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From Banking and Finance Law Daily, April 15, 2014

Legislation would modify CFPB requests for information

By Katalina M. Bianco, J.D.

Senator Dan Coats (R-Ind) has introduced the Community Financial Protection Act (S. 2242), legislation intended to provide Indiana (Hoosier) community banks and credit unions with relief from “crippling financial regulations” adopted since the financial crisis. Nationwide, community banks spent more than $250 million to comply with new regulations coming from Washington during the first quarter of 2013, according to Coats.

“Hoosier community banks and credit unions play a key role in their local communities, and they are paying the price for mistakes made on Wall Street,” said Coats. “These Indiana businesses did not cause the financial crisis, but they are being treated as if they did by federal bureaucrats. My legislation will allow community financial institutions and credit unions to focus on what they want to do and do best—helping families and local employers.”

CFPB requests for information. The bill would change the way in which the Consumer Financial Protection Bureau requests information from financial institutions with less than $10 billion in assets. Under the proposal, the CFPB would be required to use publicly available information and data or seek the requested information from existing banking regulators. The bureau would have to use the public information before requesting information from the prudential regulator, Coats said.

The proposed measure also would require that if the CFPB requests information that is not currently publicly available, the bureau must provide justification to the regulator as to why it needs that information. The prudential regulator would have the authority to deny a CFPB request for information. Finally, the bureau only would be permitted to request institution-specific, rather than industry-wide, information.

Indiana Bankers Association. The Indiana Bankers Association issued a statement supporting Coats’s legislation. “The Indiana Bankers Association applauds the efforts of Sen. Dan Coats to maintain and grow a strong Indiana banking community through the introduction of the Community Financial Protection Act,” said S. Joe DeHaven, President and Chief Executive Officer of the association. “The Community Financial Protection Act is a solid step in the right direction to ensure that Hoosiers will have continued access to capital to invest in and build communities. The Indiana banking community welcomes and supports this measure.”

Indiana Credit Union League. The Indiana Credit Union League also came out in support of the proposal. “We appreciate that Senator Coats recognizes the challenges that credit unions face in complying with the crushing regulatory burdens that have increased so much as a result of the financial crisis brought on not by credit unions or community banks but by large institutions,” said John McKenzie, President of the league. “We appreciate and support Senator Coats' efforts to clarify that such reporting requirements need to flow instead through the reports that credit unions are already required to provide to their primary regulators. Senator Coats' bill would be a good first step to bringing a measure of relief from some of the burdens created for credit unions and community banks by the creation of the CFPB and the Dodd-Frank Act.”

Companies: Indiana Bankers Association; Indiana Credit Union League

MainStory: TopStory CFPB DoddFrankAct IndianaNews

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