WASHINGTON–A credit union CEO will tell Congress today that a “tidal wave” of regulations is swamping credit union boats, while large financial institutions just continue to get larger.
In remarks to the Financial Services Subcommittee on Financial Institutions and Consumer Credit United States House of Representatives titled, “Examining Legislative Proposals to Provide Targeted Regulatory Relief to Community Financial Institutions,” Rick Nichols, president and CEO of River Region Credit Union in Jefferson City, Mo., said his $198-million CU and others are being stymied by regulations.
“In the wake of the tidal wave of new regulations following the financial crisis, the largest banks and nonbank financial service providers continue to grow larger, while smaller financial institutions suffer under an anti- competitive regulatory scheme rigged to favor those that can better afford to comply with the regulations coming out of Washington,” said Nichols. “Unfortunately, the compliance burdens stemming from this new environment take away from our ability to serve our members. For instance, new mortgage disclosure and underwriting requirements imposed by the Consumer Financial Protection Bureau have had the unintended effect of preventing credit unions, such as River Region Credit Union, from lending at pre-crisis levels. Increasing the cost of making a loan does not spur economic growth in communities like Jefferson City; rather, it leads to fewer consumers having access to the products and services they need. Although our credit union continues to provide mortgage loans, many others have either exited the market or reduced their offerings.”
During his testimony, Nichols outlined the “common sense proposals” CUNA has been advocating that he said would make for “significant strides in furthering the goal of removing regulatory barriers to allow credit unions to more fully serve their members.”
He also placed part of the blame for the ongoing reduction in the number of credit unions on the ever-increasing regulatory burden that has forced many CUs into mergers.
Nichols said TILA/RESPA rules are “far and away the rules most negatively impacting credit unions offering mortgages,” while 23% of CUs recently indicated in a survey that they plan to either curtail their HELOC offerings or stop offering them in response to the new HMDA rules.
Nichols cited a 2016 CUNA study that found the impact of regulatory burden on credit unions and their members was $7.2 billion in 2014 alone.
He also outlined a number of other areas where regulatory relief could be provided.
Nichols’ full statement to the Committee can be found in CUToday.info’s The Gov here.