×

Lifting the banking burden

Senate bill gives small banks, credit unions a regulatory break

Jill Schramm/MDN Northern Tier Credit Union in Minot, part of North Star Community Credit Union, is among community banks and credit unions that would benefit from a Senate bill that eases federal regulations.

Community banks and credit unions are welcoming U.S. Senate passage of a banking bill last week that would ease the regulatory burden impacting their operations.

The Economic Growth, Regulatory Relief and Consumer Protection Act strengthens consumer protections while tailoring regulations for small banks and credit unions to better reflect their business models.

“This is the first piece of legislation in 10 years that really walks back some of those stifling rules for our smaller banks,” said Barry Haugen, president of Independent Community Banks of North Dakota, Bismarck. “It incorporates a number of regulatory relief pieces that are helpful to community banks, not only in our state but across the country.”

Sen. Heidi Heitkamp, D-ND, helped write and negotiate the bill over several years, introducing the bill last fall with a bipartisan group of senators.

“North Dakotans know it has become harder to get a home mortgage or a small business loan because of red tape, and rural areas are suffering the most,” Heitkamp said in a release announcing the bill’s passage.

She reported the number of community banks and credit unions has dropped by about two-thirds in the past 30 years, yet more than 80 percent of North Dakota deposits still go to community banks.

The number of banks and credit unions in North Dakota has dropped from 90 to 74 and from 47 to 35, respectively, since the passage of Dodd-Frank banking regulations in 2010, according to Sen. John Hoeven, R-ND.

“The Dodd-Frank bill imposed significant regulatory burdens on our financial industry, regardless of an institution’s size or its role in the financial crisis,” Hoeven said in a release. “This one-size-fits-all approach does not work for our community banks and credit unions. Further, it has actually harmed the consumers it was meant to protect by forcing smaller banks to consolidate, limiting consumer choice in the financial marketplace.”

Among specifics in the Senate bill is the waiving of the certified appraisal requirement for mortgages in rural areas if the lender has contacted three state-licensed or state-certified appraisers and found none who could complete an appraisal within five days.

Bob Herrington, president of North Star Community Credit Union, Maddock, said current regulations force the use of appraisers who aren’t local and aren’t necessarily as attuned to the local market. He said it can be difficult to find an appraiser willing to travel, and costs are increased for the credit union’s members to obtain that appraisal.

“North Star Community Credit Union has been around for more than 80 years. We have been through many different economic cycles, and we have always taken great pride in being able to serve our rural communities and help them through some of those tricky times. The current regulatory environment with everything that’s been added since the last financial crisis has made it more and more difficult to serve Main Street, North Dakota,” he said.

“The current regulatory environment really treats the community banks and the small credit unions in North Dakota just like some of these multi-state, large banking conglomerates,” he added. “That’s the really neat thing about the legislation that’s been approved is that it will realize that small, local credit unions need to have that flexibility to continue to serve their communities.”

The bill eases reporting and examination requirements for community banks and credit unions, makes it easier for these institutions to originate residential mortgages for qualified borrowers and exempts them from complex rules that restrict their investments.

In the area of consumer protection, the Senate bill would:

– Provide free credit freezes and unfreezes and allow consumers to set year-long fraud alerts;

– Provide free credit monitoring for all active-duty service members, and protect veterans’ credit by prohibiting a credit reporting agency from including medical debt in reports;

– Protect seniors by extending immunity from liability to certain people who disclose suspected exploitation of seniors;

– Require the Treasury Department to submit a report to Congress on the risks of cyber threats to financial institutions and the U.S. capital markets.

– Require the Social Security commissioner to provide financial institutions additional verification tools to prevent identity theft.

The Senate bill now goes to the U.S. House, which last week approved a House bill with provisions that relieve some regulatory burden on community banks and credit unions.

“Overregulation has hurt North Dakota’s financial institutions, meaning less access to credit for farmers, fewer banking services in small towns, and increased consolidation. By bringing substantial reforms to community banks and credit unions, businesses and job creation will benefit immensely,” Congressman Kevin Cramer said in a release announcing the House bill’s passage.

Haugen said the House has been passing bills that would be helpful to banks, with many of those pieces finding their way into the Senate bill. Getting a bipartisan bill through the Senate has been a significant achievement and one that he hopes the House will recognize by also passing the bill in its current form, he said.

Newsletter

Today's breaking news and more in your inbox

I'm interested in (please check all that apply)
Are you a paying subscriber to the newspaper? *
   

Starting at $4.62/week.

Subscribe Today