In a blog post yesterday, Professor Sovern referenced Politico’s report that at the Consumer Bankers Association’s annual conference this week, unlike from 2012-2016, the “regulatory environment” was not identified as a “top worry” by bankers. According to Professor Sovern, this “raises a question about why Congress is working on a bill to reduce the regulatory burden banks face.” S. 2155, one of the bills to which Professor Sovern presumably was referring, passed the Senate yesterday by a vote of 67-31.
In our view, Professor Sovern’s suggestion that bankers do not view the reduction of regulatory burden as a priority is misguided for several reasons. First of all, what attendees at the CBA conference were actually asked was “what will be the top issue facing our industry over the next three years.” Although described in the Politico report as “regulatory environment,” the issue presented to attendees was actually worded “navigating through a new regulatory environment.” Concerns about “navigating through a new regulatory environment” are hardly synonymous with concerns about regulatory burden. In all likelihood, the CBA conference attendees’ reduced concern about navigating a new regulatory environment reflects their perception that the regulatory environment has become more favorable to industry under the Trump Administration.
More specifically, the attendees at CBA conferences (as the CBA’s name suggests) are primarily focused on consumer banking. “Navigating through a new regulatory environment” for consumer finance would have obviously been a primary concern under former CFPB Director Cordray. It is not surprising, however, that because of the change in CFPB leadership under the Trump Administration and the improvement in the regulatory environment for industry, navigating the regulatory environment would no longer be viewed by attendees as a top concern.
Second, the CBA’s membership is not composed principally of the community banks and credit unions who are most burdened by the regulatory requirements that would be eased by the banking bill. As a result, an audience composed principally of attendees from such community banks and credit unions would likely express greater concern about the regulatory environment than the attendees at the CBA conference.
Despite Professor Sovern’s suggestion that there is a question why Congress is working on a bill to reduce the regulatory burden that banks face, the reason is clear. The reason is that the bipartisan group of Senators that voted for the bill recognized that regulatory relief is necessary to relieve small banks and credit unions from burdensome regulatory costs and paperwork and to increase access to credit for individuals and small businesses.
It bears noting that the issue identified by the CBA conference’s attendees as the top issue facing their industry over the next three years was “innovating and creating new products and solutions.” The fact that attendees now feel they can focus their efforts on innovation and the creation of new products and solutions rather than on navigating a challenging regulatory environment is a positive development for industry, consumers, and the overall economy.