As part of Washington’s continued focus on reducing regulatory burden for Main Street, the House Financial Institutions and Consumer Credit Subcommittee convened on Wednesday to discuss a series of recently proposed bills aimed at achieving this goal.
Some of these bills have received bipartisan support, such as H.R. 2121, the SAFE Transitional Licensing Act, introduced by Rep. Steve Stivers (R-Ohio), which would ensure that those originating mortgages at depository institutions would be able to move to non-depositories with minimal work disruption; and H.R. 2473, the Preserving Capital Access and Mortgage Liquidity Act of 2015, introduced by Rep. Lacy Clay (D-Missouri), Ranking Member of the Subcommittee, and Rep. Randy Neugebauer (R-Texas), Chairman of the Subcommittee. H.R. 2473 would ensure that small credit unions are able to more easily access the secondary mortgage market to make sure their members receive competitive prices and robust credit availability.
“Throughout this Congress, we have seen examples and heard testimony about how regulatory impediments prohibit job creation, cause consolidation of community financial institutions, and decrease choices for consumers,” Neugebauer said. “Some of the proposals we have already considered have received bipartisan support.”
Among the takeaways from Wednesday’s hearing, the Dodd-Frank Act has created a climate of uncertainty about government policies that has resulted in fewer choices for consumers, less innovation for the economy, and reduced financial independence for Americans. While intended to reform Wall Street, the regulatory burden imposed by Dodd-Frank has disproportionately harmed community banks, credit unions, and small businesses on Main Street.
“Throughout this Congress, we have seen examples and heard testimony about how regulatory impediments prohibit job creation, cause consolidation of community financial institutions, and decrease choices for consumers.”
“Significant disruptions to our banking system almost always trigger legislation designed to address the problems that led to those events as they are perceived at the time,” said Oliver Ireland, Partner, Morrison & Foerster, a witness at the hearing. “Later on, with the benefit of hindsight, it often becomes apparent that our bank regulatory system has become unnecessarily complex and constraining, whether due to the remedial legislation or to the normal evolution of banking services and markets.”
The Subcommittee also found that community banks, credit unions, and small businesses have had more difficulty servicing their customers due to increased regulation and higher compliance costs, and that consumers and taxpayers have often been forced to pay higher interest rates and fees because the credit unions and smaller banks have had difficulty absorbing the increased cost of compliance.
“Consumers, businesses, and bankers have much to gain if Congress can eliminate the waste created by over-regulation of smaller financial institutions,” said Paul H. Kupiec, Resident Scholar, American Enterprise Institute, a witness at the hearing. “Regulators must be required to move toward simpler, ‘tailored’ supervision and regulation that is better aligned with the magnitude of the risk typically posed by a modestly-sized depository institution.”