WASHINGTON (3/19/15)--The top legislators on the U.S. House Financial Services Committee said they both would welcome regulatory relief legislation for community financial institutions during a hearing Wednesday.
Rep. Jeb Hensarling (R-Texas), the committee chair, and Maxine Waters (D-Calif.) both said in their opening statements that they would welcome bipartisan regulatory relief legislation.
|Rep. Jeb Hensarling (R-Texas) (left) greets CUNA witness Patrick Miller and Sam Whitfield, CUNA deputy chief advocacy officer, at the House Visitors Center before the House Financial Services Committee hearing on regulatory relief. Miller is president/CEO of CBC FCU, Oxnard, Calif. (CUNA Photo)|
"The rule is going to be that any member who brings a legitimate bipartisan piece of legislation to provide needed regulatory relief to community financial institutions--we will mark it up," Hensarling said.
Waters added that inclusion of too-big-to-fail banks in any sort of regulatory relief intended for community financial institutions would not be acceptable.
Patrick Miller, president/CEO of CBC FCU, Oxnard, Calif., testified on behalf of CUNA. His testimony featured a number of regulatory relief proposals, which included reforms to the Federal Credit Union Act, changes to the Consumer Financial Protection Bureau structure, examination fairness legislation and legislation to protect financial institutions in the event of merchant data breaches. (See related story: Senate bill steps toward improving federal exam process.)
"There is no such thing as 'the cost of doing business' because that's passed on directly to our members," Miller said. "We pass on roughly 25 basis points on every loan in higher interest rates because of compliance costs. We pay our members roughly 25 basis points less on deposits because of compliance costs."
During Wednesday's hearing, all four witnesses said they have increased their compliance staff in recent years due to regulations in the Dodd-Frank Act.
A number of House Financial Services Committee members gave specific examples from consumers who are unable to procure financial services at the community financial institution of their choice due to onerous regulations.
Rep. Bill Huizenga (R-Mich.) said he had heard from a Michigan credit union serving a small, rural area that makes 60% of its mortgage loans to members with credit scores less than 600 at the same interest rates as qualified mortgages. He said that credit union is considering dropping those credit opportunities due to the regulatory burden and asked the witnesses if their institutions were considering anything similar.
"We'll do about half what we were doing before, frankly, because we are fearful of the regulatory scrutiny," Miller said. "We may even lose a relationship because of a business decision, not made in Oxnard, Calif., but it was made for us in Washington.
"The member gets mad at us because we've said no, even though we said yes the last three times for the past 20 years. That's very frustrating, and they have to go somewhere else, and it's going to cost them more, if they can get it at all."