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Cordray answers senators' letter asking for exemptions for small banks

CFPB Director Richard Cordray recently responded to a bipartisan letter signed by 70 senators (including Oklahoma Senators Inhofe and Lankford!) asking the Bureau to exempt community banks and credit unions from regulations.  The letter pointed to language in Dodd-Frank that allows the Bureau to exempt “any class” of financial institution from its rulemakings.

In a word, Cordray's response was “no.”  His rationale is as follows:

  • Dodd-Frank charges the bureau with enforcing consumer financial protection laws “consistently” in order to promote fair competition;
  • The CFPB has taken specific actions intended to tailor regulations, including an expanded safe harbor for small creditors, expanded exemptions for rural and underserved areas, relaxed appraisal requirements for small creditors and a Home Mortgage Disclosure Act reporting exemption for lower-volume depository institutions.
  • The Bureau is required to use Small Business Review Panels in its rulemakings, as well as its Community Bank Advisory Council, and the compliance resources posted on its website.

“[T]he Bureau recognizes that community banks and credit unions did not cause the financial crisis,” Cordray concludes. “For that reason, the Bureau is committed to ensuring that the regulations that we promulgate are well-tailored and effective.”

“It's true that the Bureau has recently taken some positive changes to help smaller banks in rural areas,” OBA President Roger Beverage said. “These changes deal with mortgage lending, and they are welcome. But more needs to be done to put the blame and the compliance costs solely where they belong, not on smaller, rural community banks in Oklahoma.”

Click here to read Cordray's letter.

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