[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                      LEGISLATIVE PROPOSALS FOR A
                    MORE EFFICIENT FEDERAL FINANCIAL
                      REGULATORY REGIME: PART III

=======================================================================

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON FINANCIAL INSTITUTIONS
                          AND CONSUMER CREDIT

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 9, 2018

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 115-68
                           
                           

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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    JEB HENSARLING, Texas, Chairman

PATRICK T. McHENRY, North Carolina,  MAXINE WATERS, California, Ranking 
    Vice Chairman                        Member
PETER T. KING, New York              CAROLYN B. MALONEY, New York
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma             BRAD SHERMAN, California
STEVAN PEARCE, New Mexico            GREGORY W. MEEKS, New York
BILL POSEY, Florida                  MICHAEL E. CAPUANO, Massachusetts
BLAINE LUETKEMEYER, Missouri         WM. LACY CLAY, Missouri
BILL HUIZENGA, Michigan              STEPHEN F. LYNCH, Massachusetts
SEAN P. DUFFY, Wisconsin             DAVID SCOTT, Georgia
STEVE STIVERS, Ohio                  AL GREEN, Texas
RANDY HULTGREN, Illinois             EMANUEL CLEAVER, Missouri
DENNIS A. ROSS, Florida              GWEN MOORE, Wisconsin
ROBERT PITTENGER, North Carolina     KEITH ELLISON, Minnesota
ANN WAGNER, Missouri                 ED PERLMUTTER, Colorado
ANDY BARR, Kentucky                  JAMES A. HIMES, Connecticut
KEITH J. ROTHFUS, Pennsylvania       BILL FOSTER, Illinois
LUKE MESSER, Indiana                 DANIEL T. KILDEE, Michigan
SCOTT TIPTON, Colorado               JOHN K. DELANEY, Maryland
ROGER WILLIAMS, Texas                KYRSTEN SINEMA, Arizona
BRUCE POLIQUIN, Maine                JOYCE BEATTY, Ohio
MIA LOVE, Utah                       DENNY HECK, Washington
FRENCH HILL, Arkansas                JUAN VARGAS, California
TOM EMMER, Minnesota                 JOSH GOTTHEIMER, New Jersey
LEE M. ZELDIN, New York              VICENTE GONZALEZ, Texas
DAVID A. TROTT, Michigan             CHARLIE CRIST, Florida
BARRY LOUDERMILK, Georgia            RUBEN KIHUEN, Nevada
ALEXANDER X. MOONEY, West Virginia
THOMAS MacARTHUR, New Jersey
WARREN DAVIDSON, Ohio
TED BUDD, North Carolina
DAVID KUSTOFF, Tennessee
CLAUDIA TENNEY, New York
TREY HOLLINGSWORTH, Indiana

                     Shannon McGahn, Staff Director
       Subcommittee on Financial Institutions and Consumer Credit

                 BLAINE LUETKEMEYER, Missouri, Chairman

KEITH J. ROTHFUS, Pennsylvania,      WM. LACY CLAY, Missouri, Ranking 
    Vice Chairman                        Member
EDWARD R. ROYCE, California          CAROLYN B. MALONEY, New York
FRANK D. LUCAS, Oklahoma             GREGORY W. MEEKS, New York
BILL POSEY, Florida                  DAVID SCOTT, Georgia
DENNIS A. ROSS, Florida              NYDIA M. VELAZQUEZ, New York
ROBERT PITTENGER, North Carolina     AL GREEN, Texas
ANDY BARR, Kentucky                  KEITH ELLISON, Minnesota
SCOTT TIPTON, Colorado               MICHAEL E. CAPUANO, Massachusetts
ROGER WILLIAMS, Texas                DENNY HECK, Washington
MIA LOVE, Utah                       GWEN MOORE, Wisconsin
DAVID A. TROTT, Michigan             CHARLIE CRIST, Florida
BARRY LOUDERMILK, Georgia
DAVID KUSTOFF, Tennessee
CLAUDIA TENNEY, New York
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    January 9, 2018..............................................     1
Appendix:
    January 9, 2018..............................................    43

                               WITNESSES
                        Tuesday, January 9, 2018

Astrada, Scott B., Director of Federal Advocacy, Center for 
  Responsible Lending............................................     7
Fisher, Robert, President and Chief Executive Officer, Tioga 
  State Bank, on behalf of the Independent Community Bankers of 
  America........................................................     5
Gleim, Edward J., Executive Vice President and Chief Operating 
  Officer, Triad Financial Services, on behalf of the 
  Manufactured Housing Institute.................................     4
Shuman, Matthew J., Director, Legislative Division, The American 
  Legion.........................................................     9

                                APPENDIX

Prepared statements:
    Astrada, Scott...............................................    44
    Fisher, Robert...............................................    63
    Gleim, Edward J..............................................    69
    Shuman, Matthew J............................................    75

              Additional Material Submitted for the Record

Delaney, Hon. John:
    Written statement from the Association of the United States 
      Navy.......................................................    80
    Article from CBS Boston entitled, ``WWII Vet Mistakenly 
      Billed $4K for Medical Care, Revealing VA Problem''........    81
    Article from Military Times entitled, ``Veterans Choice 
      program hurting some vets' credit scores''.................    84
    Written statement from the Wounded Warrior Project...........    88
Emmer, Hon. Tom:
    Written statement from the Consumer Bankers Association......    89
Pearce, Hon. Stevan:
    Written statement from the Coalition to Save Seller Financing    91

 
                    LEGISLATIVE PROPOSALS FOR A MORE
                    MORE EFFICIENT FEDERAL FINANCIAL
                      REGULATORY REGIME: PART III

                              ----------                              


                        Tuesday, January 9, 2018

                     U.S. House of Representatives,
                     Subcommittee on Financial Institutions
                                       and Consumer Credit,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 2:01 p.m., in 
room 2128, Rayburn House Office Building, Hon. Blaine 
Luetkemeyer [chairman of the subcommittee] presiding.
    Present: Representatives Luetkemeyer, Rothfus, Posey, Ross, 
Pittenger, Barr, Tipton, Williams, Love, Trott, Loudermilk, 
Kustoff, Tenney, Clay, Maloney, Scott, Velazquez, Green, Heck, 
and Crist.
    Also present: Representatives Emmer, Hultgren, Pearce, and 
Delaney.
    Chairman Luetkemeyer. The committee will come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    This hearing is entitled ``Legislative Proposals for a More 
Efficient Federal Financial Regulatory Regime: Part III.''
    Before we begin, I would like to thank the witnesses for 
appearing today. I appreciate your participation and look 
forward to a productive discussion.
    I also ask unanimous consent that the gentleman from 
Minnesota, Mr. Emmer, and the gentleman from Illinois, Mr. 
Hultgren, and the gentleman from Maryland, Mr. Delaney, are 
permitted to participate in today's hearing. While not members 
of the subcommittee, these gentlemen are members of the 
Financial Services Committee, and we appreciate their 
participation today.
    Without objection, they are allowed to serve.
    I now recognize myself for 4 minutes for the purposes of 
delivering an opening statement.
    Today, this subcommittee will continue on its quest to 
advance legislation to improve customers' access to financial 
services and products. Financial companies continue to face an 
onslaught of Obama-era rules and regulations that do little 
more than establish unnecessary hurdles to compliance and limit 
access to credit.
    The CFPB's (Consumer Financial Protection Bureau's) Home 
Mortgage Disclosure Act (HMDA) rules are a prime example. Under 
Director Cordray's tenure, the CFPB added some 30 new data 
points to HMDA reporting requirements. These data points offer 
little to no additional protection for consumers or the 
financial system but expose banks and credit unions to 
unnecessarily stringent examinations and liability.
    While Acting Director Mulvaney has signaled a change in 
HMDA reporting requirements, a move that is most welcome, this 
committee will continue to pursue legislative efforts to make 
permanent reforms in these important policy areas.
    I want to thank the gentleman from Minnesota, Mr. Emmer, 
for his continuing work on the HMDA issues and for leading one 
of the bills we will discuss today.
    I also want to recognize Mr. Hultgren, Mr. Williams, Mr. 
Pearce, and Mr. Delaney for their fine work.
    Mr. Delaney and Mr. Hultgren have introduced legislation to 
ensure veterans don't take a hit on their credit scores because 
of mistakes made by the VA.
    Mr. Pearce has drafted legislation to safeguard the 
availability of manufactured housing, something of vital 
importance to his constituents across New Mexico, as well as 
mine in Missouri, as well as the rest of rural America.
    Mr. Williams has championed legislation to ensure our 
Nation's small and midsize institutions aren't subjected to 
standards and examinations designed for and more suited to the 
Nation's largest financial companies.
    And Mr. Hultgren continues to advocate for the development 
and implementation of a short-form call report for our Nation's 
smallest community banks.
    As I have said in previous hearings, the regulatory 
pendulum has swung too far. Rules and regulations are driving 
financial institutions to merge, exit entire lines of 
businesses, discontinue services to their customers, and, in 
some cases, permanently close their doors. We see it every day 
and hear about it not just from institutions but also from 
their customers, many of whom have experienced increased 
difficulty getting access to credit and other financial 
products.
    I recognize it is possible to have a regulatory regime that 
protects the American people and financial system without 
needlessly hindering consumer choice. The bills we will discuss 
today will help to foster a more reasonable regulatory system 
that frees lenders and sellers to do what they do best: Offer 
financial products and services to their customers and grow 
their communities.
    We had a gentleman here who testified recently, Greg 
Williams, the CEO and President of Gulf Coast Bank & Trust from 
New Orleans. He made the comment, he said, ``The interesting 
thing is everybody in Washington loves community banks, but 
nobody loves them enough to do anything about that.'' 
Hopefully, today we can start the process of doing something 
about that.
    We have a distinguished panel with us today, and I thank 
them in advance for their participation.
    With that, the Chair now recognizes the gentleman from 
Missouri, Mr. Clay, the Ranking Member of the subcommittee, for 
5 minutes for an opening statement.
    Mr. Clay. Thank you, Mr. Chair, and thank you for 
conducting this hearing. At this time, I have no opening 
statement. Hopefully, we can get right into the testimony. I 
yield back.
    Chairman Luetkemeyer. The gentleman yields back. That is a 
first, that Mr. Clay has nothing to say. We will please note 
that for the record.
    The Chair now recognizes the gentleman from Minnesota, Mr. 
Emmer, for 1 minute to deliver an opening statement.
    Mr. Emmer. Thank you, Chairman Luetkemeyer, for allowing me 
to participate in today's hearing.
    More than one-third of counties in America don't have a 
locally based financial institution. And lending rates in many 
of the most rural parts of our Nation remain below 1996 levels. 
Now, more than ever, Main Street banks and credit unions need 
real relief from onerous Washington regulations.
    Today, as this committee reviews the Home Mortgage 
Reporting Relief Act, we are taking another step forward. This 
bill gives community financial institutions additional time to 
comply with excessive mortgage disclosure data collection rules 
imposed by the Consumer Financial Protection Bureau to help 
Main Street banks do what they do best: Help families across 
this country achieve the American Dream.
    It was great to see the CFPB's action last month to delay 
enforcement of the 2015 rule, but Congress can and should do 
more.
    Again, thank you to Chairman Luetkemeyer for holding this 
hearing and including H.R. 4648. And a special thanks to 
Representative Hultgren for all of his work on this bill and 
this important issue as well.
    And I yield back.
    Chairman Luetkemeyer. The gentleman yields back.
    We will begin our testimony. And before we get started, I 
would just like to also make note of the fact that we are 
expecting votes about 3:30, so hopefully we can get as far as 
we can. We will see if we can get the hearing completed. If 
not, we will complete it after we return. But just to give 
everybody a heads-up, we may have to call a timeout here at 
some point.
    With that, today we welcome the testimony of Mr. E.J. 
Gleim, Executive Vice President and Chief Operating Officer of 
Triad Financial Services, on behalf of the Manufactured Housing 
Institute; Mr. Robert Fisher, President and Chief Executive 
Officer, Tioga State Bank, on behalf of the Independent 
Community Bankers of America; Mr. Scott Astrada, Director of 
Federal Advocacy, Center for Responsible Lending; and Mr. 
Matthew Shuman, Director, Legislative Division, The American 
Legion.
    We will recognize each of you for your oral statements.
    I would like to yield to the gentlelady from New York, Ms. 
Tenney, for the purposes of making a brief introduction.
    Ms. Tenney, you are recognized.
    Ms. Tenney. Thank you, Chairman Luetkemeyer.
    It is my honor and privilege to introduce Mr. Robert Fisher 
today.
    Mr. Fisher is the President and CEO of Tioga State Bank, 
which serves thousands of New Yorkers within my district and 
throughout our State. Tioga State Bank is a great example of 
how a community bank continues to serve our local communities 
by offering consumers with credit to improve the quality of 
life for our rural communities.
    And we welcome him today and look forward to your 
testimony.
    Thank you so much, Chairman.
    Chairman Luetkemeyer. I thank the gentlelady.
    With that, we will recognize each of you for 5 minutes to 
give an oral presentation of your testimony. Without objection, 
each of your written statements will be made part of the 
record.
    Just for a brief tutorial on our lighting system, green 
means go; you have 5 minutes. When you get to the 1-minute 
mark, you will get a yellow light. I would ask you to hopefully 
wrap up in that 1 minute. And when it hits red, hopefully you 
can stop very quickly thereafter, or else you get the hammer 
from me.
    With that, Mr. Gleim, you are recognized for 5 minutes.

