Removing Barriers Blog

House Subcommittee Hearing Features Regulatory Burden Discussion
Posted March 17, 2016 by CUNA Advocacy

Yesterday, the House Appropriations Subcommittee on Financial Services and General Government held a hearing to review the fiscal year 2017 budget request for the U.S. Treasury Department.  Secretary Jack Lew was the sole witness. 

Representative Mark Amodei (R-Nev.) asked Secretary Lew about consolidation of small financial institutions and how this is affecting his largely rural congressional district. 

Representative Amodei cited a February 2015 report released by the Harvard Kennedy School.  This scholarly report, the State and Fate of Community Banking, coauthored by Marshall Lux and Robert Greene, largely blames the Dodd-Frank Act and CFPB  for costly and unnecessary compliance burdens on small community-based financial institutions.   

In his line of questioning to Secretary Lew, Congressman Amodei noted that the report's findings also apply to credit unions, a point also made recently in a bipartisan letter signed by 329 Members of Congress to the CFPB. 

Another hearing highlight included a dialogue between Ranking Member Jose Serrano (D-N.Y.) and Secretary Lew about funding the short-term, small-dollar loan program for certified Community Development Financial Institutions (CDFIs). The program, which is allocated $10 million in the President's proposed budget, is authorized in Title XII of the Dodd-Frank Act and is designed to "support broader access to safe and affordable financial products and provide an alternative to predatory lending by encouraging CDFIs to establish and maintain small-dollar loan programs," according to the budget. 

This alternative is authorized by Sections 1205 and 1206 of Title XII of the Dodd-Frank Act to provide federal financial assistance to “eligible entities”, including community development financial institutions and federally-insured depository institutions, including credit unions. The law states that these  loans may not exceed $2500 and must be repayable in installments.  In addition, these loans cannot have any prepayment penalties.