At the first legislative markup in 2016, the Financial Services Committee unveiled 10 bills to help grow the economy through regulatory relief and capital formation the nation’s Main Street businesses.
Financial Services Committee Chairman Jeb Hensarling (R-Texas) delivered the opening remarks at the markup, noting that last year, the committee favorably reported 60 bills to the House, 43 of those bills were considered on the House floor, all 43 passed with bipartisan support, and 28 bills reached the President’s desk and were enacted into law. "In an era of divided government, that’s not a bad record," he said.
One of the bills, the Taking Account of Institutions with Low Operation Risk (TAILOR) Act of 2015 (H.R. 2896), was created to provide smaller community banks and credit unions relief from onerous regulatory compliance burdens and was passed today by the committee.
Sponsor of the bill, Congressman Scott Tipton (R-Colorado) stated on his website that by requiring federal regulatory agencies to tailor regulations to fit the business model and risk profile of institutions, instead of imposing less effective and more burdensome one-size-fits-all regulations, the legislation would allow community banks and credit unions to focus more of their resources on providing services to customers and growing their businesses, instead of draining them on excessive compliance.
“Banks and credit unions are currently regulated under a one-size-fits-all approach regardless of size or risk profile. As a result, regulations designed and intended for big banks are also applied to small community and independent banks or credit unions. The compliance regimens and costs imposed by these one-size-fits-all regulations are unbearable for small community banks that face an unnecessarily heavy compliance burden with fewer available employees and resources than much larger institutions,” Tipton explained. “Regulations should be tailored to meet the risk profile and business model of specific institutions to prevent unnecessary costs and burdens to those institutions, while ensuring that government regulators are able to better focus their resources to provide oversight and ensure a safe and reliable financial marketplace. The TAILOR Act would foster a regulatory environment where small banks and credit unions can focus their time and assets on investing in their surrounding communities, helping to generate economic growth and create opportunities, rather than sinking their resources into overly burdensome regulatory compliance that was never intended to impact smaller bank and credit union institutions in the first place.”
Hensarling added, "We’ve heard from countless witnesses who tell us that small community banks and credit unions—which had nothing to do with the financial crisis—desperately need relief from regulations designed for big banks. We know that services customers once took for granted—like free checking—are being eliminated because of the cost and complexity of these burdensome regulations."
“We know that services customers once took for granted—like free checking—are being eliminated because of the cost and complexity of these burdensome regulations."
Jeb Hensarling, Chairman of the House Financial Services Committee
Another piece of legislation that the committee marked up is the Flood Insurance Market Parity and Modernization Act sponsored by U.S. Reps. Dennis A. Ross (Florida-15) and Patrick E. Murphy, intended to offer options to homeowners and lower their costs on flood insurance by removing unreasonable regulatory barriers that are limiting options.
"There is no doubt the National Flood Insurance Program is badly in need of reform," Hensarling noted. "It is $23 billion in debt to taxpayers, it is unsustainable, and it hinders the development of a competitive private flood insurance market which would give homeowners more choices, lower costs, and protect hardworking taxpayers from more bailouts."
The SAFE Transitional Licensing Act, sponsored by Reps. Steve Stivers (R-Ohio) and Terri Sewell (D-Alabama) offers mortgage loan originators a 120-day grace period during which they will have the right to continue originating loans when they change jobs.
Congresswoman Maxine Waters (D-California), the Committee’s Ranking Member, expressed her disapproval of what she perceived as an attempt by committee Republicans to undermine the provision set forth in Dodd-Frank by rolling back investor protections and ultimately determined that their focus should be turned toward homelessness.
"While some of these proposals are modest or incremental in nature, seeking, in good faith, to make improvements to existing law, the vast majority of the bills we will consider today represent the next phase of a coordinated attack on the proper functioning of our financial markets," Waters stated.
She continued, "It’s clear that the Majority has been determined to use this Committee to undo the important reforms we created in the wake of the 2008 financial crisis. And soon, on the House floor, I fear there will be attempts to gut the Administration’s rule to rein in conflicted retirement advice, as well as efforts to, once again, use the budget to undercut protections for those consumers who need them the most: mortgage borrowers, payday customers, service members, and students. So far, we have seen dozens upon dozens of piecemeal bills looking to undermine financial reform—either under the guise of “capital formation” or somehow giving consumers the “freedom” to access harmful financial products. And soon, if press reports are any indication, the Majority will switch gears and work to repeal sections of Dodd-Frank entirely—including the Volcker Rule and the Financial Stability Oversight Council."