                  STATEMENT OF EDWARD J. GLEIM

    Mr. Gleim. Thank you, Chairman Luetkemeyer, Ranking Member 
Clay, and Members of the subcommittee for the opportunity to 
testify.
    I am the Executive Vice President and Chief Operating 
Officer of Triad Financial Services, Inc. I am appearing before 
you on behalf of the Manufactured Housing Institute (MHI), 
where I serve on the board of directors and as Chairman of 
MHI's Financial Services Division. Thank you for the 
opportunity to present MHI's views on the important bills 
before the subcommittee today.
    Manufactured housing is the largest form of unsubsidized 
affordable housing in the country, providing housing for more 
than 22 million people across the country. The affordability of 
manufactured homes enables first-time home buyers, retirees, 
and families to obtain housing that is cheaper than renting or 
purchasing site-built homes. New manufactured homes make up 
approximately 9 percent of new single-family home starts.
    The manufactured housing industry is committed to 
protecting consumers throughout the home-buying process. 
However, because of the small size of manufactured home loans, 
the manufactured housing finance has been acutely impacted by 
recent regulations.
    Many lenders have exited the manufactured housing space as 
a result of increased compliance burdens following the 
implementation of the Dodd-Frank Act. Lending in the 
manufactured housing space is simply too small and unprofitable 
to cover the increased compliance costs. Reasonable 
modification to the regulations are a critically important 
element to restoring a robust market of manufactured housing 
financing.
    All small lending institutions are disproportionately 
impacted on onerous CFPB rules. To the maximum extent possible, 
we encourage you to ensure the legislation before you today 
applies equally for those small lenders that are depository 
institutions and those that are nondepository institutions so 
that the legislation applies to those lending institutions that 
make manufactured home loans.
    My written testimony provides detailed comments on each of 
the bills before the subcommittee. Let me briefly summarize 
those views.
    H.R. 1264 constrains the ability of the CFPB to adopt rules 
and regulations that have the effect of limiting the ability of 
small financial institutions to provide affordable mortgage 
credit to consumers. Indeed, one-size-fits-all CFPB regulations 
are causing small lenders to curtail financing for small-dollar 
loans since compliance costs are increasing and challenging the 
profitability of such loans.
    One area that this has been quite acute is with respect to 
loans for manufactured housing. In fact, some nondepository 
lenders are turning down almost three-quarters of the 
applications they receive, and, in the majority of cases, it is 
due to CFPB rules and regulations. We would point out that H.R. 
1264 only applies to depository institutions and therefore does 
not alleviate the host of burdensome compliance requirements 
for nondepository manufactured home lenders.
    H.R. 2683 is a balanced way to address the erroneous 
reporting of adverse credit information due to an inefficient 
VA repayment system. The bill protects veterans and upholds the 
integrity of the credit reporting system. MHI's lenders believe 
that the credit report should accurately reflect the repayment 
history of individuals seeking credit to purchase a 
manufactured home.
    H.R. 4648 is an appropriate and measured response to the 
concerns that have been raised about HMDA data reporting 
requirements. The new HMDA data reporting requirements will 
cause more lenders to stop making smaller loans because of the 
cost of compliance and because the cost is too high to justify 
remaining in the manufactured housing lender space.
    With respect to seller financing, the ability to finance 
homes is an important issue for many manufactured home 
community owners who wish to ensure the manufactured homes 
within their community are occupied. The legislation before the 
committee would increase the number of loans they could make 
per year before triggering the Truth in Lending Act from three 
loans to five loans. The bill does this while retaining 
essential consumer protections.
    MHI stands ready to work with the subcommittee to make 
regulatory changes to ensure individuals can get financing to 
achieve the American Dream of home ownership through 
manufactured housing.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Gleim can be found on page 
69 of the appendix.]
    Chairman Luetkemeyer. Thank you.
    The gentleman yields back.
    Mr. Fisher, you are recognized for 5 minutes.

                   STATEMENT OF ROBERT FISHER

    Mr. Fisher. Thank you, Chairman Luetkemeyer, Ranking Member 
Clay, and Members of the subcommittee.
    I am Robert Fisher, President and CEO of Tioga State Bank, 
a $475 million community bank in Spencer, New York. I am 
pleased to be here on behalf of the more than 5,700 community 
banks represented by Independent Community Bankers of America 
(ICBA). We hope today's hearing sets the stage for legislation 
needed to strengthen local economic growth and job creation.
    Tioga State Bank was founded by my great-great-grandfather 
in 1884 to provide the needed banking services to local 
businesses and individuals. I am a fifth-generation community 
banker, proud to carry on our commitment to local prosperity. 
Many of the rural communities we serve in upstate New York 
depend on us as the only financial institution with a local 
presence.
    I will focus my testimony on three bills before this 
subcommittee, all of which include provisions recommended in 
ICBA's ``Plan for Prosperity.''
    First, H.R. 1264, introduced by Representative Roger 
Williams, would exempt community banks with assets of less than 
$50 billion from all prospective rules and regulations issued 
by the CFPB.
    Since the creation of the Bureau, community banks have been 
forced to comply with rigid, arbitrary, and prescriptive rules 
intended to target the abuses of nonbanks and larger banks. 
These rules have limited community banks' ability to rely on 
their best judgment in making credit decisions and to offer 
customized products and services. CFPB rules reduce consumer 
choice and end up hurting the very customers they are intended 
to protect.
    ICBA also supports H.R. 4648, introduced by Representatives 
Tom Emmer and Randy Hultgren, which would provide temporary 
enforcement relief from the new complex and burdensome data 
collection and reporting requirements under the Home Mortgage 
Disclosure Act. We believe that introduction of this bill 
prompted the Bureau's recent announced policy of forbearance 
under the new rule. H.R. 4648 will put this policy in statute 
rather than at the discretion of the director.
    Many lenders, core vendors, and mortgage software vendors 
continue to scramble to bring their systems into compliance. We 
are making a good faith effort to comply with the complex new 
rule and should not be held liable for unintentional errors.
    H.R. 4648 would also restrict the CFPB's ability to make 
the new data publicly available. In the communities I serve, 
where people are well-known to each other, published HMDA data 
is a threat to consumer financial privacy. We believe the 
ultimate solution is a HMDA exemption for relatively low-volume 
mortgage lenders, as provided in Representative Emmer's earlier 
bill, H.R. 2954. Raising exemption thresholds will protect 
consumer privacy and provide relief for many more small 
lenders, without a significant impact on the mortgage data 
available to the CFPB.
    Last, H.R. 4725, introduced by Representative Hultgren, 
would provide for short-form call reports in the first and 
third quarters for banks with assets of less than $5 billion.
    Call report burden has grown sharply in recent years. When 
I first started with the bank in the mid-1980's, the report was 
18 pages long. Today, for my bank, that report is 51 pages and 
80 pages for banks above a billion in assets. Yet my bank's 
business model has not really changed significantly since 1884.
    Call report preparation is a labor-intensive process that 
involves drawing data generated by different systems and 
manually reentering it into call report software. For all the 
effort we put into it, only a fraction of the data collected in 
the call report is actually useful for regulators in monitoring 
safety and soundness or conducting monetary policy.
    Recent agency efforts to streamline call reporting for 
community banks are of little to no value. They merely 
eliminated data that were not applicable to Tioga or other 
community banks. From our perspective, the new short form is 
essentially the same as the long form. H.R. 4725 is needed to 
create real relief in quarterly call reporting that will allow 
us to focus our resources on lending and serving our 
communities.
    Finally, I want to end this statement by asking the House 
to promptly pass S. 2155 when it is sent over from the Senate. 
This bipartisan bill is clearly a response to the numerous 
hearings and markups held in this committee. It offers the best 
opportunity for robust community bank regulatory relief this 
Congress, and I urge you to not let it slip.
    Thank you, and I look forward to answering your questions.
    [The prepared statement of Mr. Fisher can be found on page 
63 of the appendix.]
    Chairman Luetkemeyer. Thank you, Mr. Fisher.
    Mr. Astrada, you are recognized for 5 minutes.

                  STATEMENT OF SCOTT B. ASTRADA

    Mr. Astrada. Thank you.
    Good afternoon, Chairman Luetkemeyer, Ranking Member Clay, 
and Members of the committee. Thank you for allowing me to 
testify today about legislative proposals regarding the 
oversight of our financial institutions and the need to 
maintain responsible and sensible consumer protections, which 
are critical if we want to continue to build a strong and 
inclusive economy.
    I am the Director of Federal Advocacy at the Center for 
Responsible Lending (CRL), a nonprofit, nonpartisan research 
and policy organization dedicated to protecting home ownership 
and family wealth by working to eliminate abusive financial 
practices. CRL is an affiliate of Self-Help, a nonprofit 
community development financial institution. And for over 30 
years, Self-Help has focused on creating asset-building 
opportunities for low-income, rural, and minority families by 
providing more than $6 billion in financing to 70,000 home 
buyers, small businesses, and nonprofits and also serving more 
than 120,000 members through over 50 retail credit branches.
    This important hearing addresses Federal financial 
regulation in the context of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act, which was signed into law in 2010 
in response to the Great Recession 10 years ago. The law is a 
pragmatic regulatory framework that corrected systemic gaps and 
sought to prevent future market failures, all while 
implementing crucial protections for consumers and the broader 
economy.
    As a result, today, consumer lending is strong, bank 
profitability is at record levels, and financial markets are 
stable, thanks in substantial part to essential legislative and 
regulatory safeguards established by Dodd-Frank.
    This hearing, entitled ``Legislative Proposals for a More 
Efficient Federal Financial Regulatory Regime,'' has far-
reaching effects in terms of defining what we mean by efficient 
regulation. Does efficiency mean blanket rollbacks of consumer 
protection legislation? Or does efficiency mean targeted, 
commonsense safeguards that ensure stable, transparent, and 
equitable markets? At CRL, we strongly believe it is the second 
choice. However, all of the bills considered today, with the 
exception of H.R. 2683, rely on the first definition and roll 
back consumer protections on a wholesale basis.
    H.R. 1264 impedes the CFPB's ability to supervise and 
regulate financial institutions by exempting those with assets 
of $50 billion and under from all or new modified rules issued 
by the CFPB and would push huge portions of the banking 
industry and the consumers they serve outside of the entirety 
of the legislative and regulatory system.
    H.R. 4648 prohibits the sharing of public data on the 
financial marketplace prescribed by HMDA, which is the best 
tool we have to rout out market discrimination and 
inefficiencies.
    H.R. 4725 rolls back data-driven regulatory policy by 
directing Federal banking agencies that have already initiated 
streamlined processes to reduce reporting requirements for call 
reports.
    And Representative Pearce's legislation introduces 
potentially dangerous and reckless mortgage loan products to 
vulnerable home buyers by amending the Truth in Lending Act to 
change the definition of mortgage originators to exclude 
certain types of seller financing.
    I want to stress it is the aggregate effect of these bills 
that threatens consumers, harms banks, and exposes the overall 
economy to risk by maintaining a belief that wide-scale 
deregulation equals efficiency.
    The notion is also at the foundation of an unsubstantiated 
belief that Dodd-Frank has somehow stifled economic growth and 
that deregulation is the solution. It isn't. The data does not 
support this contention, and, as explained in my written 
testimony, the evidence actually contradicts this belief.
    The financial sectors have record profits. In 2016, the 
financial institutions had annual profits of $170 billion, the 
highest in years. The FDIC (Federal Deposit Insurance 
Corporation) puts out these reports every quarter. The most 
recent numbers are even higher, with industry net income for 
the third quarter of 2017 at a 5-percent increase compared to 
the previous year.
    Community bank profitability has rebounded strongly and is 
at pre-recession levels. At the end of the third quarter of 
2017, community bank earnings increased by $513 million or a 9-
percent increase from that time earlier that year.
    Credit unions have also continued to grow while recovering 
from the financial crisis. In 2016, credit unions added almost 
5 million new members, which amounted to the biggest annual 
increase in history and four times the pace set a decade 
earlier.
    I will just conclude with a restatement that CRL opposes 
all but one of these bills--H.R. 2683--being considered today. 
Collectively, they widely scale back the CFPB's supervisory 
authority and abolish important consumer protections. They also 
abandon the approach of targeted and dynamic reform and, 
instead, would be wholesale rollbacks on consumer protections.
    I look forward to continuing to work with this committee, 
community banks, and credit unions to work through the issues 
raised today. And I thank you for the opportunity to testify.
    [The prepared statement of Mr. Astrada can be found on page 
44 of the appendix.]
    Chairman Luetkemeyer. Thank you, Mr. Astrada.
    Mr. Shuman, you are recognized for 5 minutes. And I would 
like just to take a moment to again thank you for your service, 
as well, to our country.
    Mr. Shuman. Thank you, Mr. Chairman.
    Chairman Luetkemeyer. You are recognized.

