Transcripts For CSPAN3 Key Capitol Hill Hearings 20150211 :

CSPAN3 Key Capitol Hill Hearings February 11, 2015

[ applause ] up next, on s span 3, Community Banking regulations, then discussion on u. S. Infrastructure challenges and the u. S. Supply chain. Later a hearing on freight rail. The Political Landscape has changed with the 114th congress. 43 new republicans and 15 new democrats and 12 new republicans and 1 new democrat, 108 women in congress including the first africanamerican woman in the house and first woman veteran in the senate. Keep track using congressional chronicle on cspan. Org. The page has lots of useful information including Voting Results and statistics about each session of congress. New congress best access on cspan, cspan2 cspan radio and cspan. Org. Recently the Federal Reserve and Consumer Financial Protection Bureau removed some lending restrictions on small banks. Next the Senate Banking committee looks at Community Banks and federal regulations. Richard shelby of alabama chairs the hearing. Next the Senate Banking the hearing will come to order. This week the committee here on banking begins an examination of potential changes to the current regulatory structure. Today we will focus on regulatory relief for smaller Financial Institutions. In the near future we will continue this examination by focusing on unnecessary statutory and regulatory impediments across the Financial Services spectrum. While there are some who continue to argue that current law is beyond reproach, there are many on both sides of the aisle that believe improvements can and should be made. Today we will hear from regulators on some of the lessons theyve learned and how best to overcome some of the challenges that theyve encountered. And although we may not agree on many things i believe that we can all agree that Community Banks and Credit Unions play a vital role in our local economies. 629 counties in the United States are served only by one single, Single Community bank. 6 million u. S. Residents defend on small Financial Institutions for their daily banking needs. These Financial Institutions use their knowledge of local communities to lend a Small Businesses which are the engine of job creation in america. A recent survey found that Community Banks provide 48 of Small Business loans issued by u. S. Banks. 48 . That number is even higher in rural areas where small Financial Institutions account for 52 , yes 52 of Small Business and farm loans. These Financial Institutions are able to forge relationships with local consumers that enable them to develop products tailored to the specific needs of their communities. Unfortunately weve heard that innovation tailored for main street has been smothered by unnecessary regulations originally designed for wall street. Some of the regulators before us today have testified in the past that small Financial Institutions did not, yes, did not cause the financial crisis. Nevertheless added regulations have caused hundreds of banks and Credit Unions to simply stop offering certain products. Theyre instead forced to spend valuable resources on compliance. A conference of state Bank Supervisors found that Compliance Costs have increased for 94 of Community Banks. I believe its time to reverse this trend. Today we expect to hear recommendations from regulators on ways to provide regulatory relief for smaller Financial Institutions. Past Committee Hearings on this issue have demonstrated bipartisan understanding that something must be done here. Discussion here will build upon these efforts by providing specific recommendations from both regulators and congress to implement. I believe that were long overdue for regulatory relief for small Financial Institutions. And i look forward to the hearing today. Ill now recognize senator brown, our Ranking Member. Thank you very much mr. Chairman very much. I appreciate that youve invited both federal and state regulators to continue the conversation that why had last fall about regulatory relief for small banks and for credit un unions. They have made changes to benefit the smallest depository institutions and i thank you for those changes. To highlight a few in january the ncua reproposed its risk based capital rule to be responsive to concerns legitimate concerns raised by small Credit Unions. A few weeks ago cfpb announced changes to its mortgage rules a win for small lenders particularly those that underrural areas and the rural areas, the fit proposed to eliminate quarterly consolidated reporting financial requirements for Certain Bank Holding Companies and savings and loan Holding Companies under a billion dollars. Since our last hearing last Fall Congress has also acted. We passed the president signed into law bills that were discussed at the september hearing an supported by those who will be before this committee on thursday. These bills included a bill introduced by senators king and warner and tester that doubled the threshold for the Small Bank Holding Company policy statement, a bill supported by senators king, jack reed on this committee and senator warren sapper to allow insures for Credit Union Members in a bipartisan bill or authorized by senator more ran and me to permitle institutions to offer prize link savings accounts. All are law. Also as a result of congressional action led by senator vitter the president s nominated a Community Banker to serve on the Federal Reserve board. There are also relief proposals i supported that did not cross the finish line last year. Im pleased that senator morean will reintroduce that act. It had 7 asenate sponsors. This is ready for action. We should move on it. Theres no question regulateers in congress have been responsive to the concerns of small institutions. Weve acted where legitimate problems have been identified and members and stakeholders have come together to find compromise. I thank the Witnesses Today for helping in that process. I do not believe though, that ovary bill intended to provide regulatory relief to small institutions is a good idea. Some proposals could threaten the safety and soundness of individual institutions. Others could remove important Consumer Protections that all customers deserve no matter the size of the institution of the lending of the bank. We must not forget that more than 400 banks with less than a billion dollars in assets failed as a result of the cite cyst. The cost of the Deposit Insurance Fund exceeded 26 billion. Lending, of course is inherently risky and we must make sure we dont encourage unsafe practices in our efforts to tailor regulations. We need to establish a process to evaluate the merits of the proposals being suggested today and those we will hear about on thursday. Well not be successful this congress in providing regulatory relief if we if our proposals do not have broad bipartisan agreement and are attached to un unrelated must pass legislation. Our prospects are even less likely if we try to pair regulatory relief with attempts to roll back wall street reform. Im open to solving real problem as affecting Community Institutions as evidenced by our actions over the last couple of years. We can find Common Ground if our goal is to provide meaningful relief to the smallest institutions while not compromising safety and soundness or Consumer Protections. Todays witnesses can help us evaluate programs theyve done Significant Research to better understand the characteristics of Community Banks and small Credit