WASHINGTON – Rep. Scott Tipton, R-Cortez, challenged Treasury Secretary Jacob Lew on the impact of federal regulations on community banks during a House Financial Services Committee hearing on Tuesday.
Tipton questioned Lew – who is the chairman of Financial Stability Oversight Council – as to why the organization has not reviewed the effects of these regulations on the local banks in the over 40 FSOC meetings since 2010, despite being legally required to do so under the Dodd-Frank Act.
“We’ve not ruled out doing a more formal review, but we’ve been in the implementation stage where agencies have had the first round of implementing Dodd-Frank on their plates,” Lew said.
Tipton’s question stemmed from a meeting he had with the Colorado First National Bank in Delta.
He said the banks were struggling with burdensome capital requirements and excessive regulations that require them to be able to spend money on complying with regulations rather than being able to grow the bank.
“They said the bottom line is that they really feel that they no longer run their bank, but it is being run by the federal government and by regulations,” Tipton said. “What do you tell that small bank?”
Lew replied: “What I would tell that bank is that we have designed rules, and regulators have designed rules to try to take account in the differences in terms of the level of reporting and what’s required, and it would really depend on what the specific issues were.”
A spokesman for Tipton pointed to a recent Harvard study, which found that the total number of community banks has declined 69 percent over the past two decades, from over 10,000 in 1994 to just over 6,000 in 2014.
The study’s researchers write that “an increasingly complex and uncoordinated regulatory system has created an uneven regulatory playing field that is accelerating consolidation for the wrong reasons.”
Michael Cipriano is a student at American University in Washington, D.C., and an intern for The Durango Herald.