                 STATEMENT OF MATTHEW J. SHUMAN

    Mr. Shuman. After proudly serving 20 years in the United 
States Army, Frankie Adams is continuing to this day to serve 
his community as a police officer.
    In December 2016, the VA authorized Mr. Adams, through the 
Choice Program, to receive an outpatient procedure at a 
hospital closer to his home. A few months later, he received a 
bill in the mail instructing him to pay the remaining balance 
for the procedure that his private medical insurance did not 
cover.
    While speaking with both the doctor and the hospital, Mr. 
Adams advised them that the VA was responsible for the cost of 
the procedure. Mr. Adams was unfortunately told that the VA had 
not paid it and, in order to avoid the debt from being reported 
to a credit collector and impacting his credit, he would need 
to pay the $300 balance.
    Chairman Luetkemeyer, Ranking Member Clay, and 
distinguished Members of this committee, on behalf of the 
National Commander Denise H. Rojan and the 2 million members of 
The American Legion, I thank you for the opportunity to testify 
regarding The American Legion's position on H.R. 2683, the 
Protecting Veterans Credit Act of 2017.
    The American Legion is our Nation's largest wartime veteran 
service organization, with over 13,000 posts in every 
Congressional district.
    The story I told is a story that many veterans have lived. 
The small difference is that Mr. Adams, from the great State of 
Missouri, had the means to pay the charges. The simple reality 
is no veteran should ever have to pay for services that the VA 
is responsible for.
    If passed, H.R. 2683 will afford veterans the necessary 
protections by amending the Fair Credit Reporting Act to 
exclude for 1 year information related to their VA medical debt 
from being reflected in their credit report. This commonsense 
bill will also provide veterans with the necessary tools to 
dispute VA medical debt information reported to credit 
reporting agencies. Bottom line, veterans will no longer 
require assistance from attorneys and pay fees to resolve an 
issue they had absolutely no role in creating.
    Before continuing, I would like to give a brief history of 
the Choice Program at VA.
    In 2014, the VA wait-time scandal became a national news 
story, describing veterans waiting long periods of time to see 
a doctor to receive even the most basic of medical services. 
Many blamed an overworked and understaffed VA system.
    A solution was to allow veterans to receive care in the 
community at the Government's expense. When the Choice Program 
was created, it became the ninth community care program at the 
Department of Veterans Affairs, meaning there were eight 
similar programs already in existence, including the VA's 
Office of Community Care.
    Mr. Chairman, I share this with you purely to demonstrate 
that veterans have been dealing with the consequences of VA's 
actions even prior to the implementation of Choice.
    While The American Legion supports H.R. 2683, we have a few 
recommendations that would assist in making the bill even 
stronger:
    One, the credit reporting agencies will need a mechanism to 
validate if someone is a veteran in order to process their 
claim.
    Two, in addition to validating a veteran's status, the CRAs 
will also need to validate that the debt in question is a VA-
approved service.
    Last, in 1982, the Prompt Payment Act became law, which 
forced the Federal Government to pay their bills on time. In 
2014, when the Choice Program became law, section 105 of that 
law required the VA to pay providers in a timely manner. The 
American Legion strongly encourages this committee and the 
entire Congress to pass legislation directing the VA to adhere 
to the Prompt Payment Act, which will assist veterans who have 
selflessly served their Nation.
    Mr. Chairman, Ranking Member Clay, and Members of this 
committee, I thank you for the opportunity to share with you 
today The American Legion's position on the Protecting Veterans 
Credit Act. In closing, veterans like Mr. Adams deserve only 
the best, and The American Legion stands ready to assist you in 
doing just that.
    Thank you, and I am more than willing to answer any 
questions you have.
    [The prepared statement of Mr. Shuman can be found on page 
75 of the appendix.]
    Chairman Luetkemeyer. Thank you, Mr. Shuman. Appreciate 
your insights on those issues.
    And so let me just begin with you. I will recognize myself 
for 5 minutes here.
    You cited somebody from Missouri, which Mr. Clay and I have 
said, this guy is pretty sharp, he is hitting a very high note 
here with us right off the bat. Can you elaborate a little bit 
more on exactly what the details of that case were and how this 
bill would impact that individual?
    Mr. Shuman. Certainly, sir. Thank you for the question. It 
is worth noting that Mr. Adams is watching right now from 
Missouri.
    He is a police officer. After serving in the military, he 
decided to retire to become a police officer. And in 2016 he 
was normal age to receive a colonoscopy. He found out that he 
could have the service done--instead of at the VA, he could 
have it done at a local hospital, which was only 10 miles from 
his home. Surgery went well, just so you know.
    About 5 months later, he began receiving bills in the mail 
saying that he owed money. And though $300 is not a lot of 
money by a lot of people's standards, it certainly is to 
others. He informed them that the charges--well, first of all, 
it is also worth noting that his personal insurance covered a 
big chunk of the fees, which the VA was certainly responsible 
for in the first place. After a while, finding out, and did not 
want it impacting his credit, he personally paid the $300 
himself.
    If this happens, which has happened quite often, when 
veterans pay the fees themselves, they never get that money 
back from the VA. So let's just note that.
    Chairman Luetkemeyer. So the bill's impact here would 
minimize this individual's being charged any late fees or--
    Mr. Shuman. It would, sir.
    Chairman Luetkemeyer. --Any credit negativity with regards 
to not paying his $300.
    Mr. Shuman. Yes, sir. It would provide up to about a year 
for them to be able to figure out this process. Realistically, 
it should take roughly about 2 months for the VA to get those 
payments made, so providing a little bit more time than that, 
in case it doesn't, would be helpful to the veteran.
    Chairman Luetkemeyer. Very good. Thank you very much.
    Mr. Fisher, I was interested in your commentary here. I am 
involved intimately with a bank, and they were giving me, the 
other day, this real estate loan matrix. I realize you probably 
can't see it from there, but this top part, there are 280 
boxes. And the bottom part here, it is a timetable of 20 
different provisions in there of the things you could or could 
not do.
    So you are looking at 300 different situations there that 
you could be tripped up on and have one, what they call 
technical exception, and then cause yourself, the bank, to have 
some retribution by the CFPB or the FDIC or whomever on this.
    And so would you like to elaborate just a little bit on the 
complexity of this chart and the concerns that you have, as a 
banker, with trying to comply with all this?
    Mr. Fisher. Yes. Obviously, we are very concerned about the 
additional data points and the information that is being 
collected. So we are not asking to be--we would like an 
exemption; that would be great. But a forbearance or at least a 
temporary extension to get ready for some of the changes to 
HMDA, which has been in place since 1975, would be great.
    Chairman Luetkemeyer. How is Mr. Mulvaney--I know that he 
is looking at this, and he has proposed a delay on some of 
this. Give us a little briefing on what he is trying to do and 
the impact it would have with regards to some of this stuff.
    Mr. Fisher. I think they have just announced that they 
would have a forbearance for, I think, the same period as the 
bill to allow banks to get up to speed, so that they are not 
going to aggressively go after banks if you have an error in 
your data.
    Chairman Luetkemeyer. I know the bill tries to say there is 
a limit at which the things do not affect the banks, but there 
is already a limit in place on a number of different issues 
that affect banks. But it seems to me that there is an 
experience here where the regulators will say, well, if it is a 
good idea for the banks above this threshold, it is probably a 
good idea for the banks underneath it. Would you like to expand 
on that comment just a little bit?
    Mr. Fisher. Yes, we are always concerned that there are 
going to become best practices that will get pushed down upon 
the banks.
    As a $475 million bank, we are not subject to stress-
testing our assets or stress-testing loans, but we have 
suggested at regulatory examinations that we should consider 
stress-testing some of our loans. We don't have an enterprise 
risk manager within our bank, but we have been told that we 
should start thinking about having somebody in charge of 
enterprise risk management for our bank. So--
    Chairman Luetkemeyer. So they are using the guidance and 
rules that are above this threshold to be forced on you or by 
inference that it is a good idea, as you say, best practices 
for you to implement these, as well, is what they are telling 
you. Is that correct?
    Mr. Fisher. Definitely, sir.
    Chairman Luetkemeyer. OK.
    Let me yield back here, and we will go to the gentleman 
from Missouri, Mr. Clay. The Ranking Member is recognized for 5 
minutes.
    Mr. Clay. Thank you, Mr. Chairman, and thank all the 
witnesses again.
    Mr. Astrada, two of the bills we are considering today have 
two very different thresholds to trigger regulatory relief. 
H.R. 1264, the Community Financial Institution Exemption Act, 
would exempt nearly all banks and credit unions from any new or 
modified consumer protection regulation, and it uses a 
threshold of $50 billion in assets. H.R. 4725, the Community 
Bank Reporting Relief Act, on the other hand, would set a 
threshold of $5 billion for providing reduced call report 
requirements.
    Putting aside the substance of the two bills for a moment, 
could you please help put the impact of these different 
thresholds into perspective in terms of which segments of the 
banking sector would be covered and the potential impact on 
consumers?
    Mr. Astrada. Absolutely. And this is with the qualification 
you said, ignoring the substance, but looking at the 
thresholds.
    If we consider $5 billion, it covers a large majority of 
the industry, I think over three-fourths, that you are taking 
out of the ability of regulators to assess data on the health 
and soundness, to assess market trends, to assess where policy 
should be targeted to attract private investment. So you are 
really taking a large share of the industry outside of the 
purview of data-driven policy.
    And then when you times that by 10 and go to $50 billion, 
you are talking essentially virtually all of the banking 
industry, with the exception of a handful of the largest 
organizations. And to take that out of the purview of the CFPB 
is, I think, in line with our concern and our opposition to 
bills like these that just define efficiency as complete 
exemption from the regulatory system.
    So I will just underline that the CFPB also is responsible 
for the Equal Credit Opportunity Act, the Truth in Lending Act, 
Fair Debt Collection Act. So you are ultimately placing a 
majority of the banking, if not all of the industry, outside of 
the purview of these regulations, with a very onerous--I am 
sorry, I have to speak to the substance of 1264 real quick--an 
onerous exception process that essentially just hamstrings the 
only agency that is looking out for the consumer.
    Mr. Clay. Then, when considering the appropriate asset size 
to establish a threshold to provide regulatory relief for 
small, community financial institutions, do you believe that 
the committee should consider the FDIC's 2012 community bank 
study that defined a community bank with a threshold of $1 
billion in assets, along with other factors, such as whether a 
bank had more than 10 percent of foreign exposure?
    Mr. Astrada. CRL hasn't taken an official position on a 
number. I will say that we do support the role of the Federal 
regulators to assess that number. And it would make more sense 
to leave it to the regulators, who are in the best position, 
that have a collaborative relationship with those under their 
purview, to assess those thresholds rather than have it 
mandated from legislation.
    Mr. Clay. Now, I am going to play devil's advocate. Look, 
when the CFPB was created through Dodd-Frank, it was in 
response to the Great Recession and those players in the 
financial services industry that had been careless, that had 
almost caused our financial systems to melt down.
    And I am one who thinks that we pass no perfect laws here, 
and so sometimes we overreach. And so let me ask you, with us 
taking in all of these financial institutions, did we 
overreach, as Congress, in this law? And why wouldn't the 
CFPB's role be to focus on those players who did do wrong and 
who almost caused a meltdown and not have such a wide swath and 
take in everybody?
    Mr. Astrada. I ran out of time, but am I permitted 30 
seconds to respond to that?
    So CRL and I don't think any one of our coalition members 
have ever said that Dodd-Frank was perfect, and it very much 
was in response to a once-in-a-generation crisis. But we do 
believe and that legislation anticipated that, especially with 
sections like 1022(b)(3), which gives the CFPB ability to 
exempt classes of institutions from its rules--and it has used 
that for smaller institutions and community banks.
    While we are not of the view that Dodd-Frank is sacrosanct 
and cannot be changed, the legislation today takes the complete 
opposite approach and says let's just get rid of large parts of 
this altogether.
    Mr. Clay. I thank you for your response.
    I yield back.
    Chairman Luetkemeyer. The gentleman's time has expired.
    With that, we go to the gentleman from Pennsylvania, Mr. 
Rothfus, the Vice Chair of the committee.
    You are recognized for 5 minutes.
    Mr. Rothfus. Thank you, Mr. Chairman.
    Mr. Fisher, at this committee, we often discuss the degree 
of consolidation in the banking industry and the ongoing 
closures of community financial institutions. This, coupled 
with the de novo drought, has caused many communities across 
this country to lose their local bank or credit union.
    You are testifying today as not just a bank CEO but as a 
fifth-generation community banker. In your testimony, you 
wrote, quote, ``Community banks thrive or fail based on their 
reputation for fair dealing in the communities they serve. 
Their business model is based on long-term customer 
relationships, not one-off transactions.''
    You went on to note that regulators often fail to take 
community banks' business model into account when imposing 
heavy-handed rules on smaller institutions.
    Can you discuss what happens when a community becomes a 
financial services desert, as described in your testimony? What 
are the impacts for households on Main Street?
    Mr. Fisher. It limits choice to consumers, it limits 
choices to small businesses. The majority of our business is 
done within our community. Ninety percent of the loans that we 
make are done within the communities we serve. Without us in 
Spencer, New York, which has a population of about 3,800 
people, I don't think any other bank is going to step into my 
community and open up an office to provide banking services. 
Definitely, without community banks present, there is a loss of 
financial services and choice for consumers.
    Mr. Rothfus. And I have seen that in small towns and 
boroughs across western Pennsylvania.
    Can you discuss an example of CFPB overreach into a 
community bank like Tioga?
    Mr. Fisher. I think the increased--the biggest example 
right now, and it is one of the bills we are discussing, is the 
