With a similar bill passing the U.S. House of Representatives earlier this spring, the U.S. Senate now is considering a measure intended to give the small businesses, community banks and credit unions that are regulated by the Consumer Financial Protection Bureau (CFPB) more of a say in the bureau’s rulemaking process.
S. 1963, dubbed the “Bureau of Consumer Financial Protection Advisory Board Enhancement Act,” seeks to create a new Small Business Advisory Council within the CFPB to ensure that small businesses, which play a critical role in job creation, are accommodated in CFPB rulemakings. The bill also codifies two existing advisory boards, the Community Bank Advisory Council (CBAC) and the Credit Union Advisory Council (CUAC), which currently are established on a voluntary basis.
All of these committees would be required to represent members from rural and underserved areas, which, Sen. Mike Rounds (R-S.D.), one of the bill’s sponsors, said is particularly important in rural states such as his.
“As the CFPB continues to make decisions that affect every American, it is critical for rural areas, community banks, small businesses and credit unions to have a voice,” said Rounds, a member of the Senate Banking Committee and a partner in Fischer Rounds & Associates, an insurance and real estate firm with offices in Pierre, Rapid City, Mitchell and Brandon, S.D.
Rounds’ co-sponsor, Sen. Angus King (I-Maine), echoed that statement, adding, “Rural communities in Maine, South Dakota and all across the nation rely on these institutions to create jobs and grow the local economy.”
“Small businesses, community banks and credit unions are invaluable forces in America’s economy, and they deserve a seat at the table as the CFPB makes important and far-reaching financial decisions,” King said.
The senators introduced S.1963 on Aug. 5, and it is under review by the full Banking committee. Its companion bill, H.R. 1195, passed the House of Representatives on April 21.
The bill has the support of several trade groups that have been openly critical of the CFPB’s rulemaking process, organization and authority, and especially its impact on small businesses. Michelle Korsmo, CEO of the American Land Title Association, noted in a letter to the bill’s sponsors that Dodd-Frank required the CFPB to convene a one-time Small Business Advocacy Review Panel (SBAR) pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), but the panel only meets when a rule is expected to have a significant impact on a substantial number of small entities. What’s more, the advisory board the bureau created for community banks and credit unions only supervises depository institutions with more than $10 billion in assets, and doesn’t have regular contact with smaller firms, Korsmo added.
“Establishing a similar advisory organization for small businesses will allow these smaller institutions to report, advise and consult with the bureau on a regular basis,” Korsmo stated. “A small business advisory board would allow for clear, formal outreach to small businesses throughout the regulatory and supervisory process.”
Jim Nussle, president and CEO of the Credit Union National Association (CUNA), said in a letter from his group that codifying the CUAC will enable credit unions to better communicate with the CFPB about how its proposals and final rules will affect their members — but he had another concern.
“In the absence of your legislation, there is no guarantee that the next director will continue the CUAC,” Nussle stated.
The Independent Community Bankers of America also voiced support for making the CBAC an official committee.