Relative to the easing of banking regulations in the consumer compliance area there is an attitude in Washington that I have never seen before. By Washington, I mean both Congress as well as the federal regulatory agencies. There seems to be bi-partisan agreement that the new regulations that have been put in place in recent years have not only created an unnecessary cost burden on ﬁnancial institutions but they have caused a lessening of credit available to many consumers. There is the potential that the pendulum is about to swing in the favor of more reasonable regulation.
In a recent article, Cindy Prince outlined the Dodd Frank amendments in the Senate bill. The removal of the ability to pay rules for qualiﬁed mortgages and the HMDA reporting for community banks is a huge step. Amazingly, the bill got 66 votes in the Senate, enough to avoid cloture. That shows that there is bi-partisan support for reasonableness.
On another front, Treasury is considering changes in the CRA rules. It realizes that the dimensions of banking have changed since the rules were written and that changes need to be made to make compliance with the rules easier. It feels that the deﬁnition of what is a community investment is often unclear. Even more important, Treasury is acknowledging that many of the CRA rules and guidances are so subjective that they provide little concrete guidance as two what they mean or what is required for compliance. Treasury is suggesting that it increase the clarity of terms like excellent, substantial extensive, etc.
Mick Mulvaney, the new head of the Consumer Financial Protection Bureau, has a far diﬀerent view of the relationship of the bureau and the ﬁnancial services industry than his predecessor had. It is less aggressive and more cooperative. The CFPB has issued eleven requests for information about several of its activities. In his semi-annual report to Congress, he suggests that Congress regulate the funding of the CFPB and that it approve all new major rules.
All of the above suggests that there is now a willingness in Washington to do the right thing. The question is, what is the right thing? History has shown that without regulation bad actors in the ﬁnancial services industry will take advantage of their account holders, often pretty egregiously. On the other hand if the regulations are too restrictive everyone gets hurt. What Washington needs is reasoned input. You can be sure that the various consumer protection organizations will put their oar in the water. Likewise, will the various state and national banking organizations. But everyone knows what they will say before they say it. What they need is your input. You sit where the rubber meets the road. You know what regulations are reasonable and what information your account holders need.
Write your congressman and senators and the agencies. Give them your input. Don't just say that I am going to do that, do it now and we will all beneﬁt.