increased HMDA data points, going from 23 data points to 48, 
more than doubling the number of data points, which--community 
banks, there is--I made 253 first mortgage loans last year, out 
of 10 million. So are my 253 loans statistically significant as 
far as the numbers that the CFPB is collecting as far as these 
data points? I don't think so, but--it is just--I don't think 
it should be applicable to my bank.
    Mr. Rothfus. It appears that they are pretty hungry for 
this data.
    On another report, some critics of the Community Bank 
Reporting Relief Act might argue that the Federal Financial 
Institution Examination Council (FFEIC) has already streamlined 
call reporting. Yet, in your testimony, you wrote, quote, 
``From our perspective, the new short form is essentially the 
same as the long form. ICBA invested significant time and 
resources in the FFIEC effort, and we were deeply disappointed 
in the outcome.''
    Can you elaborate on how the new short form fails to 
provide community banks like yours with meaningful relief?
    Mr. Fisher. The call report, the sections that they 
eliminated were sections that weren't applicable to my bank. 
Some of the derivative sections, some of the other off-balance-
sheet items that we were supposed to be reporting on a 
quarterly basis, we weren't reporting on those things anyway, 
so elimination of those data points doesn't save me any time. 
Instead of maybe taking 40 hours a quarter to complete, it is 
maybe a 39-hour process today.
    Mr. Rothfus. Yes. I noticed in your testimony also you said 
that when you first started in banking in the mid-1980's the 
report was 18 pages long; now it is 51 pages. No change in your 
basic business model since that time warrants--that is nearly 
three times.
    Mr. Fisher. Yes. My business model is essentially the same 
as when my great-grandfather started the bank. We take in 
deposits and lend it back out in the community.
    Mr. Rothfus. Mr. Gleim, you discussed in your testimony the 
importance of Chairman Pearce's bill for the manufactured 
housing industry. This issue is of particular interest to me 
since manufactured housing is a popular source of affordable 
home ownership in my district. The manufactured housing 
industry also employs 16,000 people in Pennsylvania.
    I understand that restrictions on lending practices have 
made it more difficult for prospective buyers and have already 
adversely impacted the industry. Can you please elaborate on 
how the Pearce bill would help prospective purchasers of 
manufactured homes?
    Mr. Gleim. Again, let me again piggyback off of the HMDA 
information. We have gone through, and basically our numbers 
have come up with just over a hundred data points that were 
required to be filled out for that. Now, these have to be 
filled out on every application that is out there. It continues 
to increase our cost, every application, regardless of what the 
disposition is of that product. As a result, it continues to 
increase our cost. It makes it very, very difficult to make the 
smaller loans out there, and it continues to limit affordable 
housing to many of our customers.
    Mr. Rothfus. I yield back my time.
    Chairman Luetkemeyer. The gentleman's time has expired.
    With that, we recognize the gentlelady from New York, Mrs. 
Maloney, for 5 minutes.
    Mrs. Maloney. Thank you so much. And I thank the Ranking 
Member and the Chair holding this hearing, and for all of the 
panelists. And a very special welcome to Robert Fisher, a 
fellow New Yorker, and thank you for your service to our great 
State.
    My first question is for Mr. Astrada.
    What do you think of H.R. 2683, the Protecting Veterans 
Credit Act? I personally am supportive of it, would like to be 
a cosponsor, and thank my colleague Mr. Delaney for his hard 
work on it. And I don't think that veterans' credit scores 
should be harmed just because the VA fails to pay non-VA 
healthcare providers on time.
    Do you think this bill is helpful?
    Mr. Astrada. Thank you. Yes, CRL does support this bill and 
views it as a very productive and positive step to protect--
    Mrs. Maloney. And do you have any concerns with excluding 
this information from veterans' credit reports?
    Mr. Astrada. No concern. As it is, like I said, we view it 
as a very productive step to protecting our Nation's veterans. 
The only thing I would underscore is that--we deal a lot in the 
secondary debt market--is that these protections should be 
expanded, to the extent possible, for veterans and to the 
broader communities, especially when it comes to medical debt, 
which is more than half of all collections across America.
    According to CFPB publicly available data, over two-thirds 
of the complaints of that debt centered around unverified debt 
holding, incorrect amounts, or even the wrong debtor.
    Mrs. Maloney. Thank you. And I think we can get bipartisan 
support for this, I hope.
    Mr. Astrada, you said in your testimony that H.R. 4648, the 
Home Mortgage Reporting Relief Act, would undermine fair 
lending efforts. Can you elaborate on how you think the bill 
would affect fair lending? Would this bill make it harder to 
crack down on unfair and abusive practices?
    Mr. Astrada. Yes. We have strong opposition to 4648 on the 
public disclosure prohibition. When we look at HMDA and its 
three main purposes of helping to show whether financial 
institutions are serving the housing needs of their 
communities, to assist public officials in distributing public-
sector investment, and to assess identification of potentially 
anti-discriminatory behavior or preventing anti-discrimination 
laws, this data is essential.
    And without it, the public, universities, policymakers, 
professionals won't be able to have an accurate assessment of 
the market, who is getting credit, who is not getting credit. 
And this is particularly relevant for rural borrowers or 
individuals who live in banking deserts that rely on very 
limited choice of institutions.
    Mrs. Maloney. I would also like to ask you about 2683. What 
do you think about the Protecting Veteran--wait a minute. I am 
going back to the wrong one.
    I want to ask you about H.R. 1264, which would exempt all 
banks and credit unions with under $50 billion in assets from 
all rules and regulations issued by the Consumer Protection 
Bureau.
    I am all for tailoring rules to the size and business 
models of banks and credit unions, but is it appropriate to 
exempt banks and credit unions from consumer protection rules 
based purely on size? Aren't all consumers entitled to be 
protected? Shouldn't all financial institutions, regardless of 
size, care about taking care of and protecting their 
constituents or their consumers and customers? What does size 
have to do with consumer protection?
    Mr. Astrada. I think in this case, especially with 1264, 
the number is significant, because it is virtually the entirety 
of the industry. And to place that completely outside of the 
CFPB's purview, not only with all the regulations that it is 
responsible for now but in the future, is--
    Mrs. Maloney. It would be how much of the industry did you 
say?
    Mr. Astrada. $50 billion in assets, I don't have the number 
offhand, but it is well more than 90 to 95 percent.
    Mrs. Maloney. Ninety-five percent? My word. Really? That is 
interesting.
    Mr. Astrada. So it is essentially saying that the vast 
majority of the banking industry doesn't have to comply with 
the CFPB--any regulations that it is responsible for now or 
that might come up in the future.
    Mrs. Maloney. And shouldn't every customer be entitled to 
protection?
    Mr. Astrada. We would strongly agree with that statement, 
yes.
    Mrs. Maloney. OK.
    My time has expired. Thank you very much for your 
testimony. And I thank all the other panelists for being here.
    Chairman Luetkemeyer. I thank the gentlelady for her 
questions.
    With that, we go to the gentleman from Colorado. Mr. Tipton 
is recognized for 5 minutes.
    Mr. Tipton. Thank you, Mr. Chairman.
    I thank the panel for taking the time to be able to be 
here.
    Mr. Fisher, prior to the creation of the CFPB, were there 
protections in place for consumers through your banks?
    Mr. Fisher. Yes, there have always been protections in 
place for the consumers.
    Mr. Tipton. Great. I was particularly interested in a 
follow up to the Chairman's question to you when you were 
talking about, actually, the trickle-down effect in terms of 
regulations, the best practices and how they are going to be 
impacting the ability to be able to create new businesses.
    I, too, come from a rural area. We have not experienced the 
recovery that the rest of the country has. Fortunately, I 
think, now that we have had real tax relief legislation go 
through, those opportunities to be able to grow businesses, 
some responsible deregulation starting to go into place, we are 
starting to finally see some real activity in some of rural 
America now to be able to create it.
    But I would like you to be able to speak to my colleague 
Mr. Williams' bill, H.R. 1264. It will exempt community 
financial institutions from prospective rules and regulations 
from the CFPB. Could you speak to how this is going to be able 
to assist creating those economic dynamics that a lot of rural 
America, upstate New York, rural Colorado might really need to 
have?
    Mr. Fisher. I just think, obviously, our reputation is 
critical to our success in our communities. So we protect our 
consumers. We do what is right for our customers, as every 
other community bank throughout this country. When you are 
operating in a small footprint, you have to do what is right, 
because your reputation is everything.
    So I think the exemption from some of the purview of the 
CFPB takes away some of the burden that we may have as far as 
trying to serve our communities and trying to have a consistent 
message to our customers.
    Mr. Tipton. We had some real experience out of the State of 
Colorado with some of our smaller financial institutions 
stating that some of the regulatory burden was actually 
inhibiting their ability to be able to make those small-
business loans.
    I am a former small-business owner. Without that access to 
capital, we weren't able to maintain or to be able to grow 
jobs. Have you had some of that experience in your banks?
    Mr. Fisher. Definitely. With the HMDA laws as far as 
currently, I have two people in my bank out of a hundred people 
that their main focus is on HMDA. I have one employee that is 
solely dedicated to BSA.
    So regulatory burden, which is why we are here today, not 
to talk about bank profitability but to talk about reg burden 
and how we can better serve our communities and serve our 
customers and get loans out to small-business customers. And 
that is really, I think, what we are trying to do, is relieve 
some of the burden that doesn't make sense. Tier it to my 
business model.
    Mr. Tipton. I think that is a lot of the intent of Mr. 
Williams' bill, to be able to have a responsible regulation, to 
be able to create win-wins for our communities, for our 
businesses, for our families, and to be able to have 
institutions in place that can deliver that liquidity.
    Mr. Gleim, I would like now to be able to turn to some of 
the issues that you are bringing up.
    In December 2017, the CFPB announced that it intends to 
open a rulemaking to reconsider the various aspects of the 2015 
HMDA rule, as well as its intention to assess penalties for 
errors in data collected in 2018.
    In your testimony, you called the compliance burden of the 
CFPB HMDA rule stifling. Can you speak to how codifying the 
CFPB's safe harbor and extending it through 2020, as Mr. 
Emmer's legislation will do, how that will ease compliance 
burdens for the CFPB and the rulemaking industry?
    Mr. Gleim. Yes, sir. The safe harbor will help us for that 
1 year because of the fact it won't provide--we will basically 
have a safe harbor from those penalties. But it still doesn't 
resolve the issues of all of the information that we do and we 
are required to collect.
    Again, while our organization, we are the second-largest 
lender in the manufactured housing segment, we basically turn 
down 74 percent of our applications. Every one of those 
applications is required to have HMDA information. We have 
found also that the cost of software for HMDA as well as 
additional software to edit the responses for HMDA are 
extremely expensive and make it difficult for more 
organizations to enter this market for manufactured housing.
    The other issue we have is, when a customer comes in and is 
asked to provide that information, they can basically say they 
won't, and, at that point, we need to make a best guess on 
that. What the customer doesn't understand is there are so many 
data points in there that we are then required to go into not 
only his application or her application but a lot of other 
documents we have received from them to complete that. In other 
words, we are providing far more information than the customer 
expected, which leads to privacy issues as well as identity 
theft issues, as far as we are concerned.
    This takes a number of people to do. We are looking at 5 to 
10 minutes for every deal that we have.
    Mr. Tipton. Thank you.
    I yield back, Chairman.
    Chairman Luetkemeyer. The gentleman's time has expired.
    We go to the gentleman from Georgia, the distinguished 
gentleman, Mr. Scott. You are recognized for 5 minutes.
    Mr. Scott. Thank you very much, Mr. Chairman.
    Mr. Gleim, let me ask you this, because I read your 
testimony, and you pointed out something that disturbed me, the 
fact that 1264 does not provide any relief to nondepository 
manufactured home lenders. And that concerned me because there 
are millions of American families who this would affect who do 
not use the traditional lenders like banks or credit unions but 
heavily rely on this alternative form of lending.
    Could you share with us what this would do, what the impact 
of this would be?
    Mr. Gleim. I think one of the things that we have seen the 
acting director do, particularly on the Safe Harbor Act, is to 
go across the board on all lenders. And that is why we are 
asking for that same protection on this.
    One of the biggest issues we have out of this, sir, is the 
fact that it creates an uneven playing field for manufactured 
housing lenders and organizations like ours which do 
significant amounts of manufactured home lending. The big issue 
also is very few community banks and banks in general basically 
work in this segment, just because of the fact it is so 
difficult to make money off of the smaller loans.
    Not only are we penalized by that, we would now be 
penalized by basically a dual system out there that would treat 
all of us lenders that are providing manufactured home loans 
that are nondepositories following different rules.
    Mr. Scott. And that is because the loan size of 
manufactured housing is possibly too small to cover a lot of 
that. So it puts it into an unprofitable position to even cover 
compliance costs.
    Is it possible that you might--I know my colleague Mr. 
Roger Williams is a very fine gentleman, and he wouldn't want 
to do anything that would hurt millions of American families 
out there who don't use the traditional instruments in our 
financial system, that perhaps you might make a few suggestions 
to Mr. Williams that might do this.
    In Georgia and throughout this country, there are an awful 
lot of--millions of families would be affected, I think, by 
this. Is that not true?
    Mr. Gleim. That is definitely correct.
    One of the things that would help this significantly goes 
back to providing access to manufactured housing on points and 
fees. These homes that are at $20,000 and $30,000 are almost 
impossible to make a profit off of. As a result, you have 
customers that cannot buy these homes at this level. As a 
result, they end up having to go off someplace else. Again, 
there aren't many alternatives outside of manufactured homes.
    Right now, we are looking at numbers as far as originating 
and processing that run anywhere from $1,800 to $8,800 to 
