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Last Friday the House debated a rather simple, common sense bill requiring the Congressional Budget Office to produce long-term, macroeconomic analysis of proposed legislation. It was strongly opposed by House Democrats. If this bill had been law just a few years ago, Members would not have had to pass Obamacare to find out what’s in it. They and the public would have known before the fact, instead of after, that according to Congressional Budget Office Obamacare will result in 2.5 million fewer jobs. Information like this should not be swept under the rug.
Regrettably something similar happened in this committee just last week. The Oversight and Investigations Subcommittee received testimony from a high-ranking CFPB whistleblower concerning serious allegations of discrimination and retaliation at the Bureau. Her testimony was corroborated by CFPB’s own independent investigator. Both testified as to many other CFPB employees who have lodged these same allegations. What was the response from Democratic leadership on the committee? They demanded the hearing be canceled; in other words, the matter would regrettably be swept under the rug. Hidden from public view. Ignored.
Likewise, many Democrats have harshly criticized cost-benefit analysis. Looking at the pluses and minuses of a rule, the impact on jobs, asking the question whether a rule on balance helps or harms hardworking, struggling American families. The Ranking Member, for example, declared that legislation requiring cost-benefit analysis is “dangerous.” I believe what is “dangerous” is sweeping under the rug the mounting evidence that many rules promulgated under Dodd-Frank Act and its ideological precursor, the CARD Act, are harming consumers.
The Federal Reserve now reports that one-third of black and Hispanic borrowers would be hurt by the Qualified Mortgage rule. In the American Banker Association’s most recent lending survey of banks, one-third of respondents said they plan to reduce their mortgage lending only to QM loans. Perhaps that is why QM is rapidly becoming known as the “Quitting Mortgages” rule.
The FDIC has reported it has become more difficult for lower-income Americans to access banking services because checking and savings account fees have gone up. Almost one-half of banks that previously offered free checking no longer do so. In a recent survey of banks regarding CFPB’s remittance rule, the ABA reported that 42 percent will now increase fees and 18 percent plan to stop offering the services altogether.
40 percent of lower income families have reported that their credit cards have been canceled, not renewed, or their limits reduced since the passage of the CARD Act.
Clearly the evidence continues to mount and cannot be conveniently swept under the rug. It is time for all to take off partisan blinders and acknowledge the truth that Washington regulators aren’t always right and more red tape is not always the solution to every problem. It is time to hold Washington accountable.
Frequently I receive correspondence like the following from a banker in Central Texas who I think it sums up the challenges well. He wrote:
“We have provided fair, honest, and competitively priced loans and home mortgages in our market for as long as I have been with the bank. And for the record, we have not had a home foreclosure in over 25 years… Currently our ability to cope with the regulatory burden is at a critical stage. We are spending an unprecedented amount of time and resources trying to understand this process as the various agencies continue to draft new rules and guidance at will.
“Just a new regulation here and there, and now consumer lending has become a compliance nightmare. There is no time left to take care of our customers or develop new relationships because all of our team is busy working on compliance issues. The spirit of the law no longer exists as the regulatory environment has changed from a helpful and supervisory approach to the ‘gotcha’ attitude where only the slightest issue can bring instant criticism to your bank. Reluctantly we are working to downsize our consumer lending program, especially in the small loan area. Also, due to the massive new regulatory focus on the mortgage loans, we have suspended our home lending activities as of this month.
“This is not good news for our community, but we can no longer comply with the massive burden.”
I think the letter speaks for itself. Regrettably, I receive many such letters. Thus, the subject of our hearing today.