From IN Senator Dan Coats about how federal regulations are putting heavy compliance burdens on local banks & credit unions: Help Hoosier Community Banks, Credit Unions Hoosier community banks and credit unions play a key role in many Indiana counties. Local financial institutions develop personal relationships with customers and are intimately tied to the regions they serve. Today these Indiana businesses are unfairly paying the price for past mistakes made on Wall Street. Credit unions and community banks did not cause the 2008 financial crisis, but they are being treated as if they did by federal bureaucrats. Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, and the law has imposed a one-size-fits-all regulatory blanket on small financial institutions across the country. These banks and credit unions cannot afford a team of lawyers or a backroom of accountants to comply with Washington’s complex rules. I have heard directly from local leaders in many Hoosier communities about how this law is threatening the survival of community banks and credit unions. The latest industry data confirms what I have been told. Since 2008, the banking industry has undergone a period of heavy consolidation, reducing the number of American commercial banks by nearly 20 percent. Nationwide, community banks spent more than $250 million to comply with new regulations coming from Washington during the first quarter of 2013. The number of hours and the amount of money these small banks dedicated to compliance more than doubled between 2012 and 2013. Consumer-centered credit unions are also bearing the cost of overregulation, with 94 percent seeing an increase in compliance costs during the past two years. To address this growing problem, I recently introduced the Community Financial Protection Act, legislation that would provide Hoosier community banks and credit unions with some of the regulatory relief they need. Supported by the Indiana Bankers Association, Indiana Credit Union League and Credit Union National Association, my legislation will allow these institutions to focus on what they want to do and do best – helping families and local employers. The bill would modify the way in which the Consumer Financial Protection Bureau (CFPB) requests information from all financial institutions with less than $10 billion in assets. Under my proposal, the CFPB must use publicly available information or seek the requested information directly from existing banking regulators. If the CFPB requests information that is not currently publicly available, my legislation stipulates that the CFPB must provide justification as to why it needs the information. The CFPB was created by the Dodd-Frank law to promote fairness and transparency for consumer financial products and services. While well-intended, the CFPB should not unnecessarily add to the paperwork burdens already facing small banks and credit unions, especially if the information the agency wants is already being reported to other regulators. Local financial institutions are part of the backbone of many Hoosier communities. From mortgage loans to providing access to the capital needed to expand a small business, Hoosiers depend on these community banks and credit unions. Rather than adding more paperwork requirements, my proposal recognizes the difference between Main Street and Wall Street and would allow Indiana community banks and credit unions to spend more time serving Hoosiers.
Posted on: Sat, 26 Apr 2014 17:30:35 +0000
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