A House Financial Services subcommittee field hearing held Oct. 31 in Wausau, Wis. – home to Rep. Sean Duffy (R-Wis.) – gave community bankers the chance to express their views on the Consumer Financial Protection Bureau.
On July 21, 2011 – the day the CFPB officially opened its door, Rep. Duffy published an op-ed column in the Washington Times that addressed his concerns with the Dodd-Frank Act. He wrote:
For small community banks and credit unions, like those in Central and Northern Wisconsin, the hundreds of new rules will require an estimated 2,260,631 labor hours just for compliance. Those are hours that your local bank or credit union will spend dealing with some Washington bureaucrat instead of focusing on the needs of customers like you.
The field hearing allowed Duffy’s constituents to explain in their own words how they expect Dodd-Frank to impact them.
“While it is too early to tell how many of the new regulations of the Dodd-Frank Wall Street Reform Act will affect community banks, one source of concern is the new Consumer Financial Protection Bureau or CFPB,” testified Marty Reinhart, president of the $100 million Heritage Bank in Spencer, Wis.
Addressing a specific concern, Reinhart said, “[i]n particular, the CFPB should not implement any rules that would adversely impact the ability of community banks to customize products to meet customer needs.”
On a related note, Reinhart said that the Community Bankers of Wisconsin supports amending the Dodd-Frank Act to give prudential regulators a more meaningful rule in CFPB rule writing.
He also voiced his support of a bill introduced by Rep. Duffy. The legislation (H.R. 1315) would change CFPB’s governance from a single director to a five-member commission and grant additional power to the Financial Stability Oversight Council, which can override CFPB rules.
The rest of Reinhart’s testimony covered examination practices and the Community First Act.
Todd Nagel, president of the $957 million River Valley Bank in Wausau, told members of Congress that “[t]he amount, intensity and uncertainty of new federal regulations, chiefly the Dodd-Frank Act, have forced banks to allocate an enormous amount of time and resources to compliance and away from our primary mission of serving our customers.”
Two credit union executives shared concerns similar to those of community bankers.
“Like many of my colleagues in the credit union system, I am afraid that the CFPB will only add a layer of regulation, not replace a layer of regulation as it was intended,” said Mark Willer, chief operating officer of Royal Credit Union in Eau Claire, Wis. “We understand that the intentions are to protect consumers, unfortunately history shows that regulations, rules and bureaucracies reach beyond their original intentions.”
Likewise, Pat Wesenberg, president and CEO of Central City Credit Union in Marshfield, Wis., cited the potential for “burdensome data collection requirements” to come from the CFPB, and wondered how the National Credit Union Administration’s own Office of Consumer Protection fit into the consumer protection regime.
Bethany Sanchez, director of community development at the Metropolitan Milwaukee Fair Housing Council, spoke in support of the CFPB.
“Rather than pushing new legislation that would weaken Dodd-Frank before it is fully implemented, concentrate your efforts on helping the CFPB staff to understand the areas of concern, and assist them as they write rules that can truly help everyone,” she told the subcommittee members.
The hearing – titled “Regulatory Reform: Examining How New Regulations are Impacting Financial Institutions, Small Businesses and Consumers” – also included testimony from: