Years of duplicative, one-size-fits-all regulation have strained the diversity of the banking sector, with the burden falling hardest on community banks, Kathy Kraninger, president and CEO of the Florida Bankers Association, told House lawmakers on Wednesday.
Kraninger – who is also the former director of the Consumer Financial Protection Bureau – testified before the House Financial Services Committee for a hearing, “Strengthening the American Economy: Promoting Growth, Opportunity, and Prosperity.” Committee members touched on a range of subjects during the hearing, from housing policy to digital assets.
In her opening remarks, Kraninger argued that a diverse banking system with a wide range of bank sizes best serves the U.S. economy. However, regulation in recent years has resulted in unnecessary paperwork, overlapping examinations and uncertain supervisory demands, she said. Still, in the past 18 months, the Trump administration and Congress have begun an important “coarse correction” in making regulation and supervision more proportionate, transparent and focused on material risk.
“Smart regulation brings clear modern rules, consistent examinations, timely decisions and requirements calibrated to an institution’s size, complexity and business model,” she said. “Smart regulation is not an end in itself but a major driver that promotes growth, opportunity and prosperity for the American people.”
Supporting housing and new banks
Chairman French Hill (R-Ark.) asked Kraninger about the potential effects of two bills on Florida banks: The 21st Century Road to Housing Act and the Main Street Capital Access Act, the latter of which contains several provisions to boost de novo bank formation and right-size regulation. The housing bill has become law while the Main Street Capital Access Act has only cleared the House.
Kraninger noted that Florida’s community banks are heavily engaged in the construction and supply side of housing, and they play a critical role in financing housing in the rural, agricultural parts of the state. She added that the legislation would ease burdens on those banks and encourage de novo bank formation.
“It’s not something Florida is necessarily known for, but we have quite a bit of agriculture in the center of the state, and the community banks servicing those areas are important to improving the housing situation in those parts of the state,” she said. “We have growth everywhere in the state of Florida.”