process a loan. Because of that, more and more financial 
institutions and lenders are not willing to do the lower end. 
When the lower end isn't done, it also makes it very difficult 
for the customer to be able to trade up to a larger 
manufactured home or a better manufactured home.
    There is no better affordable housing right now than 
manufactured homes that, as I stated in my testimony, not only 
are the costs less than traditional-built used or new homes, 
but in many cases the cost is far less than it is for even 
renting at this point.
    Mr. Scott. Very good.
    And if there is anything I could do to work with Mr. 
Williams on that, we could maybe work together, get some 
language that would ease that concern a bit, I am sure that Mr. 
Williams would work with us.
    In my remaining time, I cannot go by without giving a 
compliment to Representatives John Delaney and Randy Hultgren 
for the great work they are doing with House Resolution 2683. 
This is no fault of our veterans, to get in this situation. And 
this legislation will go a long way, Mr. Chairman, in fixing a 
problem and correcting it. Because it is unfair for our 
veterans to have to be saddled with this extra cost because of 
the late payment structure in the VA. So I just want to commend 
Mr. Hultgren and Mr. Delaney for a job well done.
    Thank you.
    Chairman Luetkemeyer. The gentleman yields back.
    The Chair will recognize the gentleman from Texas, Mr. 
Williams, for 5 minutes.
    Mr. Williams. Thank you, Mr. Chairman. And thank you for 
holding a hearing on my bill, H.R. 1264, the Community 
Financial Institution Exemption Act, and all of the important 
legislation that we are discussing today.
    It is not easy to force a regulatory agency to do what they 
already should be doing, but H.R. 1264 seeks to put the burden 
of proof on the CFPB. For new regulations, community 
institutions will be exempt until the CFPB makes a written 
detailed finding that they should not be included. In other 
words, either keep community institutions out of these massive 
rules or put pen to paper and tell us why they are including 
community banks and credit unions.
    The bill would also require the CFPB to consult with 
primary regulators of community institutions as to whether a 
new rule should go forward or if an exemption should exist. 
Finally, nothing in the bill would prevent the CFPB from 
revisiting current rules to determine if new exemptions are 
justified.
    My bill is simple; my bill is straightforward. And I hope 
the committee will consider my legislation and that my friends 
on the other side of the aisle, as my good friend--let the 
record show, my good buddy, David Scott, has indicated, they 
will work with us to create a workable exemption. And if not 
and we don't do that, I am afraid our community institutions 
are going to keep disappearing, and customers and borrowers 
alike are going to suffer in the long run.
    In my remaining time, I would like to ask a few questions.
    Mr Fisher, first of all, congratulations on your fifth-
generation business. I operate a third-generation business. And 
I want to thank you for being here today.
    Community banks and credit unions are the backbone of Main 
Street America. And in my 45 years of experience as a small-
business owner, I can say without a doubt that community 
financial institutions are major drivers of this Nation's 
economy. But the sad truth is one credit union or community 
bank is going out of business each working today--it is 
unbelievable here in America--because of incredible regulatory 
burden.
    I would like to ask you about my piece of legislation, the 
Community Financial Institution Exemption Act, which you have 
spoken about, and the effect that it could have on Main Street.
    First, though, in your experience, would you say that in 
the past 8 years the regulatory burden on your institution has 
grown substantially?
    Mr. Fisher. I would say it has definitely mushroomed. It 
has expanded exponentially.
    Mr. Williams. All right. And do you feel that the CFPB 
should have included broader exemptions for smaller 
institutions in that timeframe?
    Mr. Fisher. Yes, I am not sure that the CFPB has 
effectively used the section 1022 exemption to exempt different 
financial institutions from the purview of some of their laws.
    Mr. Williams. Do you feel like this legislation will have a 
positive impact on Main Street?
    Mr. Fisher. I think this would have a tremendous impact on 
Main Street.
    Mr. Williams. I have another question for you. I am 
concerned that the CFPB, as it behaved under former Director 
Cordray, actively sought to increase regulation, no matter the 
cost to communities and the consequences of its actions. With 
that being said, do you think that requiring a written finding 
for new rules before they go into effect, if at all, would 
force the CFPB to stop and think if these rules are truly 
necessary for community institutions?
    Mr. Fisher. Most certainly. They would have to prove--the 
burden of proof is on the CFPB at that point.
    Mr. Williams. Finally, will my proposal effectively help 
community institutions to thrive and to grow in number rather 
than be crushed under burdensome regulations they currently 
are?
    Mr. Fisher. I would find that to be very helpful, yes.
    Mr. Williams. Thank you for your testimony.
    Real quick, Mr. Shuman, I would also like to thank you for 
your service to our country.
    Mr. Shuman. Thank you, sir.
    Mr. Williams. Yes, sir. I represent a large portion of Fort 
Hood. You know where that is.
    Mr. Shuman. I am quite familiar with--
    Mr. Williams. So veterans issues are always at the 
forefront of my mind. We should always find solutions which 
honor the sacrifice and bravery of veterans who serve this 
Nation. The current state of VA is alarming to me, and our 
veterans deserve much better.
    And I agree with The American Legion National Commander 
Barnett that no veteran should ever receive a call or a letter 
from a collections agency because the VA failed to pay the non-
VA provider in a timely manner. It is disappointing that a bill 
like this is even needed, but I feel that this a step in the 
right direction to righting this wrong.
    Briefly, what else, with exception of this bill, can this 
committee undertake to ensure that veterans are taken care of 
once they have left the service?
    Mr. Shuman. Thank you for the question, Congressman.
    Outside of this committee voting on and in favor of 
critical legislation--for example, the committees right now are 
currently working on streamlining the community care bill, the 
Choice bill, going forward, so that will be critical in the 
coming months--but just continuing to vote in favor of veterans 
legislation will be helpful.
    Mr. Williams. OK.
    In my small amount of time, Mr. Gleim, I will just ask you 
this. My legislation that we have been talking about, in your 
estimation--or, I am sorry, actually, it is Mr. Pearce's seller 
financing legislation. In your estimation, will this 
legislation help to provide the flexibility and access to 
mortgage credit that moderate- and low-income families deserve?
    Mr. Gleim. Yes, sir, I think it definitely will by creating 
that level playing field.
    Mr. Williams. So Mr. Pearce has a good bill.
    Mr. Gleim. Yes.
    Mr. Williams. OK.
    I yield my time back. Thank you.
    Chairman Luetkemeyer. The gentleman's time has expired.
    With that, we will recognize the gentlelady from New York, 
Ms. Velazquez, for 5 minutes.
    Ms. Velazquez. Thank you, Mr. Chairman, and thank you for 
holding this important hearing.
    Mr. Astrada, since 2015, the CFPB has taken numerous steps 
to provide smaller institutions with flexibility from HMDA's 
data collection and reporting requirements. Thus, H.R. 4648 
seems somewhat unnecessary and has the potential to further 
limit mortgage lending to lower-income and minority 
communities.
    Would you agree with that assertion? Please explain.
    Mr. Astrada. Yes. And one of our main concerns with the 
bill is the limit of public availability. And I think it would 
be helpful to contextualize CRL and the Civil Rights 
Coalition's views on why, I think, as the phrase was said, we 
are ``so data-hungry,'' is that data really allows for a 
critical assessment of policies and to decouple intent from 
impact. And data and the quantitative analysis that relies upon 
it has been one of the strongest tools of civil rights groups 
and excluded communities to really speak truth to power.
    And examples of this go far back, especially in the 
mortgage industry, where FHA redlining was never with the 
intent to be exclusionary. It was always to preserve peace in 
the community or preserve the economic well-being of white and 
black families. Or upholding constitutional contract law was 
the basis for allowing or empowering landowners to not sell 
their property to African-Americans.
    So by no means am I comparing any of the legislation here 
today to those bills. I am just solely saying that that is our 
concern with scaling back data. That is why we are adamant 
about protecting the public's ability to scrutinize data and to 
really hold accountable the market.
    And this is also not a statement that says we believe in 
collecting data just for data's sake and that more data is 
better, but that we do have processes through the regulators in 
a collaborative approach with those under their purview and 
that legislation that will completely supplant the regulator's 
role in collecting that data or when should that be collected 
or how it should be collected is extremely problematic.
    Ms. Velazquez. Thank you.
    Mr. Astrada, H.R. 4648 will restrict the CFPB's ability to 
make any of the new HMDA data that is collected and reported 
under Dodd-Frank publicly available.
    Can you please discuss the importance of HMDA data in 
allowing Congress and the public to monitor trends and 
potential problems in the mortgage lending industry, and 
elaborate on any concerns we should be aware of with limiting 
the public access to this data?
    What is the public good, what is the public goal in terms 
of collecting the data and not allowing for the public 
community-based organizations that have an interest in terms of 
lending to all Americans not to have access to this data?
    Mr. Astrada. Again, I think it is extremely important for 
the public's access to this information. And one of the 
earliest examples of this, of public information that would 
improve industry practices is a 1988 series of stories of 
redlining practices in Atlanta published by the Atlanta 
Journal-Constitution called, ``The Color of Money.'' This 
series was carried out not by a Federal agency or any type of 
think tank but by investigative journalists relying on public 
data. And the series itself transformed the public's 
understanding of redlining and actually led to major changes in 
the mortgage market.
    So it is examples like these that--these data collections 
are not telling institutions who to lend to, who not to lend 
to, or giving any type of directive. It is really the 
foundational, what I would believe is transparent markets 
accountable to the public, accountable to policymakers. And the 
real point of conflict of what I sense is that how much data 
should be collected is a separate question of just prohibiting 
the public's availability of even future data points.
    And the expanded rule has race, ethnicity, interest rates, 
borrower fees. So it is all these data points that might have 
prevented the extent of the Great Recession if we had it before 
2008 when the market was very dark and even financial 
professionals trading at the desk had no idea what was going on 
in terms of risk assessment.
    Ms. Velazquez. Thank you, Mr. Chairman. I yield back.
    Chairman Luetkemeyer. The gentlelady yields back.
    With that, we will go to the gentleman from North Carolina. 
Mr. Pittenger is recognized for 5 minutes.
    Mr. Pittenger. Thank you, Mr. Chairman.
    And thank each of you for being with us today.
    Mr. Fisher, I want to say I applaud your work. I was on a 
community bank board from the time we chartered to the time we 
sold it. It was a great role that we played. Frankly, North 
Carolina has lost 50 percent of our banks in the last 8 years 
as a result of the Dodd-Frank bill and the regulatory 
environment. So I commend you for hanging in there, and relief 
is on the way.
    Regarding Mr. Williams' bill, which I really commend, do 
you have concerns that even with the ability that you have an 
exemption that the best practice rules that are promulgated 
through the larger banks could be passed down to the smaller 
community banks?
    Mr. Fisher. We do have concerns. And we have experienced 
that, as I mentioned before, with some of the stress-testing on 
some of our loans and even the suggestion that we have to hire 
a person now to manage the risk for our bank versus having a 
committee risk approach.
    So we have seen the best practices already being pushed 
down upon us from some of the larger institutions that we are 
not even close to those thresholds, asset thresholds, for some 
of those things. So we are concerned about some of those best 
practices.
    Mr. Pittenger. They have tried to carve out exemptions 
built on the substantial differences between community banks 
and the larger, more complex institutions. Do you feel like 
these have worked well in the past? What should Congress be 
considering in terms of a tiered regulatory approach? And what 
has worked well? What doesn't? What would you recommend?
    Mr. Fisher. I think a tiered approach can work well as long 
as it is consistent and enforced. I think if we look at the 
Durbin amendment, it is not perfect, but it still appears to be 
working somewhat well as far as preserving the interchange 
income for some community banks.
    I think a tiered approach should be based--it should be on 
the complexity of our business models, and we don't have the 
complex business model that the mega banks have. ``It's a 
Wonderful Life,'' just having been through the holidays, that 
is our business model. We are the Bailey Savings and Loan.
    Mr. Pittenger. Yes, sir.
    Mr. Gleim, President Trump is expected to nominate a new 
director for the CFPB. What specific steps could the new 
director take that would reduce regulatory burdens for 
manufactured home lenders?
    Mr. Gleim. Actually, I think I can simply state and simply 
respond by saying that we would like him to act on provisions 
in H.R. 1699 which was basically preserving access to the 
Manufactured Housing Act and do it on an administrative basis. 
This would help to cut our costs significantly. It would make 
it a lot easier and make affordable housing out there more 
accessible to a lot of other lenders or a lot of other 
customers.
    I think one other point that it is important to make is we 
have seen extremely good years over the last couple of years as 
far as profitability goes, and that includes my organization, 
but until these regulations are changed, we are not going to 
get people being able to afford or being able to buy 
manufactured homes.
    I said earlier 74 percent of our applications are being 
turned down, not because they are not good applications and 
not, in many cases, because they are not good customers; it is 
because of the regulations that are out there. And if, in fact, 
the CFPB could basically follow the Preserving Access to 
Manufactured Housing Act as it is, we would see more and more 
people qualify and be able to buy manufactured homes that 
deserve to have a home.
    Mr. Pittenger. Yes, sir. To that end, would you just expand 
some more in detail of the HMDA data requirements and the 
concerns that you have regarding that?
    Mr. Gleim. Our issue with the HMDA data is that the bill is 
not scaling back data. The bill is protecting small lenders 
from doubling of data being collected. And that is probably the 
biggest issue, as far as we are concerned, as far as that goes.
    We are not looking at eliminating HMDA collection. We are 
looking at, do we really need estimates that go from 100 to 140 
