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U.S. Sen. Mike Crapo (R-ID) has introduced legislation that would ensure the federal financial regulators identify all unnecessary, outdated and unduly burdensome regulations. Unfortunately, included in the Federal Register for this 10-year review are two footnotes that suggest Consumer Financial Protection Bureau (CFPB) rules and new Dodd-Frank regulations that have recently gone into effect will not be evaluated. The bill, S881, would make the 10-year regulatory evaluation process more effective by ensuring all regulations are reviewed, including recent CFPB and Dodd-Frank rules.
Our current regulatory framework has discouraged the creation of new small banks and credit unions. Since 1990, more than 3,000 small banks and more than one-half of credit unions have closed. The 1996 Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) was designed to consider how to best reduce the regulatory burden on financial institutions while, at the same time, ensuring the safety and soundness of the financial system. The first EGRPRA review submitted to Congress in 2007 states: “Besides reviewing all of our existing regulations in an effort to eliminate unnecessary burdens, the federal banking agencies worked together to minimize burdens resulting from new regulations and current policy statements as they were being adopted.” The report submitted to Congress specifically discussed consumer financial regulations and recently adopted rules.
“Rather than predetermine which rules should or should not be reviewed, this legislation will require the federal financial regulators to review all existing regulations, including Dodd-Frank and CFPB rules” said Sen. Crapo. “Crushed under an ever-increasing regulatory burden, this review is only meaningful if we identify the biggest challenges for community banks and credit unions and provide real solutions.”
Specifically, S881 would make the following reforms to EGRPRA:
►Lists each agency that is a member of the Federal Financial Institutions Examination Council separately—Consumer Financial Protection Bureau, National Credit Union Administration (NCUA), Office of the Comptroller Currency, Federal Deposit Insurance Corporation, and Federal Reserve to ensure that CFPB and NCUA are mandated to take part in the review process.
►Specify that such review is to include rule-makings, joint or otherwise, under Dodd-Frank.
►Expands the review by broadening the requirement to apply to financial institutions in general as opposed to just insured depository institutions. FFIEC is designed to prescribe uniform principles and standards to Federal examination of financial institutions, not just insured depository institutions.