Removing Barriers Blog

US House Holds Two Hearings on Dodd-Frank Regulatory Burden
Posted September 18, 2015 by CUNA Advocacy

Two hearings in the US House of Representatives yesterday focused on the growing regulatory burden faced by financial institutions since the Dodd-Frank Act was passed into law. The first hearing, held by the House Financial Services Committee was entitled “The Dodd-Frank Act Five Years Later: Are We More Free?” This hearing was more political and philosophical in nature, and wasn’t as focused on specifics concerning credit unions. Rep. Brad Sherman (D-CA) did however take time to praise credit union member business lending, saying that it helped provide much needed capital to small businesses, at a time when banks were retracting from local lending. He also mentioned the need to raise the statutory cap on such loans.

Later in the day, the US House Small Business Committee- Subcommittee on Economic Growth, Tax and Capital Access held a hearing entitled: “Financing Main Street: How Dodd-Frank is Crippling Small Lenders and Access to Capital”. In her opening statement, ranking member Judy Chu (D-CA) praised credit unions, saying that credit unions have been on the front line of local lending, and shouldn’t face increased regulations stemming from problems they didn’t cause. She re-iterated that credit unions are a significant source of small business capital. Rep. Janice Hahn (D-CA) also lauded credit unions, saying that she valued her own credit union membership, and expressed support for legislation lifting the member business lending cap.

Scott Eagerton, President/CEO of Dixies Federal Credit Union testified before the committee on the growing regulatory burden facing credit unions. He mentioned that the compliance costs at his small credit union have grown five-fold since the passage of Dodd-Frank, and now swamps what his credit union allocates even for loan-loss reserves. Mr. Eagerton also stated that these costs take away from what the credit union could be investing in new marketing and technology.

More specifically, he expressed concern that NCUA’s adoption of a 12-month examination cycle and proposed Risk-Based Capital rule have placed further burdens on his small credit union. He also suggested that the CFPB use its exemption authority under Section 1022 of Dodd-Frank to exempt credit unions from many of the new regulations that are putting a damper on mortgage lending.