More ‘reg relief’ earns praise from banker, concern from consumer advocate

Proposed “regulatory relief” legislation in the House won ringing endorsements from a banker, while a consumer advocate took a less complimentary view of the proposals, during testimony Tuesday before a House subcommittee.

The hearing in the House financial institutions subcommittee focused on five bills proposed in the House that would (among other things):

  • generally exempt financial institutions with less than $50 billion in assets from Consumer Financial Protection Bureau (CFPB) rules (H.R. 1264);
  • delay inclusion (and set requirements for bill collectors) in veterans’ credit reports of inappropriate or delayed billing payments from the Veterans Affairs Department (H.R. 2683);
  • provide temporary enforcement relief from new data collection and reporting requirements under the Home Mortgage Disclosure Act (HMDA) (H.R. 4648);
  • allow for reduced call reporting in the first and third quarters for banks with assets of less than $5 billion (H.R. 4725), and;
  • amend the Truth in Lending Act to clarify the exclusion for seller-financers from the definition of mortgage originator (not yet numbered).

According to Robert M. Fisher, president and CEO of Tioga State Bank of Spencer, N.Y., (a self-described “community bank”), institutions like his are “encouraged” by the legislation under consideration. (Fisher also gave a nod to Senate legislation, S.2155, which would likewise reduce some regulatory requirements for banks.)

“The common theme of these bills is suffocating regulation whether it’s in the form of prescriptive rules that unnecessarily escalate the cost of credit, or highly granular and costly reporting requirements which provide vastly more data than regulators need for bank supervision,” he told the subcommittee in his written statement. He added that the bills would build on its previous efforts by the subcommittee addressing critical threats to community banking.

But Scott B. Astrada of the Durham, N.C.-based Center for Responsible Lending (CRL) told the panel that financial institution regulations – many of which were amended and added to by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) – “are tailored to the variety of actors in the financial marketplace, with numerous measures intended to decrease compliance costs for smaller financial institutions.” He added that that a “targeted and dynamic approach” should be continued and expanded.

“In addition, there are proposed reforms that have broad support and that would benefit all banks, without harming consumers,” he said. “Unfortunately, the proposals today are too broad to meet that standard.”

He added that “the legislative proposals before the committee today are each a piece of a larger attempt to dismantle essential consumer protections and deregulate the financial industry.”

Legislative Proposals for a More Efficient Federal Financial Regulatory Regime: Part III”