March 14, 2018

Cardin Says Banking Bill Jeopardizes Consumer Protections

WASHINGTON – U.S. Senator Ben Cardin (D-Md.), ranking member of the Small Business Committee and a member of the Senate Finance Committee, expressed his concerns about the consequences of the banking bill just passed by the full Senate.

“I am supportive of efforts to reduce the regulatory burdens on our community banks and credit unions, which are the financial anchors of Maryland communities and provide critical support to families and businesses alike. However, this specific bill makes much broader changes, bringing with it risks for our overall financial system and putting consumer protections, particularly for vulnerable homeowners and those affected by data breaches, at risk,” said Senator Cardin. “Unfortunately, there was little opportunity to address these concerns through an open amendment process, leaving me no choice but to vote against the bill.”

Senator Cardin’s full remarks for the Senate record can be found below.

Community Banks and Credit Unions

“I rise today to speak on the importance of helping our community banks and credit unions.  These institutions are on the ground daily helping our families and small businesses.  They deserve recognition.  They also deserve our careful consideration of regulatory adjustments that will help them continue their work.

“Let me be clear: there are parts of S. 2155 I disagree with, as do many of my colleagues.  But what I think that we can all agree on is the good works that our local credit unions and banks do for our communities.

“Community banks and credit unions anchor our towns, helping our workers and businesses.  These institutions provide more than just savings and checking services.  Many provide credit counseling and financial management.  They help individuals save for education, or for a financially secure retirement.  They provide the mortgage loans that make homeownership a realistic goal for many families.  They get to know our small businesses, and provide them with much-needed financial support.  And, most importantly, they do so in a way that is tailored to their communities.

“I would like to emphasize the role that community banks and credit unions play with respect to small businesses especially.  We talk a lot about Main Street businesses in this body.  As the Ranking Member of the Small Business Committee, I am keenly aware of the need to provide our small businesses with adequate resources and support, including through access to capital.  This is especially the case for underserved communities, where the bigger banks simply don’t have a presence.

“There are provisions in this bill that will help.  For example, for credit unions, the bill changes the designation of certain real estate loans which have previously been classified as business loans.  This will free up capital for small business lending.  It is through changes like these that we can carefully tailor regulations, address regulatory unfairness or duplication, and help our local lenders.

“In Maryland, we are fortunate to still have a good number of these local institutions.  We have almost 90 credit unions in Maryland who have about 1.9 million members.  These credit unions serve many of the federal workers that we in Congress work with every day.  They provide services and support for our Department of Defense employees, our Library of Congress employees, our National Institutes of Health employees, and our State and county workers who keep our communities going.  Because of their close ties with their membership, these credit unions and others like them are able to offer special services that big banks may not have the incentive to provide.

“Similarly, our community banks remain strong.  There are 54 community banks chartered in the State. Our community banking sector employs over 35,000 Marylanders.  These banks have withstood the Great Recession – and even the Great Depression.  For instance, Eastern Savings Bank in Baltimore was established in 1905, pulled through the chaos of the Depression in 1929, and still operates four service branches throughout Maryland today – with a customer base of primarily local residents.  All of our Maryland community banks are essential to our urban, suburban, and rural communities.  They are critical to economic growth in my hometown of Baltimore.  They provide nearly half of the industry’s small business loans, despite making up less than 20 percent of the banking industry’s assets.

“It would be naïve to ignore the fact that the number of these institutions is shrinking.  They have a difficult market to navigate.  “One-size-fits-all” regulations can exacerbate this trend.  This doesn’t mean that we should not provide oversight of this sector of our economy; however, I think carefully considering “tailoring” our approach to regulating is more than appropriate here.  I think we can all agree on this principle.  Many of the credit union and community bank provisions we are considering, standing alone, have broad bipartisan support.  If those provisions stood alone, my vote on such a bill would be a “yes”.

“S. 2155, of course, contains more than community bank and credit union provisions, and I share some of the concerns voiced by my colleagues on this bill, especially regarding consumer protections in certain industries.  At the same time, I cannot stress enough how important it is to strengthen our credit unions and community banks.  I look forward to continuing to work on these issues, especially on small business lending, with my colleagues going forward.”

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