CBA Letter for the Record re House FI Reg Relief Hearing

July 13, 2017



The Honorable Blaine Luetkemeyer


Committee on Financial Services

Subcommittee on Financial Institutions and Consumer Credit

U.S. House of Representatives

2230 Rayburn House Office Building

Washington, D.C. 20515       

The Honorable Lacy Clay

Ranking Member

Committee on Financial Services

Subcommittee on Financial Institutions and Consumer Credit

U.S. House of Representatives

2428 Rayburn House Office Building

Washington, D.C. 20515       



 Dear Chairman Luetkemeyer and Ranking Member Clay:


The Consumer Bankers Association (CBA) appreciates the Financial Institutions and Consumer Credit Subcommittee’s interest in tailoring the regulatory framework for financial institutions serving consumers and small businesses.  From underwriting loans to main street businesses to providing banking services to previously unbanked or underbanked consumers, CBA’s members are integral to fueling the economic engine that drives prosperity in communities around the country.  As such, we would like to take this opportunity to submit the following comments on the hearing entitled, “Examining Legislative Proposals to Provide Targeted Regulatory Relief to Community Financial Institutions.”  CBA is the voice of the retail banking industry whose products and services provide access to credit to millions of consumers and small businesses.  Our members operate in all 50 states, serve more than 150 million Americans and collectively hold two-thirds of the country’s total depository assets.


Financial institutions of all sizes need relief from the overwhelming regulatory burden that requires valuable resources to be redirected away from the customer and focused on satisfying the demands from multiple regulatory agencies that operate independently and with little to no coordination. The legislation considered today would provide targeted relief and improve consumer access to well regulated banking products.


Ensuring Quality Unbiased Access to Loans Act of 2017


CBA strongly supports the Ensuring Quality Unbiased Access to Loans Act of 2017.  This legislation would promote access to small-dollar bank loans, often known as deposit advance products (DAP), which were available prior to guidance issued in 2013 by the Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC). 


DAP served the critical need of providing emergency credit to pre-existing banking customers.  Unfortunately, the FDIC and OCC guidance effectively eliminated the ability of the financial institutions they regulate to offer a viable alternative to compete with payday lending.  The FDIC and OCC guidance recommended the use of underwriting that is more appropriately applied to a much larger credit product, such as a mortgage loan, and placed other restrictions on the products. This, combined with a low interest rate environment, has made small-dollar credit unviable and has forced banks to exit the market.


We are encouraged that Congress is taking action to allow highly regulated banks to reenter this market and ensure consumers have access to small dollar credit liquidity. CBA strongly supports the repeal of the current DAP guidance and the requirement that any future guidance be subject to a cost-benefit analysis and public notice and comment period.


Making Online Banking Initiation Legal and Easy Act of 2017


We also strongly support H.R. 1457, the Making Online Banking Initiation Legal and Easy Act of 2017 (MOBILE Act), which would simplify consumers’ ability to open bank accounts online or on a mobile device from anywhere in the United States.  This common-sense, bipartisan legislation would provide consumers with improved access to safe and regulated financial services products and promote financial inclusiveness for unbanked and underbanked consumers.


Some CBA members have developed applications that allow consumers to verify their identity and open a bank account online or on a mobile device without the inconvenience of visiting a branch.  One method allows consumers to “swipe” their driver’s license or other state-issued identification card to record their information.  Another method requires consumers to take a photo of their identification card and face.  Both methods simplify the account opening process and increase the number of financial institutions that consumers can access at their fingertips.


The MOBILE Act brings consistency to the various state laws that address a bank’s ability to implement the needed verification processes that would allow a consumer to swipe or copy a state-issued identification card for the purposes of opening an account.  


Community Lending Enhancement and Regulatory Relief Act of 2017


CBA supports several provisions included in H.R. 2133, the Community Lending Enhancement and Regulatory Relief Act of 2017.


Abusive Standard

The CFPB was granted a significant new authority, when compared to other banking regulators, to issue enforcement actions based on unfair, deceptive, or abusive acts or practices (UDAAP).  The inclusion of “abusive” within the power and scope of the CFPB’s authority has proven to be a powerful tool that the Bureau can use to bring enforcement actions and levy penalties over the institutions they supervise.  As the CFPB wields this new and undefined authority, the prudential regulatory agencies have authority to enforce traditional unfair or deceptive acts or practices (UDAP) powers under the Federal Trade Commission Act, even against large banks subject to CFPB supervision.  The prudential agencies and the CFPB pursue actions without consultation, which not only creates duplication and overlap but could result in divergent interpretation and application of the legal standards. 


CBA supports this legislation that would provide uniformity between the financial regulators by removing the “abusive” standard and require the Bureau to consult with the appropriate prudential regulator before taking action in an effort to eliminate duplication and ensure that there is a uniform standard for UDAP. 


Section 1071

CBA members anticipate compliance and litigation complications that could lead to a chilling of small business lending and due to the complex new data collection requirements under Section 1071 of the Dodd-Frank Act. 


Section 1071 amends the Equal Credit Opportunity Act to create a Home Mortgage Disclosure Act (HMDA)-like set of requirements for business credit applications.  In brief, every financial institution must inquire of any business applying for credit whether the business is a small business, women- or minority-owned business, maintain a record of the information separate from the application, and report the information along with related information about the application (location of business, action taken, amount of credit provided, etc.).  The information must be made public on request in a manner to be established by regulation, and will be made public annually by the Bureau. 


The potential for overly burdensome data collection requirements could stifle small business lending, greatly increase compliance costs for small business lenders, open the door to costly litigation, and duplicate existing law.  Lenders will need to revamp lending systems and processes in order to collect the required data, adding cost to compliance.  The net result will limit the resources banks have to make loans and add greatly to compliance burdens and risks, a negative for small business lending.  In order to prevent a reduction in small business lending and an increase in costly litigation that could occur from the misuse of the information collected, CBA supports the repeal of Section 1071.


Operation Choke Point

CBA supports the inclusion of legislation to place restrictions on Operation Choke Point.  The Department of Justice (DOJ) instituted Operation Choke Point with the goal of “choking off” banking services to businesses the government deemed fraudulent or high risk regardless of the legality of their operations.  CBA and our members oppose any effort by DOJ or the bank regulatory agencies to force financial intuitions to terminate business relationships without proof of illegal behavior.


Financial Institutions Due Process Act of 2017


Additionally, CBA supports H.R. 924, the Financial Institutions Due Process Act of 2017.  This legislation would ensure financial regulatory agencies provide timely examination reports to allow banks to take corrective action swiftly.  It would also create an independent examination review panel of three judges to hear appeals of supervisory determinations.  Furthermore, H.R. 924 would set up an advisory opinion process through which financial institutions could request a written determination from regulators for permission to take action or an interpretation of law, regulations, or accounting standards.


Privacy Notification Technical Correction Act


CBA supports H.R. 2396, the Privacy Notification Technical Correction Act, to reduce unnecessary paperwork by streamlining the reporting of bank privacy policies.  Specifically, H.R. 2396 would relieve a bank of its annual privacy policy notice requirement if it has not changed its policies and practices, makes its current policy publically available, notifies customers of the availability of the notice on periodic billing statements or electronically, and posts all notices if it maintains more than one policy.




CBA stands ready to work with Congress to ensure a sound regulatory framework that safeguards the American consumer, ensures access to credit for consumers and small businesses, and promotes competition in the financial marketplace.  On behalf of the members of CBA, we appreciate the opportunity to submit this letter for the record. 




Richard Hunt

President and CEO

Consumer Bankers Association