WASHINGTON—While most attention on Federal Reserve Chair Janet Yellen’s congressional testimony has focused on whether the Fed will move on rates, members of the House Financial Services Committee also raised questions around the growing compliance burden, especially on smaller institutions.
Raising concerns similar to those noted Tuesday during Yellen’s testimony before the Senate Banking Committee, Reps. Jim Himes (D-CN), Blaine Luetkemeyer (R-MO), Sean Duffy (R-WI), Lynn Westmoreland (R-GA), Andy Barr (R-KY), and Roger Williams (R-TX), asked Yellen during Wednesday’s hearing about the increasing amount of regulation and its negative impact on smaller financial institutions, NAFCU reported.
In response to a question from Himes over limited access to capital, Yellen said the supply of credit remains healthy for small businesses, although the demand for credit is still “somewhat depressed” from the financial crisis.
“We know that there are community banks that are struggling under regulatory burdens, and we’re doing everything that we possibly can to address that,” Yellen said. “But I’ve not seen a change that would be attributable to the financial regulations.”
As examples of the Fed’s efforts to assist small FIs, Yellen cited the increase of the exemption threshold under its small bank holding company rules and its efforts to tailor exams to smaller institutions by doing more exam work off-site. NCUA has also announced a number of similar initiatives.
Westmoreland and Rep. Carolyn Maloney (D-NY) also raised concerns about cybersecurity, particularly regarding the recent Reuters report about the Fed being hit by 50 cyber breaches between 2011 and 2015 and the reports of a malware attack on the Society for Worldwide Interbank Financial Telecommunications (SWIFT), noted NAFCU.
Meanwhile, during her testimony Yellen cited cautious optimism about the economy, and she told the committee that the Fed supports relieving small financial institutions’ regulatory burdens. Yellen gave no firm projections on the next interest-rate increase during either hearing.
Last week, the Federal Open Market Committee left the federal funds target rate at a range of 0.25 to 0.5%. NAFCU Chief Economist and Director of Research Curt Long said the decision was expected and that the committee will likely wait until the third quarter or later to raise rate.