WASHINGTON, D.C. -

Not long after small bank and credit union executives went to Capitol Hill to describe the rule-following load placed on them by the Consumer Financial Protection Bureau among other federal regulators, Sen. Mike Crapo introduced legislation he said would ensure that agencies identify all “unnecessary, outdated and unduly burdensome” regulations. 

Crapo explained the Federal Register in stipulating a 10-year review has two footnotes that suggest CFPB rules and new Dodd-Frank Act regulations that have recently gone into effect will not be evaluated.  The Idaho Republican said his measure, S. 881, would make the 10-year regulatory evaluation process more effective by ensuring all regulations are reviewed, including recent CFPB and Dodd-Frank rules.

The lawmaker who is a member of the Senate Banking Committee insisted 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, according to Crapo.

“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” Crapo said.  “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.”

Crapo went on to point out that 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.        

Specifically, Crapo’s bill would make the following reforms to EGRPRA:

— Lists each agency that is a member of the Federal Financial Institutions Examination Council separately: CFPB, 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 rulemakings, 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.

The introduction of Crapo’s measure already is being cheered by the financial community.

“We appreciate Sen. Crapo’s leadership on this issue and recognition of the heavy regulatory burden that credit unions are operating under,” said Brad Thaler, who is vice president of legislative affairs for the National Association of Federal Credit Unions.

“While we are pleased that NCUA has shown leadership in voluntarily participating in the EGRPRA process, we believe requiring review of all existing regulations from financial regulators, especially NCUA and CFPB, as this legislation would do, will help in preventing costly, unnecessary or duplicative rules and help credit unions thrive,” Thaler continued.