The Consumer Financial Protection Bureau has proposed new regulations in the aftermath of the mortgage market meltdown that have caused concern among smaller community banks.
Samuel Vallandingham, Chief Information Officer of First State Bank in West Virginia, told the House Financial Services Committee that the new requirements would result in higher costs for small banks, forcing them out of the market and leaving fewer choices for consumers. “Every dollar spent on compliance is a dollar less that we have to lend and invest in the communities we serve,” said Vallandingham.
His concerns were echoed by the Independent Community Bankers of America (ICBA). In comments submitted to the ICBA, the industry association said the federal agency “has underestimated the costs that will accrue as a result” of the rule changes.
The new rules will impact lending institutions in several ways: increasing their training and supervision costs in order to meet compliance; adding new notifications about the status of loans to current mortgage clients; and eventually increasing capital requirements, all of which will add to the bank’s already existing regulatory costs.