- During consideration of H.R. 3126, legislation to create a Financial Product Approval Agency, Democrats on the House Financial Services Committee rejected an amendment offered by Congressman Jeb Hensarling (R-TX) that would have offered real exemptions for small banks and credit unions from the Financial Product Approval Agency. As Committee Chairman Barney Frank noted, community banks "were not the cause" of the financial crisis. The Hensarling amendment would have made clear that the Financial Product Approval Agency would have no authority to oversee or enforce its rules on small community based institutions.
Despite recognizing the enormous compliance burden such an agency would place on community banks and credit unions, Democrats on the Committee adopted an alternative amendment offered by Congressman Brad Miller (D-NC) that offers what Ranking Member Spencer Bachus characterized during debate on the amendment as "illusory" exemptions for small institutions. Under the Democratic proposal, the CFPA would still write the rules, exposing small community institutions to inevitably conflicting mandates and more onerous regulations. The illusion of the exemption was confirmed by Rep. Brad Miller when he said, "CFPA can still take over enforcement if any bank, no matter what size, violates consumer protection laws."
The Hensarling amendment was defeated on a straight party-line vote, 27-41. Click here to view a copy of the amendment.