data points out there on that individual customer resulting in 
significantly increasing cost, which means more and more 
lenders will not, basically, go into manufactured housing 
because of this and because of the small balances. Again, I am 
talking $20,000, $30,000. Our average balance is $70,000.
    Mr. Pittenger. Thank you.
    I yield back.
    Chairman Luetkemeyer. The gentleman yields back.
    We go to the gentleman from Texas. Mr. Green, you are 
recognized for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. I thank the Ranking 
Member as well. I thank the witnesses for appearing.
    Let's start with something very basic. Mr. Fisher, sir, 
would you tell us what the HMDA data is used for?
    Mr. Fisher. HMDA data is used to see if a bank is 
discriminating based on race, sex, ethnicity, other features 
like that.
    Mr. Green. And do you agree that this type of 
discrimination still exists?
    Mr. Fisher. It does not exist at my institution, but I 
would say that there are probably some forms of discrimination 
that still exist, yes.
    Mr. Green. It exists at BXS. They just agreed to pay a 
$10.6 million settlement because of their behavior. And I have 
a list of others.
    Is there anyone on this panel who believes that 
discrimination doesn't exist? If so, raise your hand. Be 
truthful.
    I take it by an absence of hands, and I would ask that the 
record reflect, that all of the members of the panel believe 
that discrimination exists.
    Now, Mr. Fisher, if it exists and you have acknowledged it, 
but not at your bank, if it exists, how would you have us deal 
with something that prevents some people from accessing capital 
that are qualified to receive the capital?
    Mr. Fisher. I think the current HMDA data that was put into 
place in 1975 still adequately monitors that. It provides all 
the relevant data points that you need to monitor that. I don't 
think the expanded data points are significant--
    Mr. Green. Tell me about your background, Mr. Fisher. Where 
have you studied these issues such that you can give us an 
authoritative opinion such as you have just announced? Where 
have you studied this?
    Mr. Fisher. I have not studied this.
    Mr. Green. OK.
    Mr. Fisher. I--
    Mr. Green. So you really don't know what you are talking 
about. You really don't. People are suffering. They can't get 
loans that other people get, and sometimes they are more 
qualified than the people who are getting loans. It happens. It 
is not their fault that we have this history of invidious 
discrimination, something that I know we don't want to confront 
and don't want to talk about, but it exists, and somebody has 
to say it.
    And this data is important to those people who are being 
discriminated against. If someone can give us a better way to 
do this, I would be honored to hear it, but we don't have it.
    In fact, this is not enough. We ought to be able to test 
banks. We ought to be able to send people into banks to try to 
get loans, different ethnicities, and find out who is really 
discriminating against people and to what extent.
    Mr. Astrada, sir, tell us about this ``Color of Money.'' Is 
that the article that you referenced?
    Mr. Astrada. Yes.
    Mr. Green. I read that some time ago, but my recollection 
is that they found that there were some serious infractions. Is 
that a fair statement?
    Mr. Astrada. Yes.
    Mr. Green. Can you articulate some of these infractions, 
please?
    Mr. Astrada. Yes. And I think this is a great example to 
outline the spectrum of what you said, of just blatant, 
obvious, all-out racism where borrowers were declined loans 
based on the color of their skin, but also, through this data 
requirement, the more complex system that we have of 
discrimination.
    And I don't want to get too academic, but I think that a 
Supreme Court case in 1917 outlawed--or it deemed 
unconstitutional racial zoning by a county in Kentucky. And the 
research behind this article and that has been built on, shows 
that how, because individuals who discriminated against ethnic 
minorities, African-Americans, Latinos, couldn't outright 
racially zone, that they made an economic correlation of all 
the indicators that went along with the social class that they 
were discriminating against.
    So this article really sheds light on the more complex 
sense of discrimination, when you talk about institutional 
racism, all the way down to the individual teller that might be 
discriminating against somebody just on the color of their 
skin.
    Mr. Green. Thank you.
    I am going to yield back, Mr. Chairman.
    Chairman Luetkemeyer. The gentleman yields back.
    I would go to the gentleman from Georgia, Mr. Loudermilk. 
Recognized for 5 minutes.
    Mr. Loudermilk. Thank you, Mr. Chairman.
    And I do appreciate every one of our panelists for being 
here.
    Before I start questioning, I want to thank Mr. Shuman and 
Mr. Fisher both for your service to our country. Especially 
from an Air Force veteran, as well, and from a member of the 
Legion, as well, I appreciate your service to our country.
    Back in our district, I created an advisory council, back 
when I first was elected 3 years ago, and the advisory council 
was made up of professionals in business, business owners, 
small-business owners, managers, CEOs, community activists, 
nonprofits, ministers. It was basically a snapshot of the 11th 
Congressional District in Georgia.
    The reason I have this advisory panel is we meet regularly 
and we discuss issues that are important, and we bring ideas of 
how can we serve the people better.
    Recently, I asked them a question--actually, it was about 2 
years ago. I asked a question as I went into the business 
community there. I asked our advisory council, I said, ``If we 
could only do one thing, if we were only able to accomplish one 
thing to help your business, would you rather us address 
corporate taxes and business taxes or reduce regulations?'' It 
may not surprise you guys; it surprised me. Eighty-five percent 
of them in the room said reduce regulations. It was the number-
one thing.
    I followed up on that, and I said, ``Why?'' ``Because it is 
not just the bottom line for us; it is servicing our customers. 
And the current regulatory environment prohibits us from 
actually servicing our customers.''
    I had a young man, a member of our advisory council, 
president of a small community bank, came to me later, and he 
said, ``Let me explain to you the problems that we are facing 
because of the current regulatory environment. A young man came 
into my office, and he wanted a loan of $3,500 to buy a car. He 
needed this car for his job. He had been struggling. This was 
an opportunity. He got a job. But because of the current 
regulatory environment, even though I personally knew this 
guy,'' he said, ``I knew him, I knew he would be good for the 
money, I was not allowed to make a loan to him.''
    Mr. Fisher, you are in the banking industry.
    Mr. Fisher. Yes.
    Mr. Loudermilk. You make money by making loans to people, 
correct?
    Mr. Fisher. That is my core business. That is how we make 
money every day.
    Mr. Loudermilk. When you turn down someone for a loan, you 
don't make money.
    Mr. Fisher. Correct.
    Mr. Loudermilk. When the Government tells you you can't 
make a loan, even though you may know that it would be in the 
best interest to do so, you don't make any money.
    Mr. Fisher. That is correct.
    Mr. Loudermilk. Who is hurt through that?
    Mr. Fisher. The consumer ultimately is hurt--
    Mr. Loudermilk. Ultimately.
    Mr. Fisher. And we are hurt, as well, but--
    Mr. Loudermilk. Regarding the bill that Mr. Williams has 
introduced that would exempt the financial institutions under 
$50 billion from CFPB regulations--still, it would allow them 
to reinstate a rule if there were unique circumstances--I don't 
see how this would actually increase the systematic risk. I 
just don't believe that it would put that type of risk--what 
are your thoughts on that?
    Mr. Fisher. I don't think it would increase the risk at all 
either. I believe there are consumer regulations. And as I have 
said previously we do things that are right for our customers 
and right for the community because our reputation is on the 
line every day. And so we can't afford to do things that are 
contrary to customer goodwill that would hurt us 
reputationally.
    Mr. Loudermilk. So if the CFPB--and you have touched on 
this a little bit, but if this bill was to pass, what kinds of 
consumer protections would be there?
    Mr. Fisher. I think everything that the CFPB has put in 
place and that the other consumer protections would still be in 
place. It is new regulations going forward. And they could 
still have it enforced upon banks as long as they proved that 
the law needs to apply to community banks and other financial 
institutions as well.
    Mr. Loudermilk. And I agree with my colleague who spoke 
before me, and there are forces out there that do discriminate. 
But I have also learned, especially in this modern era, that 
the market is one of the strongest forces. And I am sure that 
your board of directors would--they would like to be able to 
make more loans to more people. Because what happens is, for 
this young man that was not able to get the loan to buy his 
car, he had to go to another agency to get the loan that 
required or made him pay a whole lot higher interest.
    So thank you, and I yield back.
    Chairman Luetkemeyer. The gentleman's time has expired.
    With that, we go to the gentleman from Kentucky, the 
Chairman of the Monetary Policy Committee, Mr. Barr. Recognized 
for 5 minutes.
    Mr. Barr. Thank you, Mr. Chairman. Thanks for the important 
hearing. I appreciate the opportunity to look at these 
important legislative solutions to over-regulation.
    And I wanted to follow up with Mr. Fisher and continue the 
discussion about HMDA data and the collection requirements that 
the CFPB is proposing for small institutions like yours.
    My understanding is that this rule more than doubles the 
number of data fields that you are required to collect. Is that 
correct?
    Mr. Fisher. Twenty-three to 48 data fields.
    Mr. Barr. So 25 additional data fields. You are already 
collecting and submitting and reporting 23 data fields right 
now. My understanding is that Dodd-Frank requires you to 
collect and report more, but the CFPB even goes beyond that. Is 
that fair?
    Mr. Fisher. I believe that is the case.
    Mr. Barr. And so the gentleman from Texas was making the 
point that you don't study this, but, in fact, community banks 
like yours, you more than study it, you live it each and every 
day, collecting it and reporting the data.
    And what many community banks in central and eastern 
Kentucky tell me is that the additional collection burdens in 
mortgage lending is actually forcing these institutions to exit 
mortgage lending altogether.
    And so my question to you or any other community banker in 
America is, how does exiting mortgage lending benefit any 
prospective borrower, including minority borrowers?
    Mr. Fisher. I don't think reduced choices is good for the 
consumer.
    Mr. Barr. The point here is that excessive, overzealous 
regulation reporting requirements doesn't help consumers. 
Ultimately, what it has forced community banks to do is 
actually get out of the business of mortgage lending. In fact, 
some community bankers have pointed out to me that they refer 
to the QM rule as ``quitting mortgages.''
    If this is what regulation has come to, that is not helpful 
to low-income borrowers. That is not helpful to minority 
borrowers. That is not helpful in any way in getting rid of 
discrimination. In fact, I would argue that Dodd-Frank, the 
CFPB is actually forcing banks to disadvantage disadvantaged 
borrowers because of the tremendous burden that is now hoisted 
upon community financial institutions and nonbank lenders and 
nondepository lenders.
    If there is discrimination that is going on in this 
country, it is discrimination that is forced by regulators, 
because they are literally forcing lenders out of the business 
of helping low-income borrowers in America.
    Mr. Gleim, I wanted to follow up with you, and, of course, 
was delighted to engage in this debate on preserving access to 
manufactured housing, the legislation H.R. 1699, which I 
introduced. And I will note, as we were talking about this 
legislation with some of our colleagues on the other side of 
the aisle, that there were 27 Democrats, including my good 
friend Mr. Scott, who voted in favor of that on the House 
floor. That legislation passed the House 256 to 163. That was 
bipartisan legislation that really does get at this issue of 
preserving access to manufactured housing. Your testimony 
references that legislation.
    During that debate, some opponents of the legislation 
criticized the depth of the market. They cited the existence of 
a, quote, ``monopoly'' in manufactured housing lending as the 
need for these CFPB regulations.
    I would like for you to respond to that, but as you do, 
isn't it the regulations themselves that created less 
competition? Isn't the fact that these regulations are a 
disincentive for banks and credit unions to get in the business 
of manufactured lending, isn't that what is causing less 
competition and choice within manufactured housing lending?
    Mr. Gleim. There is no question about that. Again, the 
issue that we are unable to do small loans keeps a lot of 
lenders from coming into this business. The other issue we have 
is the definition of a mortgage loan originator, which impacts 
that as well.
    But, all of the regulations that are coming in and the way 
that they are doing it is driving more and more lenders out of 
manufactured housing.
    Mr. Barr. My time has expired, but I would just ask the 
question, how in the world is the CFPB protecting consumers 
when consumers can't get a loan for a manufactured home that 
allows them to build equity and have a monthly payment that is 
less than a rental payment?
    And I yield back.
    Chairman Luetkemeyer. The gentleman yields back. His time 
has expired.
    With that, we go to the gentleman from Washington, Mr. 
Heck. You are recognized for 5 minutes.
    Mr. Heck. Thank you, Mr. Chairman.
    Mr. Astrada, thanks for being here today. I always 
appreciate the CRL because I think you are not only thoughtful 
but you think about things a little bit differently, and Lord 
knows that we could use some out-of-the-box thinking here and 
comments here on occasion.
    I wanted to ask you some questions about the seller finance 
bill. Now, let me put my cards on the table. I like this bill. 
I think, frankly, it is a measured approach, Mr. Astrada, to 
what is a genuine problem that we ought to address. And I can't 
understand why the underlying law was written the way it was.
    So let's put it like this. Dodd-Frank includes lots of 
provisions dealing with mortgages, and rightly so, because it 
came on the heels of an unbelievable mortgage crisis, and we 
all get that. And almost all of these mortgage provisions 
include some carveouts for small operators. The qualified 
mortgage rule has an exemption for small creditors. The HOEPA 
rule has an exemption for small creditors. The mortgage 
servicing rule has an exemption for small servicers. The 
mortgage originator rule has an exemption for small mortgages 
but only if they are an LLC.
    So I am trying to think of what the compelling public 
policy rationale would be for having a small originator 
exemption for LLCs and not natural persons, a disparity which 
is corrected in the bill that I happen to like. Can you think 
of a compelling public policy reason for treating those two 
differently and not providing a small originator carveout?
    Mr. Astrada. I just want to make sure I am answering your 
question specifically. So what you are asking is if there is a 
public policy reason for not extending the exemption to LLCs?
    Mr. Heck. No. There is a small originator exemption--
    Mr. Astrada. Yes.
    Mr. Heck. --For LLCs, but it is not extended to natural 
