ABA Highlights Harmful Effects of Excessive Regulation

In testimony before a House Small Business Committee panel today, banking industry leaders offered examples of the harmful effects of excessive regulation on America’s hometown banks, including those serving rural communities.

“Regulation shapes the way banks do business,” said Roger Beverage, president and CEO of the Oklahoma Bankers Association, who testified on ABA’s behalf. “Bank regulatory changes — through each and every law and regulation, court case and legal settlement — directly affect the cost of providing banking products and services to customers. Even small changes can have a big impact on customers by reducing credit availability, raising costs and driving consolidation in the industry that limits consumer choice.”

Beverage urged lawmakers to support a number of measures — all of which are part of ABA’s Agenda for America’s Hometown Banks — that would help to alleviate the regulatory burden on financial institutions. These measures include the TAILOR Act of 2015, which would tailor regulation to banks’ business models; the Portfolio Lending and Mortgage Access Act, which treats all loans held in portfolio as Qualified Mortgages; and other legislation targeted at addressing the cumulative effects of new regulations. In addition, Beverage recommended that the Consumer Financial Protection Bureau address the uncertainties surrounding the TILA-RESPA integrated disclosures and that Congress re-evaluate the necessity of Basel III’s complex capital calculations for highly capitalized banks.

Also testifying at the hearing was Shan Hanes, president and CEO of First National Bank in Elkhart, Kan., and a member of ABA’s Agricultural and Rural Bankers Committee, who spoke about the issues facing rural bankers, including the increasing regulatory burden, the uneven playing field created by the government-sponsored Farm Credit System and the appraiser shortage in rural communities. “Rural banks will compete with anyone on a level playing field and they have not backed down from such competition in the past,” Hanes said. “But when there is a combination of an unfair playing field and over burdensome regulations, all banks have a difficulty in surviving, not just competing.”