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Hearing of the Financial Institutions and Consumer Credit Subcommittee of the House Financial Services Committee - "Rising Regulatory Compliance Costs and Their Impact on the Health of Small Financial Institutions"


Location: Unknown

Congresswoman Shelley Moore Capito, R-W.Va., Chairman of the Subcommittee on Financial Institutions and Consumer Credit, delivered the following opening remarks at today's Financial Institutions and Consumer Credit hearing entitled "Rising Regulatory Compliance Costs and Their Impact on the Health of Small Financial Institutions"

Remarks as prepared for delivery:

This hearing will come to order. Over the last 10 months, the Financial Institutions and Consumer Credit Subcommittee held a series of field hearings across the nation. Although the focus of each hearing differed, one common theme emerged: the pressure on small financial institutions is growing across the nation.

One of the most poignant comments I've heard during these field hearings was from a community banker who said "every banker knows that they will eventually have to consider the option of selling their institution to an acquirer…unfortunately, the current regulatory environment is forcing many bankers to make these decisions prematurely."

This morning's hearing will provide all members of the subcommittee with the opportunity to learn more about the growing regulatory burden facing small and medium sized financial institutions. We are not here this morning to de-regulate the financial services industry; rather we are here to learn about the unique challenges faced by these institutions and the impact it has on the communities they serve. We must strike the appropriate regulatory balance and we must pay attention to the cumulative effect of regulatory burden. Outdated and unnecessary rules should be removed as new rules are implemented.

This is not a partisan issue. Treasury Secretary Tim Geithner echoed many of these concerns in an August 2010 speech: "[W]e will eliminate rules that did not work. Wherever possible, we will streamline and simplify…" Unfortunately, little or no progress has been made on streamlining and simplifying as many new rules and regulations are implemented.

I have serious concerns that the growing regulatory burden for small financial institutions will lead to further consolidation in the industry. Between 1990 and 2005 the percentage of banking assets held by the 10 largest U.S. banks grew from 10% to 55%. Small rural communities in states like West Virginia depend on community banks and credit unions. There is little or no incentive for larger institutions to serve these communities. If we do not take steps to ensure the future viability of small financial institutions the very communities they serve will be adversely impacted. Small town America cannot have a resurgence without the local community bank and credit union there to help spur economic growth.

I look forward to hearing from our witnesses today. Their input will continue to help the subcommittee make informed decisions about the future of small financial institutions.

I now would like to recognize the Ranking Minority Member, the Gentlelady from New York, Mrs. Maloney for the purpose of making an opening statement.

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