Testifying before a House Financial Services subcommittee today, bank CEO Jim Reuter said that a controversial proposal by the Biden administration requiring banks to report information to the IRS on gross inflows and outflows on customer accounts, “is yet another regulatory burden that would only lead to further consolidation in the industry.”
“Administratively, the cost would be significant,” said Reuter, president and CEO of Denver-based FirstBank. “We don’t track [the data]in the manner that’s being contemplated here. We might look for anomalous activity or fraud but we aren’t tracking it in a way that meets what the IRS is looking for.”
Data security and increased cyberattacks on the IRS are also concerns stemming from the proposal, Reuter testified. “No matter how well the IRS does their job, they’re a much bigger target if we increase the pot of gold sitting there with everybody’s transactional information,” said Reuter, testifying on behalf of the American Bankers Association.
He added that policymakers could make a big difference on the regulatory burden on banks by tailoring so that the burden is lighter for a bank that is less complicated. Reuter said there are opportunities for banks to partner with fintech companies, “but where it becomes an issue is when we’re competing with those same organizations or like organizations and they’re not regulated at the same level. That drives up our cost of business, because we’re competing with a branch infrastructure that they do not have.”