March 08, 2018

Crapo: Regulatory Burden Directly Impacts Our States

Cites burdens on Idaho’s institutions and S. 2155 fixes

WASHINGTON – This week, Senator Crapo has been highlighting the benefits of his Economic Growth, Regulatory Relief and Consumer Protection Act, S. 2155. After joining with colleagues from the Senate Banking Committee to discuss the legislation, Senator Crapo returned to the Senate Floor to talk about the regulatory burden on small institutions and how his regulatory relief bill can help. 

In July 20, 2016, the American Action Forum attempted to estimate the number of paperwork hours and final costs associated with Dodd-Frank rules. In total, the Forum estimated that, “Dodd-Frank had imposed more than $36 billion in final rule costs and 73 million paperwork hours as of July 2016. To put those figures in perspective, the costs are nearly $112 per person or $310 per household. Additionally, it would take 36,950 employees working full-time to complete a single year of the law’s paperwork, based on agency calculations.” 

“I regularly hear from small banks and credit unions in Idaho about how the one-size-fits-all regulatory approach is impacting their business and product offerings, hindering their ability to serve their communities. . . When these small financial institutions are not able to offer certain products within the communities they serve, it is a direct hit to the citizens of Idaho and all of our states.” 

030818_Banking Floor Speech

Senator Crapo speaks on S. 2155’s merits. Click here or above to watch. 

Senator Crapo’s bill is focused on providing meaningful relief to community banks and credit unions, helping them to prudently lend to consumers, homebuyers, and small businesses. It makes targeted changes to ensure existing laws and regulations are proportionate and appropriate for small financial institutions, and midsize and regional banks. 

It has 26 cosponsors – 13 Republicans, 12 Democrats, and an Independent – highlighting the strong bipartisan support of this targeted and carefully crafted legislation. To learn more about the bill, click here.

Full Remarks 

Mr. President, I have been very encouraged by my colleagues and their support for the Economic Growth, Regulatory Relief and Consumer Protection Act over the last few days. 

We have heard many stories about how the regulatory burden on our financial institutions has had a direct impact on Main Street. 

Yesterday, Senator Moran talked about ranchers who couldn’t get a loan because they lacked collateral after an emergency. 

Senators Heitkamp and Perdue explained the benefits of relationship banking and the advantage of lending based on a personal knowledge of the customer. 

Senator Corker talked about Dodd-Frank’s unintended consequences for small financial institutions. 

Senator Tester discussed bank consolidation and the real impact it’s had on communities in Montana. 

Senator Donnelly went through the various, important consumer protection items included in the bill. 

Senator Kennedy also talked about some of the important consumer protection provisions, and about the lack of access to credit for small businesses in Louisiana. 

And Senator Warner spent a good amount of time defending this robust, bipartisan bill against its critics and some of the false information being shared about the bill. 

Many of my colleagues who are not on the Banking Committee recognize the need for regulatory relief. 

Senators McConnell, Cornyn, Portman, Lankford and others have been very supportive of our efforts to enact pro-growth, pro-jobs legislation. 

We also heard from the bill’s critics yesterday, but the resounding message from Congress was that our constituents have asked for regulatory relief and we stand ready to deliver it. 

We and our neighbors have noticed that many of our community financial institutions have closed their doors over the last decade. 

In fact, we have seen almost no new community financial institutions chartered or new branches being opened over the last few years. 

These financial institutions – of all sizes and forms – provide critical services in our communities. 

They help businesses manage operations, help entrepreneurs get funding to start their businesses, help families buy a home, help all of us save for our kids’ educations, and help us deal with financial emergencies. 

Community financial institutions are the pillars of towns and communities across America, particularly in rural states like Idaho. 

They have certain advantages compared with their larger counterparts, operating with an understanding and history of their customers and therefore a willingness to be flexible.  

Unfortunately, increased regulatory burden and one-size-fits-all regulations have limited their ability to help customers. 

These institutions’ operating landscape has changed dramatically over the last few years, and community banks and credit unions across the country have struggled to keep up with the ever-increasing regulatory compliance and examiner demands coming out of Washington. 

