The U.S. Government Accountability Office (GAO) made several recommendations to the Consumer Financial Protection Bureau (CFPB) and federal financial regulators related to easing the regulatory burden for community banks and credit unions.
Through interviews with 60 of these institutions, the GAO learned that regulations for reporting mortgage characteristics, along with reviewing transactions for potentially illicit activity and disclosing mortgage terms and costs to consumers were time-consuming, complex, and costly to comply with.
While the regulations are essential to preventing lending discrimination and use of the banking system for illicit activity, they can be burdensome, especially for smaller community banks.
To help ease the burden, the GAO made 10 recommendations. Among them, the agency recommends that the CFPB should assess the effectiveness of Truth-in-Lending Act – Real Estate Settlement Procedures Act Integrated Disclosure (TRID) guidance to determine if TRID’s requirements are understood.
The CFPB should also issue public information on its plans for reviewing regulations applicable to banks and credit unions, including information describing the scope of regulations the timing and frequency of the reviews, and how reviews will be coordinated with the federal regulators.
Further, the federal regulators – the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Federal Reserve Board of Governors — should strengthen the rigor and transparency of the Economic Growth and Regulatory Paperwork Reduction Act.