persons. And I am asking, is there a compelling public policy 
reason for LLCs to have this small carveout but not natural 
persons?
    Mr. Astrada. I think that gets outside of our concern with 
the bill, but I am more than happy to give you my--
    Mr. Heck. So you don't have a problem with extending it to 
natural persons.
    Mr. Astrada. It is--I am--
    Mr. Heck. Any more than you might LLCs? Are you saying you 
don't think there should be a small carveout for LLCs?
    Mr. Astrada. No. What I am saying is I think our concerns, 
or at least from CRL's concern, with the bill is more in the 
aggregate of what the bill puts out. So it is not just the 
extension to real persons or LLCs; it is also the striking of 
the fully amortized loans that would also follow that 
exemption. It is also the increase of the property from 3 with 
a 12-month period to 5.
    So it is really just those factors taken together are our 
concerns. That is ripe for potential problems not only for the 
borrowers themselves but also for the risks that that causes, 
especially for individuals who rely on manufactured housing.
    Mr. Heck. To be clear, do you or do you not have a problem 
with having a small originator carveout?
    Mr. Astrada. If you want a yes-or-no answer, I will give 
you a whole bunch of qualifiers, and then I will give it to 
you. Just that question outside of the rest of the bill--
    Mr. Heck. Just that question outside the rest of the bill.
    Mr. Astrada. I do not have a problem.
    Mr. Heck. And taking the next step, do you have a problem 
with that carveout being extended to natural persons in 
addition to LLCs outside the rest of the issues that you have 
alluded to within this bill?
    Mr. Astrada. I don't have a problem with it, no.
    Mr. Heck. Good. I take that as a ringing endorsement of 
that part of this legislation.
    Mr. Astrada. I--
    Mr. Heck. And I thank you for it.
    Mr. Astrada. Well--
    Mr. Heck. That said--
    Mr. Astrada. I will withdraw that endorsement--
    Mr. Heck. Reclaiming my time, to quote the Ranking Member.
    Just to remind you, I really appreciate when your 
organization is here. I genuinely do.
    I don't know that I have enough time left to ask this 
question, but I did want to ask you about why you are concerned 
with respect to manufactured housing and the provisions of this 
bill. Because I find that, in that regard, not an issue that 
you alluded to earlier, that there are actually protections 
included, not only in the underlying law, but also some 
additional protections that are included within our proposed 
legislation.
    With that, my time is up. And I certainly appreciate it 
every time CRL is here, and I genuinely mean that.
    I yield back, Mr. Chairman.
    Chairman Luetkemeyer. The gentleman's time has expired.
    With that, we go to the gentleman from Michigan, Mr. Trott.
    You are recognized for 5 minutes.
    Mr. Trott. Thank you, Mr. Chairman.
    I want to thank the panel for being here.
    I also want to thank Mr. Shulman and my friend from 
Maryland, Mr. Delaney, for offering H.R. 2683. It is a good, 
commonsense solution to fix a problem affecting our veterans, 
and I appreciate your bringing it forward. And I think it will 
pass with strong, bipartisan support. And if you have other 
suggestions on easy fixes we can do to problems that we are 
creating here in Washington for our veterans, we would all love 
to hear about them.
    Mr. Shulman. Thank you, Congressman.
    Mr. Trott. Mr. Fisher, I would want to talk about something 
that my friend from New York, Mrs. Maloney brought up. She 
asked a rhetorical question. I assume it was rhetorical. She 
said, ``What does a bank size have to do with whether a 
consumer should be protected, and shouldn't every consumer 
deserve protection?''
    And my response--and she is not here, but my response to 
that question is this chart. This is the regulatory scheme 
affecting banks. And this is the consequence of that.
    So my question, I would rephrase it a little differently. 
Shouldn't every consumer have the opportunity to have a bank 
nearby to give them a home loan or a small-business loan, or 
should credit just be limited to those who live in big cities 
or those who are well-healed or well-connected?
    So my question to you, sir, is, if some of these bills that 
we are considering today are signed into law, what is going to 
happen to your bank back in Spencer, New York? What are you 
going to do for your customers?
    As an aside, sitting here, listening to you today, I 
thought maybe you should consider a career in politics. You 
were so diplomatic and patient in response to Mr. Green's 
question, where he suggested that after five generations of 
running a community bank you know nothing about discrimination. 
I would have been a little more confrontational in my response 
and said, ``I have been serving our community for five 
generations, and I know a whole lot more about discrimination 
and its consequences than a bunch of bureaucrats crunching 
numbers in Washington.''
    But back to my question, what is it going to mean for your 
community back in Spencer, New York?
    Mr. Fisher. I think relieving regulatory burden, if we 
could get some relief from this huge list that you have up on 
the wall there, I think it would allow me to focus more on 
serving the customers, getting loans out into the community, 
and helping revive the upstate New York community.
    Congresswoman Tenney has left the room, but I thank her for 
some of her efforts to introduce some legislation. And just the 
relief--upstate New York, where I live, is still fairly 
economically depressed. We have not had the recovery that the 
rest of the Nation has had since the Great Recession. So it 
would allow me to really focus my efforts and focus externally 
on the community and our customers and in doing what is right 
for the community and putting loans back out there.
    Mr. Trott. Think you would be able to eliminate a job in 
compliance potentially?
    Mr. Fisher. I doubt that I will be able to eliminate a job 
in compliance, but I may be able to redirect those forces 
elsewhere more in line with a customer-facing--
    Mr. Trott. Now, Mr. Astrada, in his testimony, would have 
us believe that what is going to ensue if some of these bills 
are enacted is fair lending violations and discrimination and 
abuse and instability.
    Is that a likely scenario for your community bank? Are you 
going to go back and tell your loan officers, ``The Federal 
Government is off our back now, we can start discriminating 
against all those folks that we never liked''? Is that what is 
going to happen?
    Mr. Fisher. No. And I think even the rollback, we would 
still be subject to the HMDA requirements from 1975, so we 
would still be reporting the 23 data points. Obviously, as a 
community bank, we are doing what is right for our customers 
and the community. And it is all about being there for the 
customer. And if we tarnish our reputation, it is hard to 
recover that in a community of less than 5,000 people.
    Mr. Trott. So let's talk about the data points. Mr. Gleim 
and Mr. Fisher, either of you can respond to this.
    So I was recently visiting an organization in my district, 
and they are very actively involved in the Head Start program. 
And they indicated to me that the Federal Government has 3,000 
different things they measure with respect to how the Head 
Start program is administered, and they have to provide so much 
data, it is just overwhelming to them. I can't imagine what you 
would measure with respect to Head Start and kids and 3,000 
data points.
    But you mentioned 100 data points. So do you have an 
example--and if you don't, it is fine. Either of you or anyone 
can chime in. But do you have an example of just a ridiculous 
data point that you have to provide that just provides no 
possible utility whatsoever?
    Mr. Gleim. I think it is a matter--for instance, one of 
those data points that the customer doesn't know that we are 
reporting is the fact that they are getting a manufactured 
home. It is a little hard for me to understand the 
discrimination side of that.
    I am not saying, do away with HMDA. That is not the 
intention--because, as everyone knows, there have been issues 
along those lines. But as we go through those points, as we go 
through everything from numbers of children to the type of 
home, to the color of the home, to the location of the home, 
things along those lines, it is a matter of basically how many 
points are necessary.
    Mr. Trott. Great.
    Thank you for your time. My time has expired, but the idea 
of leaving the bureaucrats to determine the size of 
institutions that should be exempted is a bad idea. And that 
was my last question. I will yield back, though. Thank you.
    Chairman Luetkemeyer. The gentleman yields back. His time 
has expired.
    We go to the gentleman from Maryland. Mr. Delaney is 
recognized for 5 minutes.
    Mr. Delaney. Thank you, Mr. Chairman.
    And I want to thank all of our witnesses for being with us 
here this afternoon.
    I want to direct my questions to Mr. Shuman, related to a 
particular piece of legislation. But before I do that, sir, I 
want to thank you for your service to our country and your 
continued service to so many men and women who have served our 
country who need someone to be looking out for them. So I thank 
you for that.
    Mr. Shuman. Thank you, Congressman.
    Mr. Delaney. My question relates to the bill I cosponsored 
with my good friend Mr. Hultgren, H.R. 2683, the Protecting 
Veterans Credit Act of 2017, which I know you made some very 
positive comments about in your introductory remarks, which I 
appreciate.
    This bill has also been endorsed, obviously, by The 
American Legion, but by the VFW, the Military Officers 
Association of America, the Wounded Warriors Project, the 
Paralyzed Veterans of America Association, the Association of 
the United States Navy, the National Consumer Law Center, and 
the Consumer Federation of America.
    Mr. Chairman, I would like to ask for unanimous consent to 
submit letters to the record for these groups that are 
supporting the bill.
    Chairman Luetkemeyer. With no objection.
    Mr. Delaney. Thank you.
    And the bill does, as you know, sir, two things. The first 
thing it does is it freezes the ability of negative credit to 
be reported to credit agencies related to medical care that is 
provided to a veteran outside of the VA system, whether through 
the Choice Program or some other provider. And so to the 
extent, because of bureaucratic delays that we know have 
existed in the system related to making these payments once the 
veterans are out of network, what the bill does is effectively 
says that if bad debt is incurred because these bills haven't 
been paid, then that debt cannot be reported for a year to the 
credit agencies, so as not to impair the credit of our 
veterans. That is the first thing it does.
    And the second thing it does is it makes it much easier for 
our veterans to actually adjudicate credit impairments that are 
actually put on their credit, so to the extent these even 
happen after that first year, they can be dealt with.
    And we have two articles that, Mr. Chairman, I would also 
like to ask for unanimous consent to submit to the record, the 
first from CBS, which was titled ``World War II Vet Mistakenly 
Billed $4,000 for Medical Care, Revealing Problems at the VA,'' 
and this resulted in a credit impairment, and from the Military 
Times, ``Veterans Choice Program Hurting Some Vets' Credit 
Scores.''
    Chairman Luetkemeyer. Without objection.
    Mr. Delaney. Thank you, sir.
    Mr. Shuman, can you give me a sense as to the scale of this 
problem, in your judgment, and how you think this bill is a 
specific prescription to the problems that our servicemen and 
women are encountering as they go out of network?
    The Choice Program is a really good idea, but the 
implementation of it has been spotty, particularly as it 
relates to working through the bureaucracy of getting these 
bills paid. Can you give us a sense as to how prevalent this 
situation is?
    Mr. Shuman. Thank you for the question. And I also thank 
you for introducing the bill. I think it is a great step in the 
right direction to protect veterans.
    The simple reality is that VA no longer shares the actual 
real number with the VSOs anymore, so I cannot give you an 
exact number. I can tell you, when they set up a phone number 
to call, thousands--I think somewhere roughly in the estimate 
of 74,000 calls came in in the course of 14 months.
    That is 74,000 veterans who have been impacted to an extent 
where they ask for help. And I think if anybody knows, veterans 
hardly ever ask for help. So if 74,000 called, I could only 
imagine the number that, like Mr. Frankie Adams, whose story I 
already told, didn't call.
    Mr. Delaney. Right. They just deal with it.
    Mr. Shuman. Right.
    Mr. Delaney. Yes.
    Mr. Shuman. So this bill is a step in the right direction, 
particularly as there are seven different community care bills 
currently in process of trying to figure out and streamline the 
Choice Program. Particularly in the midst of a new bureaucratic 
process, this going into effect could help protect them during 
that transition.
    Mr. Delaney. And we all know what happens, is once a bad 
debt is reported and it is reported in a credit reporting 
agency and the debt is sold to a collection agency, oftentimes 
our veterans are harassed for the payment of these bills, which 
are, in fact, not their obligations.
    Mr. Shuman. That is correct, sir.
    Mr. Delaney. And I assume you have heard of specific 
examples of that occurring.
    Mr. Shuman. Absolutely. The American Legion, we travel the 
country and audit about 15 VA medical centers every year. And 
the night before we do that, we host a townhall. And a good 
portion of our townhall visits, which takes place in every one 
of your Congressional districts, our members tell us of the 
massive frustration from this issue.
    Mr. Delaney. Right.
    And just a quick yes-or-no answer because we are running 
out of time: Do you think this bill goes a long way to solving 
the problem?
    Mr. Shuman. Yes, sir.
    Mr. Delaney. Thank you, sir.
    I yield back.
    Chairman Luetkemeyer. The gentleman yields back. And we 
thank his participation in our committee this afternoon.
    With that, we go to the gentlelady from Utah, Mrs. Love. 
Recognized for 5 minutes.
    Mrs. Love. Thank you.
    And I know some of these questions have been asked, but I 
just need to make sure I get this information. I wanted to talk 
about the CFPB and Representative Emmer's bill, H.R. 4648.
    I would like to ask a few questions just very quickly about 
the Home Mortgage Disclosure Act and Reg C. And I have been 
really concerned for some time about the CFPB's HMDA rule added 
new mortgage data points that needed to be collected, reported, 
including borrower's age, ethnicity, race, sex, credit score, 
among others. We even talked about over 100 data points.
    How do you expect the new data to be used by the CFPB and 
others interpreting the data to scrutinize the mortgage lending 
industry in community banks, Mr. Fisher?
    Mr. Fisher. They are already utilizing the data that we are 
currently submitting to look for discrimination and things like 
that. So I am not sure what the enhanced data points do, 
because a lot of the data points are already out there. I think 
that the current data points already allow them to find 
discrimination and things like that.
    Mrs. Love. Mr. Gleim, you look like you wanted to chime in.
    Mr. Gleim. Yes. I feel the same way. I think the 
information is out there. And we really don't know what they 
expect to do with the expanded information that they have and 
exactly how it will be used, which is the concern again about 
privacy, identity theft. There is another group now that is 
going to have all of this additional information.
    And as I said earlier, the customer doesn't necessarily 
realize that they are giving as much information as they think 
they are.
    Mrs. Love. Yes. OK.
    And last question. Do you believe that the HMDA data, both 
