Although they will not be supervised by the Consumer Financial Protection Bureau, executives of small financial institutions told a congressional panel Monday they remain uneasy about the effect the bureau will have on their businesses.
While the bureau's rulemaking powers extend to all banks and credit unions, the Dodd-Frank Act authorized the CFPB to enforce those rules just at banks with over $10 billion in assets as well as large nonbanks. Community banks and credit unions will still report to their primary regulator for compliance with CFPB policies.
But at a field hearing in Wasau, Wis., before the House Financial Services subcommittee on financial institutions, executives from the state expressed their anxiety about the CFPB's reach. The hearing took place in the congressional district of Rep. Sean Duffy, a first-term Republican who sits on the subcommittee.
Marty Reinhart, the president of the $96 million-asset Heritage Bank in Spencer, Wis., said Congress should give other banking regulators a greater role in the CFPB's rulemaking process.
"In particular, the CFPB should not implement any rules that would adversely impact the ability of community banks to customize products to meet customer needs," Reinhart said in prepared testimony.
Mark Willer, chief operating officer of Royal Credit Union in Eau Claire, Wis., agreed, saying the bureau - which took over consumer compliance responsibility formerly held by the Federal Reserve Board - will increase the burden for everyone.
"Like many of my colleagues in the credit union system, I am afraid that the CFPB will only add a layer of regulation, not replace a layer of regulation as it was intended," he said in written testimony.
But Bethany Sanchez, community development director of the Metropolitan Milwaukee Fair Housing Council, urged the lawmakers to work with the CFPB to identify areas of concern rather than pursuing legislation to weaken Dodd-Frank before it is fully implemented.
"Please give it a little time," she said.