Hearing focuses on regulatory reform; mark-up to be held soon
Washington, DC â?? While chairing a Senate Banking Committee hearing today on regulatory reform, Idaho Senator Mike Crapo used costs forced on small banks and credit unions in his home state through regulation as an example of relief needed. Todayâ??s hearing brought together a comprehensive list of proposals for regulatory reform. Among the witnesses today was the Idaho Department of Finance Director Gavin Gee. Crapo has been working for nearly two years on a regulatory reform effort that would appropriately balance the costs and benefits of public laws and regulations in the banking industry.During his opening statement, Crapo said, â??All of us want to protect consumers and ensure the systemâ??s safety and soundness; however, excessive regulation increases the costs of producing financial products, stifles productivity and innovation, and misallocates resources. Responding to the steady stream of new regulations while complying with existing ones has become a challenge for all financial institutions. Rule changes, particularly for smaller institutions with limited staff, can be costly, and these costs can be passed on to consumers. It is also important for us to understand that the resources that are expended working to meet government compliance and paperwork requirements are time and effort unavailable to serve customers and communities. Crapo observed that the high cost of regulations is often passed on to the consumer and pointed out the cost of regulation to Idaho banks and credit unions. â??In Idaho, one of the specific issues that results in high costs for community banks and credit unions with little benefit to consumers is the mailing of annual privacy notices when the institution does not share information with third parties. One community banker in Idaho told me his bank spends an estimated $15,000 per year mailing approximately 50,000 privacy notices. In 2004, his bank received one customer call in response to his bankâ??s privacy notice mailing and received no customer responses in 2005. Another banker in Idaho said that customers do not read the annual privacy notices; most end up in the garbage.â??Idaho Director of Finance Gavin Gee said, â??Congress has an urgent responsibility to review the impact that the growing number of federal statutes have had on our nationâ??s community banks and the economy. We hope the Congress will enact a sound and sensible regulatory relief bill this year.â?? Following the hearing, Crapo indicated that he plans to complete work on the effort shortly and wants a mark-up on the measure before the end of the month. The House Financial Services Committee passed a regulatory relief package in December of 2005.For interested media, a PDF copy of the proposals (matrix) (4MB) is available at http://crapo.senate.gov/issues/regulatory_relief/reg_relief_proposals.pdf.# # #FOR INTERESTED MEDIA: A radio actuality is available by calling 1-800-545-1267. Press 327 at any time during or after the greeting and instructions. You can also access the actuality through the Internet at http://src.senate.gov/radio/.