As a result of the "tidal wave of new regulations coming out of the financial crisis," credit unions and many small banks are forced to operate "in a regulatory environment that is rigged in favor of the largest financial institutions."

That was the message from Rick Nichols, president and CEO of Jefferson City, Mo.-based River Region CU, who on Wednesday testified before the Financial Institutions and Consumer Credit Subcommittee at the U.S. House of Representatives.

Nichols, speaking on behalf of the Heartland Credit Union Association and the Credit Union National Association, told the subcommittee River Region CU is a small financial institution, serving just 22,000 members. When Washington produces one-size-fits-all regulations designed to rein in Wall Street banks and other abusers of consumers, “My credit union feels the impact more than Bank of America and Wells Fargo,” Nichols continued. “They have an army of compliance attorneys and all the resources in the world. We simply do not. The system is creating ‘too big to fail’ banks that put all American consumers at risk.”

Nichols thanked the subcommittee for looking at legislative proposals to provide targeted relief to community financial institutions. He voiced his support for Chairman Blaine Luetkemeyer’s (R-Mo.) H.R 2133, the CLEARR Act.

“We are being painted with the same brush as those who commit abuses,” Nichols asserted. “Overregulation is leading to a decreased number of smaller financial institutions that know their communities and work for the people they serve every day. Relief cannot come quickly enough.”

Rick Nichols, CEO of River Region CU, testifying before a House subcommittee
Rick Nichols, CEO of River Region CU, testifying before a House subcommittee Photo courtesy of CUNA

Nichols asked specifically for legislative provisions that would:

· Adjust thresholds for mortgage servicing and escrow account administration;
· Exempt certain higher-risk mortgages from appraisal requirements;
· Repeal NCUA’s 2015 risk-based capital rule;
· Modify the CFPB’s UDAAP authority;
· Improve the CFPB’s final HMDA rules;
· Repeal the CFPB’s authority to collect small business loan data;
· End Operation Chokepoint;
· Give consumers the right to waive waiting periods on mortgage closures;
· Increase the CFPB supervisory threshold to $50 billion;
· Treat mortgages held in portfolio as qualified mortgages; and
· Transfer authority to define ability to repay to the FHFA.

Nichols went on to state his and CUNA’s support or H.R. 924, the Financial Institutions Due Process Act, H.R. 1457, the MOBILE Act, and HR 2396, which makes changes to privacy notification requirements designed to make compliance easier.

“America’s credit unions greatly appreciate the subcommittee’s work on these targeted regulatory relief proposals,” he said. “The complexity of the crisis facing community-based financial institutions means that one piece of legislation is unlikely to remove all the obstacles these institutions face in serving consumers. There is much more work to be done."

“In conclusion, we encourage the subcommittee to continue to pursue additional measures to provide meaningful relief to community financial institutions like River Region Credit Union,” Nichols said. “It is important to keep in mind the people these regulations affect.”