Industry experts testified before the House Financial Services Subcommittee on Financial Institutions on Wednesday, saying the regulatory burden imposed by the Dodd-Frank Act has had a negative effect on credit unions’ ability to serve their customers.
Robert Burrow, the president and CEO of West Virginia-based Bayer Heritage Federal Credit Union, said the growing regulatory burden “stems not just from one single onerous regulation but a compilation and compounding of numerous regulations.”
Burrow said while many of the rules “may be worthwhile and well-intentioned,” they are issued “with little coordination between regulators and without elimination or removal of outdated or unnecessary regulations that remain on the books.”
Pamela Stevens, the president and CEO of Texas-based Security One Federal Credit Union, said Dodd-Frank’s one-size-fits-all approach is harmful to small institutions because the costs associated with compliance hinder the ability of the institutions to offer competitive pricing.
“The burden of complying with ever-changing regulatory requirements is particularly onerous for smaller institutions like mine, because most of the costs of compliance do not vary by size, and therefore proportionately are a much greater burden for smaller as opposed to larger institutions,” Stevens said. “If a smaller credit union offers a service, it has to be concerned about complying with most of the same rules as a larger institution but can only spread those costs over a much smaller volume of business. Not surprisingly, smaller credit unions consistently say that their number one concern is regulatory burden.”
The hearing on Wednesday was just the second in a number of hearings that will be held by the committee to discuss the effect of Dodd-Frank’s regulatory burden and its potentially negative economic consequences.