucker (47:15):
Oh,
Derek Storms (47:16):
Okay. Okay. I'll write them down for you, Kareem, and send them over
Kareeme Tucker (47:19):
To you. There you go. There you go. The moment comes, I'm like, what would Brandon say to this?
Derek Storms (47:24):
Derek, why are you following me around with a notepad? Gentlemen, we've used a lot of your time. Last one, we're going to do this on every podcast. We're making a list of pizza places across the country, across the world, anywhere, favorite pizza place, name, city, state. I'm writing it down.
Bo Fears (47:41):
I'll stay real local. Fellini's, which is old fourth ward in Atlanta. It's pretty strong.
Kareeme Tucker (47:47):
Did you say Weenis?
Bo Fears (47:48):
Fellini's.
Derek Storms (47:49):
Oh, Fellini's.
Brandon Milhorn (47:51):
Fellini's.
Bo Fears (47:51):
Yes.
Brandon Milhorn (47:52):
In Ithaca, New York where I went to law school, there was this bar and restaurant called The Nines. It was an old fire department that they converted into a bar and restaurant and they had the best deep dish pizza. They're closed now, unfortunately, but man, oh man, that was some good pizza.
Derek Storms (48:13):
Awesome.
Kareeme Tucker (48:13):
What about you, Derek? Look, just not just a guest. What about you going on in Missouri?
Derek Storms (48:19):
West Main pizza in Jefferson City, Missouri. So if you're in Jefferson City, West Main Pizza, it's awesome.
Kareeme Tucker (48:25):
So for me, it would be Sergio's here in Raleigh, North Carolina. So I am in Raleigh. I live in Raleigh currently, but I'm a native New Yorker. So we are particular about our pizza and the Sergio, they happen to have come from Brooklyn, New York, where I am from. So we are very judgy, judgmental about our pizza because we believe New Yorkers believe we are the pizza capital, but they're really good here in Raleigh, North Carolina. But we'll be sure to check out. Well, you said Brandon, yours is closed, but we'll be sure to check out Fellini. What is it? Fellini's?
Bo Fears (48:59):
Fellini's.
Kareeme Tucker (49:00):
Fellini's in Georgia. All right.
Derek Storms (49:03):
Allright, gentlemen, thank you very much. Thank you. I
Kareeme Tucker (49:05):
Appreciate it. Thank you for joining us on an episode of
Brandon Milhorn (49:09):
Eagle Global. You've got a slogan or a logo that's fantastic.
Kareeme Tucker (49:12):
I know. I'll tell you quickly about this. I shared with a friend that we would be doing this podcast and recording and she's like, "Oh, what's your background look like? " And I'm like, "I've got curtain and stuff and we met for lunch and she made this for me overnight." That's awesome. I like how cool. How cool. That is awesome. Yeah, I'm excited.
Brandon Milhorn (49:32):
In the loop.
Kareeme Tucker (49:33):
Yeah. Yeah.
Bo Fears (49:34):
You put a train around, right? When you hit the home runs of the game. Right, exactly. The best is to wear
Kareeme Tucker (49:41):
It. No, no, no.That's well out of my league, but I'll find a nice place to hang it or put it here on my bookcase. It'll definitely be displayed. A chain new. I'm a Pearls lady. Pearls every day.
(49:55):
But thank you both. We appreciate you so much for joining us on this episode of In The Loop. It has been great getting to know you better. Brandon, wonderful to see you again and getting to know you better as well. We hear you love fast cars, but we won't get into that. We're sports cars. And Bo, I know how much you love baseball and so both of you actually, but we won't get into that. But just know Bo, a little birdie told me something about how you love to step into puddles in New York City, big gaping holes where trees are. You like to get your feet wet. We won't go into that, but a little birdie shared that with me. Yeah, but it's been so great getting to know you. And Brandon, we're happy that we had the opportunity to pull you from a fireside chat, normal standing point that we know you enjoy and get you behind the desk and chatting with us here on our podcast.
Brandon Milhorn (50:51):
That's always great to do a podcast with Bo.
Kareeme Tucker (50:54):
Awesome. Absolutely. Thank you.
Derek Storms (50:59):
Thanks for listening to In the Loop, brought to you by CSBS.
Kareeme Tucker (51:03):
If you want to connect with other examiners and learn more tips for the role and job, don't forget to follow us so you never miss an episode.
Derek Storms (51:11):
We'd love it if you'd spread the word by sharing our podcast with another examiner.
Kareeme Tucker (51:15):
See you next time.
Derek Storms (51:21):
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