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Financial Services Committee Passes CFPB Regulatory Relief for CUs
Friday, January 19, 2018 6:40 AM

The U.S. House Financial Services Committee voted Wednesday along party lines to pass H.R. 1264, the Community Financial Institutions Exemption Act, by a vote of 30-25.

H.R. 1264 was conceived by Texas credit unions and community banks to strengthen the exemption authority the CFPB currently has but has rarely used effectively. Chairman Jeb Hensarling (R-Texas) and Reps. French Hill (R-Ark.), Frank Lucas (R-Okla.), and Roger Williams (R-Texas) voted to support regulatory relief for credit unions. Unfortunately, Reps. Al Green (D-Texas) and Vicente Gonzalez (D-Texas) voted no with the rest of the Democrats on the committee.

"We appreciate everyone on the US House Financial Services committee who voted for less regulation on credit unions, listening to credit union leaders from their states," said Caroline Willard, president and CEO of the Cornerstone Credit Union League. "Hopefully the House will take up H.R. 1264 soon to implement an effective exemption for community financial institutions from more CFPB rules."

In his opening remarks, Hensarling said excessive regulation of financial institutions "will continue to clog the arteries and prevent the free flow of capital that is the lifeblood of economic growth." He added, "Congress must do more to reduce the burdensome and often unnecessary red tape that prevents companies from growing and creating more and better jobs and those regulatory burdens that hinder Main Street financial institutions from serving their customers."

The Cornerstone lobby team had approached Williams in 2015 about filing legislation to address the lack of use by the CFPB of its authority to exempt credit unions from the massive regulations they were promulgating. H.R. 1264 would grant immediate relief to financial institutions under $50 billion, while keeping the CFPB's authority to revoke the exemption for institutions that behave improperly.

Small community financial institutions are subject to the same compliance costs as larger ones, but the disproportionate costs have resulted in lower revenue streams and fewer services and products for consumers. Section 1022 of Dodd-Frank gives the CFPB the authority to exempt smaller financial institutions from the rules intended for larger banks, but the CFPB has refused to use that authority.

Williams told the committee the bill would require the CFPB to consult with the primary regulators of community institutions as to whether new rules should go forward or if an exemption should exist. "Nothing in the bill would prevent the CFPB from revisiting current rules to determine if new exemptions are justified," Williams said.

Texas Credit Union Association President Jeff Huffman said, "Rep. Williams has done a great job bringing H.R. 1264 forward and spotlighting the need for functioning exemption authority at the CFPB to preserve the option for consumers to have access to locally owned and operated financial institutions. Also, we appreciate Chairman Hensarling for his leadership on this subject and bringing H.R. 1264 before the committee for consideration."
Rep. Blaine Luetkemeyer (R-Ky.) reminded the members that consumer protection standards are not permanent because the CFPB can revoke the exemption for any bad actors. He praised Williams for bringing the bill and said it will allow financial institutions to get back to business.

North Carolina has lost 50 percent of its banks since 2008 due to compliance costs, according to Rep. Robert Pittenger (R-N.C.), making it harder for banks to provide goods and services and harder for small businesses to obtain capital. Passage of H.R. 1264 will allow more resources to go into the local economy than to addressing compliance costs.

Rep. Scott Tipton (R-Colo.) referenced the "tale of 2 economies," saying that what happens to financial institutions affects the economic recovery of communities. Larger banks can shoulder compliance costs, and they have bounced back from the economic meltdown; but the smaller institutions in smaller communities have not, inhibiting some communities' economic recovery.

Rep. Keith Rothfus (R-Penn.) said there are communities in his district that have only an ATM left and "you can't have a relationship with an ATM."

Hensarling thanked Williams for his work on this vital issue. "If we truly care about the plight of those working hard to make ends meet, we will pass this bill," he said. "Regulators will still have the ability to enforce all consumer protection, and we will quit losing a community bank or credit union each day."

For more information, please contact Texas Credit Union Association President Jeff Huffman at 469-385-6488 or