I regularly hear from small banks and credit unions in Idaho about how the one-size-fits-all regulatory approach is impacting their business and product offerings, hindering their ability to serve their communities. 

For example, Koreen Dursteler from the Bank of Commerce in Idaho Falls, a small bank with just over $1 billion in assets, has written about the avalanche of regulation over the past last 8-10 years. 

Due to excessive regulations and the cost of hiring additional compliance staff, the bank had to stop offering consumer mortgage loans at its branch locations. The bank does still offer mortgage loans from its mortgage loan office, but they are unable to keep those loans in portfolio due to compliance costs.

This is not an isolated incident. I hear stories like this all the time. 

Another example: Val Brooks works at Simplot Credit Union which serves the Canyon County, Idaho area.  

She noted that Simplot has long been proud to serve this area, where some folks come from lower-income households and may be underserved. 

Simplot worked to obtain the necessary education, compliance, certification and licensing standards to better serve its customers and the community. 

However, after the CFPB increased already burdensome mortgage regulations such as QM and HMDA, the Simplot Credit Union had to make the very difficult business decision to stop offering mortgage loans altogether. It was just too cost prohibitive and resource draining. 

When these small financial institutions are not able to offer certain products within the communities they serve, it is a direct hit to the citizens of Idaho and all of our states. 

To be absolutely clear, it is not that folks are against all regulation, but rather that to people outside of Washington, it seems as if regulatory changes are made without much thought as to how they will truly affect customers and financial providers. 

As policymakers, it is our responsibility to diligently and frequently study the state of our economy, our regulatory framework, and how these things are impacting our communities and citizens, including people’s access to financial services. 

We must encourage regulations that not only ensure proper behavior and safety for our markets, but also are tailored appropriately. 

This means making sure that the burden on financial institutions is not so large that consumers, businesses, and our communities are deprived of financial services and suffer as a result. 

This has been an important issue to members on both sides of the aisle. 

Congress has held numerous hearings in prior years exploring many of these issues, including a series of hearings in the Banking Committee in 2015. 

Then in March of last year, the Banking Committee issued a request for legislative proposals that would promote economic growth. 

We held bipartisan briefings and public hearings with stakeholders across the spectrum, vetting potential ideas for right-sizing regulation. 

We began the process by holding a hearing on the role of financial companies in fostering economic growth, which included former regulators, stakeholders, and the chief economist of AFL-CIO. 

At our next two hearings, we examined proposals that would tailor existing laws and regulations to ensure that they are proportionate and appropriate for small financial institutions, and midsize and regional banks. 

Then in June, the financial regulators provided feedback on their Economic Growth and Regulatory Paperwork Reduction Act or EGRPRA report and the proposals discussed in previous hearings.  

As a result of this process, we introduced the Economic Growth, Regulatory Relief and Consumer Protection Act, or S. 2155. 

This bill is aimed at right-sizing regulation for financial institutions including community banks and credit unions, making it easier for consumers to get mortgages and obtain credit. 

It also increases important consumer protections for veterans, senior citizens, victims of fraud, and those who fall on tough financial times. 

The provisions in this bill will directly address some of the problems that I frequently hear about from financial institutions in Idaho. 

Community banks and credit unions are simple institutions focused on relationship lending and have a special relationship, providing credit to traditionally underserved and rural communities where it may be harder to access banking products and services or get a loan. 

Dodd-Frank instituted numerous new mortgage rules and complex capital requirements on community banks and credit unions that have hindered consumers’ access to mortgage credit and lending more broadly. 

In July 20, 2016, the American Action Forum attempted to estimate the number of paperwork hours and final costs associated with Dodd-Frank rules. 

In total, the Forum estimated that “Dodd-Frank had imposed more than $36 billion in final rule costs and 73 million paperwork hours as of July 2016. 

“To put those figures in perspective, the costs are nearly $112 per person or $310 per household. Additionally, it would take 36,950 employees working full-time to complete a single year of the law’s paperwork, based on agency calculations.” 

Our bill is focused on providing meaningful relief to community banks and credit unions, helping them to prudently lend to consumers, homebuyers, and small businesses. 

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