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The Independent Community Bankers of America (ICBA) has told Congress that excessive financial regulations have crossed a line by harming the customers they are supposed to protect. By cutting off access to credit to creditworthy borrowers, regulatory overkill threatens individual consumers and the viability of small businesses nationwide, ICBA told the House Financial Services Committee.
“Regulatory burden reaches the level of overkill when it injures the customer it was intended to protect,” said David Williams, chairman of Centennial Bank in Lubbock, Texas. “Empirical research, my own experiences, and the stories I have heard from other community bankers across the nation clearly demonstrate that we have reached that point.”
In his testimony, Williams gave several examples of the counterproductive consumer impact of regulation, including:
►Mortgage rules that are pushing would-be homeowners in New Mexico into the rental market and actually driving up rents,
►Regulations that raise the fees for low-dollar loans, causing consumers to pay significantly more or be denied access altogether,
►Rural lenders in Texas and elsewhere that do not meet the Consumer Financial Protection Bureau’s “rural” definition, which inhibits their ability to lend to rural borrowers, and
►The many customers denied a mortgage loan for relocating to a new town, including teachers, doctors and pharmacists.
ICBA again urged Congress to continue advancing legislation with provisions of ICBA’s Plan for Prosperity, including the CLEAR Relief Act (HR 1233) introduced by Rep. Blaine Luetkemeyer (R-MO) and the Portfolio Lending and Mortgage Access Act (HR 1113) introduced by Rep. Andy Barr (R-KY). ICBA’s Plan for Prosperity regulatory relief platform includes a variety of reforms to mortgage rules, Basel III capital standards and other excessively burdensome regulations to ensure community banks can continue serving their customers and communities.