WASHINGTON–While credit unions are hailing regulatory relief provisions in S 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act, numerous consumer groups and others are blasting it as a gift to Wall Street that wipes away the consumer protections and other safeguards put in place following the deep recession of a decade ago.
Critics have derided is as the “Bank Lobbyist Act,” which rolls back provisions included in the Dodd Frank Act, many of which are deeply unpopular with credit unions.
But while credit unions welcome what they have said is much-needed regulatory relief, other groups are also pressing Congress to vote against the legislation. Among those critical of the bill are:
- The Center for Responsible Lending, which bills itself as a nonpartisan, nonprofit organization dedicated to fighting predatory financial practices. Yana Miles, senior legislative counsel at the CRL, wrote in an op-ed, “(Dodd Frank) put in place a set of reasonable safeguards geared toward preventing a repeat of the economic catastrophe. Fast forward to today. A vote is expected imminently in the U.S. Senate on S 2155, a bill that would roll back much of this Dodd-Frank law and allow for the return of many of the same lending practices that caused the mortgage meltdown. The Dodd-Frank law established a common-sense rule that lenders should have to verify borrowers’ ability to repay their mortgage loan. The Bank Lobbyist Act would dramatically expand a narrow exemption to this rule, so that hundreds of additional, larger financial institutions would no longer have to abide by it. This would bring back toxic loan products, increase the number of foreclosures, and even provide legal immunity for predatory lenders.The Bank Lobbyist Act would also exempt 85% of depository banks from having to report Home Mortgage Disclosure Act (HMDA) data such as the anonymized credit scores of borrowers. HMDA data is critical to rooting out pernicious racial discrimination. This broad exemption is appalling on several fronts. As highlighted by recent reporting, modern-day redlining is alive and well. Also, it was discriminatory financial practices coupled with the foreclosure crisis that led to people of color losing an entire generation of wealth they had built up. Instead of threatening the American economy with one gallon of poison or two, Congress should choose neither. Our elected representatives should listen to the American people and make another crisis less, not more, likely.”
- Public Citizen. Public Citizen has said of the bill, “It is especially troubling that the #BankLobbyistAct has the support of more than a dozen Senate Democrats – an ugly reflection of Wall Street’s political clout in both parties, purchased through billions in political spending over many decades.”
- The Leadership Conference on Civil and Human Rights. The Leadership Conference on Civil and Human Rights sent a letter to senators in which it expressed its opposition to the legislation. “Under the innocent-sounding guise of ‘regulatory relief,’ S 2155 would undermine one of our nation’s key civil rights laws and weaken consumer protections enacted after the 2008 financial crisis,” the LCCHR said in its letter. “The Leadership Conference is particularly opposed to Section 105 of the bill, which would exempt more than four in five banks and credit unions from a recent policy expanding on and improving the data collected by the Consumer Financial Protection Bureau under the Home Mortgage Disclosure Act of 1975 (HMDA),” the letter states. “In 2015, the CFPB finalized a rule that now requires most mortgage lenders to report more detailed HMDA data about the loans they make, including specific details such as the total points and fees, the difference between the annual percentage rate paid compared to the benchmark rate for all loans, any prepayment penalty terms, the value of the property, the borrower’s credit score, and whether the loan was a ‘reverse mortgage’ sold to a senior. These additional data fields are essential for federal and state regulators to find patterns of discriminatory or predatory lending. They certainly would have been useful before 2008. Supporters of S 2155 claim they are simply trying to reduce regulatory requirements on small banks and credit unions,” the letter continues. “While we are sensitive to the need for regulatory burdens to be carefully tailored to the size of lending institutions, the expanded HMDA data fields include information that lenders already routinely collect in the underwriting process. Moreover, the revised CFPB rule already exempts truly small lenders, those making fewer than 25 mortgages each of the past two years, as well as financial institutions not located in metropolitan areas.
- Sen. Elizabeth Warren (D-MA) (who was the primary driver behind the CFPB, which was created by Dodd Frank). “On the 10th anniversary of an enormous financial crash, Congress should not be passing laws to roll back regulations on Wall Street banks. The bill permits about 25 of the 40 largest banks in America to escape heightened scrutiny and to be regulated as if they were tiny little community banks that could have no impact on the economy.”