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Today, we sent a letter to
the chairman and ranking member of the House Financial Services committee to offer
our support for H.R. 2896, the Taking Account of Institutions with Low
Operation Risk (TAILOR) Act.
This legislation will
decrease regulatory burden on credit unions and community banks with lower risk
profiles relative to systemically significant institutions, by requiring federal
regulators to take risk into account when promulgating regulations.
Specifically, the legislation
would direct the banking agencies, and NCUA and CFPB to:
Credit unions are precisely
the type of institutions for which this legislation is designed to help because
they are well-capitalized, with a low risk profile and a long history of
meeting their members’ credit needs– in good times and bad.
Although we constantly hear
policymakers accurately stating that credit unions did not contribute to the
financial crisis, the public policy response to the crisis, so far, has failed
to recognize this seemingly indisputable fact.
Credit unions have been subjected to tens of thousands of pages of new
regulations in the last seven years and this must stop.
Constant regulatory changes
present a challenge for small depository institutions because the fixed costs
of compliance are proportionately higher for smaller-sized credit unions and
banks than for large institutions.
Congress and regulators ask a lot of small, not-for-profit, financial
institutions when they tell them to comply with the same rules as J.P. Morgan,
Bank of America and Citibank.
Our letter stressed to the
committee that overregulation is one of the primary reasons that small
financial institutions are disappearing at an alarming rate. Over the last 20 years, the number of credit
unions has been cut in half – from more than 12,500 in 1995 to just more than
6,000 today. For the last several years,
the rate of regulatory and compliance-driven credit union consolidation has led
to the loss of one credit union per day, on average.
We believe that when there
are fewer credit unions for Americans to turn to for safe and affordable
financial services, consumers are increasingly forced to turn to other
providers who are more concerned with their bottom line than the borrower’s
needs, like the too-big-to-fail financial institutions whose activity caused
the financial crisis, or nonbank predatory lenders who are known to abuse
consumers. Needless to say, this outcome is the opposite of what post-financial
crisis legislation intended.
We closed our letter bluntly:
the continuing failure to address the regulatory and compliance crisis facing
credit unions has jeopardized their ability to serve members, and threatens the
financial opportunities of Americans.
Champion for the Credit Union Movement
Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.
© 2017 Credit Union National Association
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