Rounds Slams Burdensome Regulations in Opening Remarks at Banking Hearing, Emphasizes Negative Impact on Local Communities
WASHINGTON – U.S. Senator Mike Rounds (R-S.D.), a member of the Senate Committee on Banking, Housing, and Urban Affairs, delivered opening remarks at a committee hearing titled, “Oversight of Financial Regulators: Protecting Main Street Not Wall Street.” Click HERE to listen to Rounds’ opening remarks.
“As a direct result of these regulations and proposals, banks will now spend their time complying with more Washington bureaucratic red tape instead of investing that time or resources into their local communities,” Rounds said in his remarks. “Beyond overly burdensome compliance costs to financial institutions, we must recognize and emphasize that the costs of this rulemaking onslaught will ultimately be borne by small businesses and wage earners who are on a fixed income and rely on their local banks for loans and access to credit.”
“Since the Biden administration took office, it now costs the average American family of four over $700 more per month to live in this country – it’s close to $1000 in my home state of South Dakota,” continued Rounds.
Rounds closed with, “At a time when all Americans are suffering from persistently high inflation caused by ‘Bidenomics’, the last thing they need is a bunch of Washington Bureaucrats upending and rewriting a decade’s worth of banking rules which will only serve to restrict capital, harm the economy and punish American families. I think you need to go back to the drawing board.”
Read Rounds’ full remarks below, as prepared for delivery.
+++
Thank you, Chairman Brown, and thank you to our witnesses for appearing before us today.
While this group comes before the committee every year, today’s hearing feels particularly timely given the number and breadth of regulations being pushed through by our financial regulators.
In the last few months alone, your agencies have put forth, or finalized, regulations and guidance that represent the biggest rewrite of banking regulation since the passage of Dodd-Frank.
We have seen regulations on bank capital, long-term debt, resolution planning, the Community Reinvestment Act, debit card interchange fees and climate risk management, just to name a few.
These proposals collectively amount to thousands of pages, with the Community Reinvestment Act alone standing at almost 1,500 pages, nearly double the length of the entire Dodd-Frank Act.
Moreover – none of these regulations exist in a vacuum.
As legislators, my colleagues and I recognize the importance of actively considering all possible effects a law might have, including its impact on individuals and how we can mitigate unintended consequences.
Therefore, we find it concerning that you have failed to consider how these rules will impact banks and businesses of all sizes–ultimately harming the American people.
As a direct result of these regulations and proposals, banks will now spend their time complying with more Washington bureaucratic red tape instead of investing that time or resources into their local communities.
Beyond overly burdensome compliance costs to financial institutions, we must recognize and emphasize that the costs of this rulemaking onslaught will ultimately be borne by small businesses and wage earners who are on a fixed income and rely on their local banks for loans and access to credit.
Yesterday, several of the witnesses before us received a letter led by Ranking Member Scott on the Basel III endgame rule, which was signed by myself and 37 other Republican senators.
We have heard from countless constituents, from all walks of life, about the harm they will experience should this rule go into effect.
Our letter emphasized the detrimental impacts, such as limiting the availability of credit for housing in low- and moderate-income communities, severely restricting small business lending and decreasing the retirement savings of hardworking Americans.
Vice Chair Barr, you recently stated that, “The proposal is projected to raise capital for large banks. This may result in higher funding costs. But this is only half the story.”
However, I think the other half of the story is the millions of hard-working families who will be unable to achieve the American dream of homeownership, the tens of thousands of small businesses who will be unable to secure a loan and the workers forced to stay on the job past retirement age because their pensions are providing less returns.
What happens to them?
We must remember that at the end of each regulation are real people, people who care about the safety and security of their families– including financial safety and security.
Results matter.
Since the Biden administration took office, it now costs the average American family of four over $700 more per month to live in this country – it’s close to $1000 in my home state of South Dakota.
You are adding to that pain.
This rule would put a strain on all institutions seeking to provide services that would help American consumers and businesses prosper, like many of those in my home state of South Dakota.
Due to the scale and breadth of each of these proposals, I would support having a hearing dedicated to each and every one to understand the impacts they will have.
But seeing as my time today is limited, I wanted to call attention to another proposal where the regulators are operating well outside of mandates given to them by Congress.
We have heard Federal Reserve officials, including Chair Powell, state as recently as last month that the Fed is not and will not become a climate policy maker.
Yet, our regulators are mandating that banks must engage in climate scenario analysis.
Earlier this year when the Fed conducted a climate scenario analysis exercise, officials stated that it would have no supervisory implications, but now banks are being told that they will be supervised to make sure they have such programs in place.
So, which is it?
Not a single bank has failed because they have failed to account for climate risk.
As Governor Bowman discussed in her dissent of the climate guidance, this action could ultimately lead to negative impacts on low-income communities who will have reduced access to capital.
In your desire to worship at the altar of climate change, you are sacrificing the economic wellbeing and capabilities of hardworking Americans.
Let me repeat: none of these regulations exist in a vacuum and collectively, these rules paint a devastating picture for consumers, especially in low- and moderate-income communities.
At a time when all Americans are suffering from persistently high inflation caused by ‘Bidenomics’, the last thing they need is a bunch of Washington Bureaucrats upending and rewriting a decade’s worth of banking rules which will only serve to restrict capital, harm the economy and punish American families.
I think you need to go back to the drawing board.
Thank you, Mr. Chairman.
###
