Barr Delivers Opening Statement at Financial Institutions and Monetary Policy Subcommittee Hearing on Revamping and Revitalizing Banking in the 21st Century
Washington,
February 8, 2023 -
Today, the House Financial Services Subcommittee on Financial Institutions and Monetary Policy, led by Chairman Andy Barr (KY-06), is holding its first hearing of the Congress entitled, “Revamping and Revitalizing Banking in the 21st Century.”
Watch Chairman Barr’s opening remarks here.
Read Chairman Barr’s opening remarks as prepared for delivery:
“Thank you to our witnesses for joining us today for the first hearing of the Financial Institutions and Monetary Policy Subcommittee in this session of Congress.
“Today’s hearing will examine areas where banking regulations can be updated to align with existing and emerging technologies, barriers to entry for de novo banks and impacts on competition in community banking, the current framework governing consumer data privacy, and transparency and accountability in bank regulation and supervision.
“For years, I have been raising the alarm and pushing for regulatory changes to address the crisis of de novo bank charters. According to the FDIC, only 60 new banks have been chartered in the past decade. In contrast, more than 2,000 banks were formed from 1990-2008.
“In addition to fewer new banks, there has also been a growing trend of community banks merging, being acquired, or simply closing their doors, which has accelerated following the financial crisis.
“While low interest rates and a weak economy may have contributed to this decline over the past decade, we also know these trends are caused by a number of factors including cost, compliance, and regulatory burden.
“Congress should be encouraging an economic and regulatory environment that allows community financial institutions to thrive, let alone survive.
“My bill, the Promoting Access to Capital in Underbanked Communities Act, seeks to increase de novo bank formations through a reduction in burdensome initial capital requirements and restrictions.
“A bill sponsored by Rep. Auchincloss directs the federal banking agencies to study and report to Congress on ways to promote the establishment of new banks and credit unions, including community development financial institutions (CDFIs) and minority financial institutions.
“These bills are steps toward identifying and addressing the challenges posed to the chartering of new financial institutions. The fact is, encouraging the establishment of de novo financial institutions will help fill the needs left by a drought of new community financial institutions, along with consolidation and closures over the past decade. Enabling more de novo institutions will increase banking options and competition to better serve families, small businesses, and local communities.
“We will also be discussing bills sponsored by Rep. Williams and Rep. Foster that encourage coordination of state banking agencies and federal banking agencies in regulating and examining the activities of bank service companies and prevent the Financial Stability Oversight Council (FSOC) from voting to determine that a nonbank financial company will be supervised by the Federal Reserve without first considering alternatives.
“These bipartisan bills are first steps toward clearly demonstrating Congress’ intent when it comes to transparency and accountability in financial regulation and supervision.
“Technology has fundamentally changed the way consumers participate in our financial system, both by improving access and inclusion. It has also increased the amount of sensitive data shared with service providers and the government. Our privacy laws—especially as they relate to consumers’ financial data—must keep up.
“The financial services industry is already highly regulated with regard to consumer financial information disclosed under the Gramm-Leach-Bliley Act (GLBA). However, the ways in which consumer data is collected and disclosed has changed dramatically in the past twenty years, due primarily to the proliferation of new technologies that consumers interact with on a daily basis. It is time for Congress to update the protections in GLBA to bring our regulations into better alignment with existing and emerging technologies.
“The discussion draft we’re discussing in this hearing is intended to modernize the Gramm-Leach-Bliley Act using a technology-agnostic approach, put control back in the hands of the consumer, protect against the misuse or overuse of consumer nonpublic personal information, empower consumers by requiring privacy terms and conditions to be transparent and easily understandable, and provide a national standard for data privacy, thereby reducing compliance burden and providing certainty to both consumers and entities that handle their financial data.
“I look forward to continuing to work with my colleagues on this discussion draft to secure Americans’ privacy without strangling innovation.”
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