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September 17, 2015

NAFCU witness: Regulation has gone 'way too far'

On Thursday, Dixies Federal Credit Union President and CEO Scott Eagerton testified on behalf of NAFCU before a House Small Business Subcommittee hearing on the impact of the Dodd-Frank Act on small businesses and financial institutions. He argued the regulation "pendulum" had "swung way too far" and that it is hampering credit union member service.

Eagerton, whose credit union is headquartered in Darlington, S.C., testified before the House Small Business Subcommittee on Economic Growth, Tax and Capital Access, which is chaired by Rep. Tom Rice, R-S.C.

In response to a question from Rep. David Brat, R-Va., Eagerton said, "I really feel like we're getting away from helping people … and that needs to change." Brat likened Eagerton and a witness representing community banks to "data points" and argued that their experience proves the detrimental effect of overregulation.

Eagerton also agreed with subcommittee Chairman Tom Rice, R-S.C., that the result of his staff spending more time and resources on regulatory compliance is that they have less to offer in the way of products and services, which he agreed is something that disproportionately impacts middle-class and minority borrowers.

In his testimony, Eagerton spoke about the increased time and resources his small credit union has had to devote to the increasing number of regulations since the passage of the Dodd-Frank Act. "While it is true that credit unions under $10 billion are exempt from the examination and enforcement of the CFPB, all credit unions are subject to the rulemakings of the agency and are feeling this burden," Eagerton said. "While the CFPB has the authority to exempt certain institutions, such as credit unions, from agency rules, they have unfortunately been reluctant to use this authority on a broad scale."

Rep. Janice Hahn, D-Calif., expressed her support for raising the "arbitrary" cap on credit union member business lending, which Eagerton agreed would help his institution. Eagerton also advocated NCUA returning to an 18-month exam cycle and for CFPB's structure to be changed from a single director to a bipartisan commission.