U.S. Senators Angus King, I-Maine, and James Lankford, R-Okla., sent a letter to the leaders of the Senate Banking, Housing, and Urban Affairs Committee urging them to hold hearings on legislation that would help provide regulatory relief to smaller financial institutions.

“We are deeply concerned that community banks and small credit unions are shouldering increasingly high compliance costs that stem from outdated, unnecessary, or overly burdensome rules,” the Senators wrote, in a press release. “As the Committee prepares to announce hearings for the June and July work periods, we urge you to hold a hearing on measures to provide regulatory and supervisory relief for our nation’s small financial institutions. In doing so, we hope that you will identify several bipartisan, common-sense legislative measures to provide meaningful relief for these entities.” 

In the letter, the Senators emphasized how smaller financial institutions often have deeper ties to the communities they serve, lending to businesses, farmers, and individuals that may otherwise struggle to access credit in local markets. But they also pointed out that there is strong evidence suggesting that, after the 2008 financial crisis, many small businesses are now relying on home equity lines of credit and larger banks for their credit needs as smaller banks consolidate – a phenomenon which leaves less small business credit available.

The Senators also suggested requesting that federal banking regulators from the Federal Deposit Insurance Corporation (FDIC), Consumer Financial Protection Bureau (CPFB), Office of the Comptroller of Currency (OCC), and the Federal Reserve be asked to appear before the Committee to identify new ideas.

“We owe it to our community banks, small credit unions, and to the customers they serve to recognize the key structural differences that exist between small and large financial institutions and responsibly adjust the regulatory framework to reflect those differences,” they wrote.

The letter was also signed by Senators Orrin Hatch, R-Utah, Joe Manchin, D-W.Va., Bill Nelson, D-Fla., and James Inhofe, R-Okla.

The complete text of the letter is below and can be read HERE:

+++

May 17, 2017 

Dear Chairman Crapo and Ranking Member Brown:

We are appreciative of efforts made in the last session of Congress by this Committee to assist small financial institutions, and hope that work continues. We are deeply concerned that community banks and small credit unions are shouldering increasingly high compliance costs that stem from outdated, unnecessary, or overly burdensome rules. As the Committee prepares to announce hearings for the June and July work periods, we urge you to hold a hearing on measures to provide regulatory and supervisory relief for our nation’s small financial institutions. In doing so, we hope that you will identify several bipartisan, common-sense legislative measures to provide meaningful relief for these entities.

Our community institutions lend to businesses, farmers, and individuals that may otherwise struggle to access credit in their local markets. These institutions are critical to the health of small businesses that depend on this kind of traditional credit. Yet there is strong evidence that, post the 2008 crisis, nonagricultural small businesses are increasingly relying on home equity lines of credit and larger banks for their credit needs as small banks consolidate – and less small business credit is available as a result.

In addition, the presence of community banks in rural areas gives consumers access to lending specialists who understand their unique needs, whether it be a loan for new logging or farming equipment, financing for a major facility expansion, or a mortgage for a first time homeowner with a small down payment. Since many of these small financial institutions are owned by their own depositors, rather than by shareholders, they also have strong ties to their communities.

You may also consider requesting that federal banking regulators from the FDIC, CFPB, OCC, and the Federal Reserve appear before the Committee to help identify new ideas. In prior sessions of Congress, these regulators have worked with Members of Congress to identify common-sense, bipartisan legislative solutions to regulatory challenges facing small financial institutions. This model has been successful, in part, because of federal regulators’ keen understanding of the rulemaking process and how it can impact community institutions.

We owe it to our community banks, small credit unions, and to the customers they serve to recognize the key structural differences that exist between small and large financial institutions and responsibly adjust the regulatory framework to reflect those differences. We thank you for your attention to this important issue and urge you to prioritize the matter in Committee.