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Congressman Pittenger Says Excessive Regulation Slows Economic Growth, Hurts Entrepreneurs

american-moneyRepublican politicians have made a greater push in the last few months to ease the regulatory burden on smaller banks, and one of the central figures in favor of relief from regulation has been U.S. Congressman Robert Pittenger (R-North Carolina).

Pittenger, a member of the House Financial Services Committee, said in an interview co-authored the Bureau of Consumer Financial Protection Advisory Boards Act (H.R. 1195), which passed in the House last month largely along party lines (235 to 183) and is awaiting a vote in the Senate. Pittenger has been a vocal critic of the Consumer Financial Protection Bureau (CFPB); in February 2014, Pittenger called for more transparency and accountability from the CFPB as he denounced the “tsunami of regulations” coming from Washington, D.C.

Earlier this week, in an interview with the Charlotte Observer in his home district, Pittenger said that the pendulum has swung too far in the other direction and that the regulations intended to protect consumers are now having the opposite effect. It is the entrepreneur who gets hurt by the excessive regulations, he said, because the cost of compliance on the smaller banks who tend to make the loans to start-up businesses forces those banks to restrict their lending. Pittenger cited as evidence of this the failure of hundreds of banks since the financial crisis and the merger of several others.

Pittenger said he believes there are so many regulations in place that they could potentially cause another economic downturn, and he pointed to current slow economic growth (an annual 2.2 percent) as evidence that regulations are hurting the economy and preventing job growth.

“The CFPB continues to issue new regulations designed for massive, ‘systemic-risk’ financial institutions without considering how those same rules harm small businesses, community banks, and credit unions,” Pittenger said last month after H.R. 1195 passed in the House. “Small businesses create jobs. Community banks and credit unions support local businesses. Most bureaucrats just support new rules. This bipartisan legislation will give small businesses, credit unions, and community banks a voice in proposed regulations, allowing for adjustments that protect consumers while giving small businesses the freedom to grow and create good paying jobs.”

He has said he does not believe the CFPB should be eliminated altogether, just that it should be run by a five-member board instead of a single director and should be more accountable and transparent, and that it should enact fewer regulations.

The White House has threatened to veto H.R. 1195 if it passes in the Senate. The bill would create a small business advisory board to advise the CFPB during the rule-making process, and it would make permanent two advisory boards for community banks that are currently comprised of volunteers and could be eliminated at any time by the Director of the CFPB. A last-minute amendment to the bill proposed by House Financial Services Committee Jeb Hensarling (R-Texas) calls for a reduction in the amount of money the CFPB director can request for funding by less than 1 percent, Pittenger said. Nevertheless, the late amendment to the bill drove its co-author, Denny Heck (D-Washington), to vote against it and encourage others to do the same. Heck claimed that Hensarling "put the torch" to his bill.

Similar legislation is moving through the Senate; earlier this week, the Senate Banking Committee approved the Financial Regulatory Improvement Act of 2015 by a party line vote of 12 to 10. The bill is aimed at providing regulatory relief for community and regional banks and credit unions, and proposing “moderate” changes that would increase the transparency of the Federal Reserve.

Pittenger told the Observer that he plans to introduce legislation later this year that would eliminate duplicative or inconsistent financial regulations.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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