A delegation of CBAI community bankers from around the state met with the new CFPB Director Kathy Kraninger in Chicago on February 5, 2019. The meeting was the latest of CBAI member meetings with leaders of the Bureau, having met previously with Directors Elizabeth Warren and Richard Cordray.
The session was an important listening opportunity for the new Director as she was very interested in learning about any and all issues relating to community banking and the CFPB. The broader discussion with the Director emphasized how overly complex rules are an unnecessary and unwarranted regulatory burden on community banks, particularly because community banks do not engage in the conduct or cause the harm that many of the rules are designed to prevent. The delegation emphasized that the negative impact of complex, burdensome rules on community banks adversely affects customers’ access to credit and deposit services by forcing community banks to limit offerings or exit markets, thus reducing consumer choice.
CBAI and community bankers have consistently urged the Bureau to use Section 1022 of the Dodd-Frank Act which states, “The Bureau, by rule, may conditionally or unconditionally exempt any class of covered persons, service providers, or consumer financial products or services” from their rulemaking. It is clearly Congressional intent for the Bureau to have and use this authority to exempt community banks from much of its rulemaking. While some modest exemptions/thresholds have been set in the past, these have been too narrowly focused, and the volumes set too low. The Bureau’s expand use of this statutory authority will allow community banks to better serve their customers and communities.
The CBAI member delegation also commented on specific issues including: TRID and underwriting requirements under ATR/QM that need to be modified; HMDA and why higher exemptions for open and closed-end mortgages and modifications to the reporting of data are needed to relieve the regulatory burden on community banks; the need to foster sustainable small-dollar lending products that can be offered by community banks; and based on the outstanding performance of community banks in small business lending, clearly they are not violating fair lending laws and deserve a broad exemption from the regulatory burden of upcoming rules on small business data collection.
CBAI community bankers appreciated this opportunity to inform the Bureau on these issues and look forward to a continuing conversation with the CFPB.