Congressional Republicans’ proposal to replace Dodd-Frank, the Financial Choice Act, received endorsements this week from two major financial players — the Independent Community Bankers of America (ICBA) and the National Association of Federally-Insured Credit Unions (NAFCU).
The Financial Choice Act of 2017, sponsored by House Financial Services Committee Chair Jeb Hensarling
(R-TX), was introduced to lift some of the excessive regulatory burdens of Dodd-Frank on banks and credit unions.
In a letter to Hensarling, ICBA President and CEO Camden Fine said community banks support the regulatory relief that the Financial Choice Act offers. He added that many of the bill’s provisions are in ICBA’s Plan for Prosperity regulatory relief platform.
“ICBA strongly believes that a timely and aggressive approach to reform of our financial regulatory system is sorely needed to strengthen the financial services sector as well as the American economy,” Fine wrote. “ICBA is pleased to see that the Choice Act advances key reforms of community bank regulatory relief bills we have previously endorsed and many provisions of our Plan for Prosperity.”
Among the Plan for Prosperity provisions included in the bill are: a repeal of new and unnecessary Consumer Financial Protection Bureau (CFPB) data-collection and reporting requirements for small-business loan applications; higher exemption thresholds for the Home Mortgage Disclosure Act; automatic “qualified mortgage” status and escrow relief for community bank mortgages held in portfolio; a short-form call report to restore proportionality to quarterly reporting; a repeal of Durbin Amendment artificial price controls on debit card interchange; cost-benefit analyses for proposed and existing regulations; greater accountability in the bank exam environment; and relief from costly and duplicative Sarbanes-Oxley section 404(b) internal controls.
ICBA does have concerns, however, with provisions that would alter the 10 percent concentration cap on deposits and liabilities at the nation’s largest financial institutions.
NAFCU President and CEO Dan Berger also sent a letter to Hensarling and ranking member Maxine Waters (D-CA) in support of the act, which was the subject of a House Financial Services Committee hearing on Wednesday.
“Many elements of the discussion draft will help create an environment that will allow credit unions to succeed,” Berger wrote. “Changes to mortgage rules; changes to HMDA limits; and examining appropriate risk capital levels are key parts of the bill.”
Berger specifically pointed to the elimination of the Durbin amendment in the draft language, calling it “among the most significant aspects of this discussion draft for credit unions.” He urged that it remain intact throughout the legislative process.
He also said NAFCU supports changing the structure of the CFPB to an oversight commission.
“The Committee could improve the capital ‘off-ramp’ provision for credit unions by adding language that recognizes their unique nature and limited ability to raise capital, which disadvantages them in returning to the 10% threshold envisioned in the bill,” Berger wrote.
Among the provisions in the act that NAFCU supports include retention of the three-member structure of the NCUA Board; the transparency and independent oversight it brings to the NCUA in the form of budget hearings, an independent appeals process and more transparency regarding the overhead transfer rate; the elimination of the CFPB’s supervisory authority with respect to unfair, deceptive or abusive acts and practices; and the assurance of a cost-benefit analysis for regulations to be reviewed by Congress.
“We also would hope that the discussion draft could be further clarified to ensure that there is a federal regulatory structure, whether the new CFPB/Consumer Law Enforcement Agency or not, for non-bank financial services market players that do not have a prudential regulator,” Berger concluded.