During a hearing today on bank regulation, House Republicans accused regulators of failing to appropriately tailor regulation to bank size and risk while Democrats said the Trump administration has sought to overturn regulatory reforms put in place to prevent a repeat of the 2008 financial crisis.
The House Financial Services Subcommittee on Financial Institutions held a hearing on regulatory overreach by banking agencies. In his opening remarks, subcommittee Chairman Andy Barr (R-Ky.) said the Dodd-Frank Act and subsequent regulator actions created a “one-size-fits-all” approach to regulation that has hurt community banks.
“I’ve heard from community bankers across the country about the inconsistency and lack of clarity in the supervision and examination framework being driven by partisan bureaucrats in Washington,” Barr said. “Rather than our prudential regulators working alongside supervised institutions to ensure compliance, we have seen a shift to promoting agendas such as climate-related finance or the debanking of legally operating businesses – dangerous deviations from the core mission and purpose of these agencies.”
Subcommittee Ranking Member Bill Foster (D-Ill.) accused President Trump of attacking independent agencies such as the Federal Reserve, which he said has injected volatility into financial markets. He also criticized the administration for allegedly rolling back Dodd-Frank reforms by attempting to trim the staff and missions of agencies such as the Consumer Financial Protection Bureau, which was created by the law.
“Each of these agencies, along with our banking and market regulators, serve critical roles in the financial stability of the United States, yet their missions are under assault,” Foster said.
Among the hearing’s witnesses was J. Michael Radcliffe, chairman and CEO of Community Financial Services Bank in Benton, Kentucky, who said that the regulatory burden for community banks has increased significantly since 2008. He urged lawmakers to return to a system of regulatory tailoring.
“Under the existing ‘one-size-fits-all’ regulatory regime, community banks are often held to the same standards as multinational banks with trillions in assets,” Radcliffe said in prepared remarks. “This approach disregards the minimal systemic risk posed by community banks and places an undue burden on their operations.”
