Lack of Clarity and Due Process From Agencies Hinder Firms’ Ability to Operate
April 6, 2017 -
The Financial Institutions and Consumer Credit Subcommittee held a hearing on Thursday on the need to increase transparency in the financial regulatory system and examined opportunities for reform.
“Financial companies are standing on regulatory quicksand, having to constantly shift in an effort to stay afloat. There are unending attempts to decipher a regulator’s wants and needs, allowing little to no foundation on which to run a business,” said Chairman Blaine Luetkemeyer (R-MO). “Ultimately, this world of ambiguous guidance, contradictory rules, and aggressive enforcement has led to confusion for financial companies seeking to comply with Dodd-Frank and other Obama-era rules. But the greatest impact is on the customers of those financial companies, who in many cases have been left clamoring for access to financial services, and paying more for the ones they’ve been able to retain.”
Key Takeaways from the Hearing:
- Limited and ambiguous guidance from federal agencies in recent years has led to confusion for financial companies, impacting their ability to serve consumers and innovate.
- Evidence of limited due process and significantly delayed examination reports have also left financial institutions with a lack of clarity surrounding the federal agencies’ interpretation of rules, making compliance with those rules more difficult.
- If we want a healthier economy and more freedom, we must increase access to competitive, transparent, and innovative markets that provide a ladder of opportunity on which all Americans can rise.
“Financial firms—not just banks—have long dealt with capital rules, liquidity rules, disclosure rules, leverage rules, special exemptions for rules, and the constant threat that regulators would make up new rules or enforce old rules differently. There is no doubt that, for decades, the U.S. regulatory framework has increasingly made it more difficult to create and maintain jobs and businesses that benefit Americans. One of the main reasons the regulatory regime has been counterproductive for so long is because it allows regulators to micromanage firms’ financial risk, a process that substitutes regulators’ judgments for those of private investors.” - Norbert Michel, Senior Research Fellow, Financial Regulations and Monetary Policy Institute for Economic Freedom and Opportunity, The Heritage Foundation
“Credit should not be limited to the wealthy or those with perfect credit scores. Credit should be made available to the single mom who needs a loan to purchase a car seat and crib for her new baby – regardless if she has a few dings on her credit, so long as she can still afford the monthly payments of an installment loan. Credit should be made available to the recent college grad who may not have a good credit record yet, but needs financing to purchase a car to get to his first job. It is not apparent that the Consumer Financial Protection Bureau shares this philosophy. The CFPB seems to believe that credit should only be extended to those borrowers who do not present any risk, such as holders of the Amex Black Card who make more than enough money to pay back a loan.” - Bill Himpler, Executive Vice President, American Financial Services Association