new and old, is sufficiently accurate to form a basis of 
enforcement actions such as purported fair lending violations?
    Mr. Gleim. I think it is in some cases. But keep in mind, 
the customer doesn't have to fill out this information, and if 
he doesn't, the people that are taking the application will 
make a best guess as to what they are doing.
    Mrs. Love. So best guess doesn't actually equal accurate.
    Mr. Gleim. For such things as ethnicity, as well as just a 
number of the questions there, because we still are required to 
report that information if it is observed.
    Mrs. Love. OK.
    Mr. Fisher. And to complicate that, some applications are 
done via the phone, not in person. So you may be making a best 
guess based upon last name, some things like that. So if the 
person chooses not to fill it out, the banker has to make a 
best guess.
    Mrs. Love. OK.
    I am going to yield the remainder of my time to Congressman 
Pearce.
    Mr. Pearce. I thank the gentlelady for yielding.
    Mr. Chairman, I would ask unanimous consent to put a letter 
in from the Coalition to Save Seller Financing, titled ``CFPB 
Can Change Seller Financing Rules.''
    Chairman Luetkemeyer. Without objection.
    Mr. Pearce. Mr. Gleim, I have a question for you.
    Mr. Astrada, I am going to come back to you and see if we 
can't find middle ground on this whole balloon note. I read 
your testimony here.
    And so 50 percent of the houses in the Second District of 
New Mexico that I represent are manufactured housing, so it is 
probably as big an issue to me as anyone in the country. And 
seller financing, Mr. Gleim, if we eliminate the seller 
financing, what options do people have at that point?
    Mr. Gleim. Eliminating the seller financing becomes a major 
issue as far as being able for customers to, obviously, obtain 
that home, to be able to get them those homes, but it also 
gives them very few, if any, alternatives outside of that. 
Again, it is almost impossible to basically provide good 
affordable housing for a cost less than a manufactured housing.
    So if you are looking primarily at seller financing, as far 
as that being the case, it makes--there is one less opportunity 
for this customer to receive that financing.
    Mr. Pearce. Sure. And the movement from 3 to 5, is that 
going to upset the market in any way? Because what happens as 
people buy, they buy--
    Mr. Gleim. We don't see that as upsetting the market, 
because, it is in the interest of that community owner to be 
able to add those additional, those two homes, and is he 
really, or is she, going to be making a bad loan? The only way 
they make money off of this is the customer continues to pay. 
Again, the idea of making a bad loan just to get somebody else 
into that home just doesn't make an awful lot of sense.
    Mr. Pearce. OK.
    Mr. Astrada, I will have some time coming here in just a 
minute. We will finish, but I really want to engage in a little 
bit of a discussion on those things.
    I yield back, Mr. Chairman.
    Chairman Luetkemeyer. The gentlelady's time has expired.
    With that, we go to the gentleman from Illinois. Mr. 
Hultgren is recognized for 5 minutes.
    Mr. Hultgren. Thank you, Chairman Luetkemeyer. And I want 
to thank the subcommittee for allowing me to join with you 
today and to be a part of it. Thank you so much.
    And I want to thank each of our witnesses for your time and 
expertise and willingness to help us to navigate through this, 
so thank you so much.
    I want to focus on, first, the Community Bank Reporting 
Relief Act. Mr. Fisher, if I can address maybe a couple 
questions to you first.
    Mr. Fisher. Sure.
    Mr. Hultgren. How often are there significant quarter-to-
quarter variations in an individual community bank's call 
report data? In other words, do Federal banking regulators need 
all this data every single quarter?
    Mr. Fisher. I don't believe they do. If I look at my 
balance sheet from a quarter-to-quarter basis, we are very 
consistent. There are no major discrepancies. And if there were 
a major discrepancy, the regulator would pick up the phone and 
call me. That is the relationship we have. And there are not 
that many banks that they couldn't do something like that.
    Mr. Hultgren. Right.
    In the event of market distress or other extenuating 
circumstances that may atypically affect the financial 
stability of a community bank like you are talking about, are 
Federal banking regulators able to communicate with leadership 
of your bank to get that information they need? You mentioned 
they do. Do they actually take that--
    Mr. Fisher. They do that today, even in a nonstress time.
    Mr. Hultgren. And how does that go? Is that usually where 
you are looking to be helpful or you are open to giving the 
information that they are asking for?
    Mr. Fisher. Yes. They are doing some--a lot of it is 
offsite testing, looking at some of our numbers. And so, if 
they have a question, they don't hesitate to pick up the phone 
and call.
    Mr. Hultgren. OK.
    As you know, under the Economic Growth and Regulatory 
Paperwork Reduction Act, Federal banking regulators recently 
made some changes to the call report requirements for 
institutions with less than a billion dollars in assets.
    I wonder if you could please explain why this was not 
meaningful regulatory relief. And do you believe notice-and-
comment rulemaking would require Federal banking regulators to 
be more responsive to the reporting burden concerns raised by 
community banks?
    Mr. Fisher. Many of the sections that were eliminated 
through the EGRPRA process, they were not applicable to my bank 
or most other community banks in the country. They had sections 
on derivatives and other things that are just not in our 
business model. So they eliminated those sections, so instead 
of spending 40 hours a quarter preparing the call report, maybe 
we spend 39 on the short form.
    Mr. Hultgren. Yes. OK.
    The Community Bank Reporting Relief Act limits the 
regulatory relief to institutions with $5 billion in assets. 
Can you please explain why the current reporting burden under 
the call report is most acute for the smallest financial 
institutions? And do you believe this asset-sized threshold 
covers the community banks that do have the economies of scale 
to efficiently cope with the regulatory burden?
    Mr. Fisher. Five billion would be great. I think if you 
look at most community banks that are $5 billion and under, we 
don't have the processes as far as--all the systems don't speak 
to each other, so we have a lot of manual processes. We have to 
pull multiple reports from different systems, manipulate the 
data to fit the request of the Government to fit into the call 
report data. We have to manually reenter that.
    And so I think $5 billion is a good threshold, although we 
would prefer $10 billion. But, $5 billion would be great.
    Mr. Hultgren. OK. Thank you.
    I am going to shift over. I just have a little over a 
minute left. Mr. Shuman, I echo my colleagues in thanking you 
for your service. Twenty years, is that what you had said, in 
the Army?
    Mr. Shuman. No, sir, I served 4 years. Mr. Adams' story, 
which I told, was 20 years.
    Mr. Hultgren. Oh, there it is. Sorry about that. I misheard 
that. But thank you. I was going to say, man, how did you--you 
must have started when you were 10.
    Mr. Shuman. I look really good.
    Mr. Hultgren. But, anyhow, thank you for your service. I 
appreciate it. And thank you for your continued service with 
The American Legion.
    I want to just talk a little bit about the Protecting 
Veteran Credit Act of 2017. Veterans' Affairs Committees in 
both the House and Senate are considering proposals to 
consolidate the different community care programs. In the long 
run, the expectation is that this will yield better care and 
service for our veterans and improve the ability for the VA to 
pay its bills in a timely manner.
    As these changes are implemented, do you have any concerns 
in the short run regarding bill processes? And how important is 
it for legislation addressing consumer credit concerns, such as 
H.R. 2683, to move in tandem with any major reforms to the VA's 
community care programs? Would you recommend the Financial 
Services Committee work closely with the VA Committee on this 
issue?
    Mr. Shuman. Thank you for the question, Congressman, and 
thank you for your support.
    I will also say that the VA does not have a 21st-century 
style of processing claims. They are still doing it by paper 
and hand. Until we have a process that is modernized, it is 
going to continue to be slow.
    That said, yes, the Veterans' Affairs Committees, in 
addition to other of your colleagues, have proposed bills to 
streamline the nine community care programs. However, in the 
interim, in the massive bureaucratic process, that would be 
streamlining those programs. In the interim, veterans are still 
going to be impacted in their credit.
    So moving this piece of legislation prior to those bills, 
there could certainly be a case that would be made that would 
help veterans in that situation.
    Mr. Hultgren. Great.
    My time has expired. Thank you again, all, for being here.
    I do want to also give a shout-out to colleague from 
Maryland, Congressman Delaney, for his hard work on this 
legislation. I am proud to be working with him on this. Again, 
anything we can do for our veterans is so important.
    But thank you all.
    And thank you, Chairman. I yield back.
    Chairman Luetkemeyer. The gentleman's time has expired.
    And we do want to thank the gentleman from Illinois and the 
gentleman from New Mexico for their participation in the 
hearing today. They are not normal members of our subcommittee, 
but they are members of the full committee, and we certainly 
welcome their addition to this.
    With that, we recognize the gentleman from New Mexico, Mr. 
Pearce, for 5 minutes.
    Mr. Pearce. Thank you, Mr. Chairman.
    Mr. Astrada, it is my district that we are dealing with. 
And all we are just trying to do is find a way for people who 
want to get in out of the cold to finance manufactured houses.
    And so your testimony is very articulate in opposing 
balloon notes, but that is one of the more critical things. And 
the banks explain to me that we don't change the amortization, 
we just have a balloon note every 5 years because you can tear 
up a mobile home in a matter of days. And so we just want to 
look at it. We want to go ahead and look at it. We don't jack 
them when we see it.
    And I recognize your objections, and I don't really have a 
problem with trying to stop what you are doing. But on page 3, 
the top paragraph, we are trying to address what it is that you 
were objecting to and other people object to, the people who 
are just predatory. But then when CFPB implemented the balloon 
note restriction, suddenly the banks just quit loaning because 
they couldn't go and inspect.
    And so we have to find the sweet spot that gives the 
protection you are looking for without the punishment on the 
people that are trying to solve a problem and get out of the 
cold.
    So address that one. Because you mentioned that if they 
don't fully amortize--and I am sensitive to that, and that is 
the reason we put this paragraph in here that says they can't 
go up, the amount of finance can't be increasing during the 
term of the note under this bill. Is that offering any 
protection at all to what you are concerned about on the 
amortization question?
    Mr. Astrada. And I did read that and do appreciate the 
nuances of the additional consumer protections. But I think on 
the amortization issue specifically, although it can't 
increase--and this is something that probably our coalition 
partners will be much more of experts than I am in the 
secondary market--from my research and my discussions is that 
the refi or resale ability of manufactured housing is very 
different than nonmanufactured housing.
    In worst-case scenarios, a borrower who gets at the end of 
that loan either has to take a loss for selling below market 
value or take--
    Mr. Pearce. Yes, that is a balloon note that is punitive. 
Most balloon notes, they roll it--they do it for 5 years and 
they keep a 30-year amortization going. So all they are doing 
is doing the 30 years and they roll it, then they reset it. And 
I agree with you on those that get you to the end of the deal 
and the only thing that you can do is dump it. I am sensitive 
to that.
    Also, I think you expressed concern about the people who 
manufacture them. And then the Ranking Member and I had the 
discussion on the floor. I don't want that either. So if you 
construct the manufactured house, then you are not going to 
come under the terms of this bill.
    And so we are just--we are trying to find where we can get 
financing from traditional--if we get the balloon notes back 
in, I think that the major institutions will get back in, 
except anything--again, Dodd-Frank said, if you are going to 
hold it in portfolio, we consider that to be a prejudicial loan 
too. And secondary markets typically don't want manufactured 
housing.
    We are just trying to solve these problems. So talk a 
little bit more from your perspective. And I guess let's see, 
because I really am--I want the consumer protections you are 
talking about, but we have to have a market somewhere.
    And CFPB was so punitive, there were only three, and people 
were getting out of the market because they were afraid that 
they were going to get tagged in even though they were 
technically within the law. It was just too restrictive. And so 
everybody quit, and it was a big penalty in my district.
    So talk a little bit about that.
    Mr. Astrada. And I understand and appreciate those 
concerns. In talking with our coalition members, I think just 
to the extent of the issues raised in my testimony is where 
CRL's main concern is. But we have worked with our coalition 
partners, who have done a much more line-by-line, thorough edit 
of or redlining of the bill and what consumer protections would 
counterbalance some of the issues that we have expressed.
    So I won't pretend that I can solve them now in the next 25 
seconds, but I will commit--
    Mr. Pearce. Yes. If you will be in touch with our staff, 
then--we really do want the protections, but we want the market 
there too. And that would be very functional for us. And so my 
commitment to you is that we will get in touch with you and we 
will follow through on this, because I do want to hit that 
sweet spot.
    I appreciate the things you are commenting on, and we are 
trying to stop those. But we have to have a market somewhere, 
and balloon notes are key for the lending institutions. But 
then the seller financing people, they buy six or seven of 
these during their lifetime, and then they sell one at a time, 
and that is their retirement income.
    By the way, the banks said that the best-performing loans 
in all their books are always manufactured housing. People 
there are serious about staying in out of the cold, and this is 
one of the few shots they have had. So let's work together on 
it.
    Mr. Chairman, I have gone a little bit over, but, I 
appreciate your indulgence.
    And thank you very much, Mr. Astrada.
    I yield back.
    Chairman Luetkemeyer. The gentleman's time has expired.
    Mr. Astrada. Could I have 15 seconds to just--I will 
verbally commit to working with your office from CRL and to 
bring our coalition partners alongside us. Thank you.
    Chairman Luetkemeyer. Both the gentlemen's time has 
expired.
    With that, we would like to thank the witnesses for being 
here today. You have helped us discuss very thoroughly these 
five different bills that are before the committee. I 
appreciate your expertise, your time.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    With that, this hearing is adjourned.
    [Whereupon, at 4 p.m., the subcommittee was adjourned.]

                            A P P E N D I X



                            January 9, 2018
                            
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