Unions. They also understand our panelists also understand why and how small institutions fail. This can help us target regulatory relief to the smallest institutions for example, in ohio 80 , 80 of the Community Banks in my state are under500 million in total assets. These are the types of institutions that feel the impact of burdensome regulations the most whether providing another report to their regulator or needing to hire another employee for compliance. Last, mr. Chairman, i look forward to hearing more about the gripper review currently under way. The fed, the occ and fdic are required by law to review these to review regulations and identify those duplicative, outdated or unnecessary the state regulatory agents and cfpb participate in this exercise voluntarily in addition to the three that are required. This review supplements a significant analysis of impacts that the agencies also do while writing a rule. I appreciate that youve already held meetings in los angeles and dallas and planned ahead and hold meetings in boston chicago, washington and rural areas later in the year. I would encourage you to consider a meeting in ohio, as well. This review will be completed next year, any actions we take in congress should complement not complicate the process currently under way by the agencies. Mr. Chairman i thank you. All members Opening Statements will be made part of the record. I under stand senator tester has another committee hearing. I do and i want to thank the chairman and rank members for holding this. In a rural state like montana Credit Unions and Community Banks are the lifeblood for capital of businesses and permanent personal families. And i would just like to say this state where personal relationships still matter and wall street did behave badly. Some on wall street behaved badly a few years back and i think Community Banks and Credit Unions have felt the page of their behavior when they did nothing wrong. I would just ask that this committee and the regulators match the risk with the regulation. Thats really where it needs to be and i think if we do that well have succeeded in making capital accessible to folks that live in Rural America and across this country. Thank you. Our Witnesses Today are doreen eberley, shes the director of Risk Management supervision for the federal deposit insurance corporation, marianne hunt ser the Deputy Director of the division of banking supervision and regulation for the board of governors of the Federal Reserve system. Mr. Tony bland is the Senior Deputy comptroller for midsize and Community Bank supervision for the office of the comptroller of the currency. Larry fazio is the director of the office of examination and insurance at the National Credit Union Administration and Candace Franks is the commissioner of the Arkansas State bank department. She also serves as chairman of the conference of state Bank Supervisors. I would like to ask all you all your witnesses all the witnesses, written testimony be made part of the hearing record and if you could such up your oral testimony by five minutes, it will give us a chance to have a dialogue with you. Well start with miss eberley. Thank you. Chairman shelby, Ranking Member brown and members of the committee, i appreciate the opportunity to testify on behalf of the fdic, on regulatory relief for Community Banks, as the primary federal regulator the fdic has a particular interest in the opportunities they face. They provide traditional relationship based Banking Services to their communities. Although owe hold only 14 of assets they account for 45 of all of the small loans to businesses and farms made by insured institutions. While more than 400 Community Banks failed during the recent financial crisis the vast father majority did not. Institutions that stuck to their core expertise whether the crisis are now performing well. The highest failure rates were observed among nonCommunity Banks and those that departed from the traditional model and tried to go rapidly with risky assets often funded by volatile broker depot sits. We are keenly aware of the impact the regulatory requirements can have on smaller institutions which operate with fewer staff and other resources than larger ones. Therefore, the fdic pays particular i attention to the impact regulations may have on smaller institutions that serve areas that otherwise would not have access to Banking Services. The fdic and the other regulators are actively seeking input from the industry and public on ways to reduce Regulatory Burden through the Economic Growth and regulatory paperwork reduction act process which requires the federal financial regulate attorneys review their regulations at least once every ten years to identify any regulations skrout dated, unnecessary or burden burdensome. As part of this, the agencies are jointly requesting Public Comment on our regulations. We are also conducting rege nalg outreach meetings involves the public, industry and other interested parrotts. In response to what weve heard in the first round of comments the fdic already acted on relief suggestions where we could achieve rapid change. In november, we issued two Financial Institution letters responding to suggestions we received from bankers. The first Financial Institution letter released questions and answers about the deposit insurance application process. Commenters are told us a clarification of the fdics existing policies would be helpful. The second addressed new procedure thats eliminate or reduce the need for applications by institutions wishing to conduct permissible activities through certain subsidiaries subject to some limited documentation standards. This will significantly reduce application filings in the years ahead. The fdic takes a risk based approach which recognizes Community Banks are different than large banks and should not be treated the same. Every fdic examiner is trained as a Community Bank examiner through a fouryear program. Each of them gains a thorough understanding. They live and work in the same communities served by the banks they examine ensuring theyre knowledgeable and experienced in local issues important though those banks. Institutions with lower risk profiles such as most Community Banks are subject to less supervisory attention than those with elevated risk profiles. For example well managed banks engaged in traditional noncomplex activities received periodic point and time safety and soundness and Consumer Protection examinations carry odd out over a few weeks. This contrast the very largest fdi. Supervised institutions receive receivecontinuous supervision and ongoing examination carried out through targeted reviews during the course of an examination cycle. The fdic considers the size, complexity and risk profile of institutions during rulemaking and supervisory Guidance Development processes and ongoing basis through the feedback we receive from Community Bakers and stakeholders. Where possible we scale policies according to these factors. As we strive to minimize the burden we look for changes that can be made without affecting safety and soundness and believe the current 500 million threshhold for the expanded 18month examination period could be raised. In addition we would support Congress Efforts to reduce the Privacy Notice reporting burden and also think it would be worthwhile to review longstand statutory regulatory thresholds to see if they should be changed. The fdic will continue t

© 2025 Vimarsana