Camden Fine, president and CEO of the Independent Community Bankers of America (ICBA), is urging a bipartisan group of nearly three-quarters of the U.S. Senate not to give up in their quest for more regulatory relief for community banks and smaller lenders.
In a letter [1]addressed to Sen. Joe Donnelly (D-Indiana) and Sen. Ben Sasse (R-Nebraska), the two Senators who along with 68 other Senators in July petitioned CFPB Director Richard Cordray [2] to exempt community lenders and credit unions from complete CFPB oversight, Fine said, “Your letter was signed by an impressive bipartisan coalition of 70 Senators, which is testimony to the powerful consensus behind tailored, or tiered, regulation. ICBA urges the Senate to seize on this rare consensus by enacting legislation before the close of the 114th Congress that would promote tiered regulation of community banks.”
Credit unions and smaller lenders have long sought relief from the CFPB’s regulations, which the credit unions maintain are aimed at “bad actors” that caused the financial crisis. Critics of the Dodd-Frank Act, out of which the CFPB was created, have long maintained that its “one size fits all” approach to regulation that was intended for Wall Street has had an adverse effect on Main Street.
Cordray responded to the Senators’ letter in mid-August [3], listing several ways in which the CFPB already does tailor regulations to fit credit unions and community lenders. Cordray noted in his response that smaller lenders are exempted from certain higher thresholds and more generous timelines for compliance, which Fine said in his letter that the ICBA appreciates. However, he also said that Cordray’s response letter “doesn’t tell the full story.”
“What’s missing from Director Cordray’s letter is any recognition of the cumulative and collective impact on community banks of the more than 5,000 pages of regulations, amendments, clarifications of rules, and interpretative rules issued by the CFPB, in addition to rules issued by other federal agencies before and after the Dodd-Frank Act,” Fine said. “Implementing a single new rule can take weeks or months, depending on the complexity of the change and the bank processes impacted.”
Fine noted that every regulatory change requires software updates, testing, training, and legal and audit expenses, all of which amount to the bank or credit union using significant staff resources that divert staff away from other duties that include serving customers. He stated he believes the CFPB should go further in exercising its authority to create broad exemptions for community banks and further urged the Senate to pass legislation providing relief for community banks with regard to a number of areas, including the “qualified mortgage” status of loans held in portfolio, small business loan data collection, Home Mortgage Disclosure Act (HMDA) reporting, small mortgage servicers, and Basel III compliance.
Click here [1]to read Fine’s complete letter.