[Congressional Record Volume 161, Number 111 (Thursday, July 16, 2015)]
[Senate]
[Pages S5173-S5174]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS:
  S. 1799. A bill to provide authority for certain depository 
institutions, and for other purposes; to the Committee on Banking, 
Housing, and Urban Affairs.
  Ms. COLLINS. Mr. President, I rise to introduce the Community Bank 
Sensible Regulation Act of 2015, a bill which would allow financial 
regulators to exempt community banks from unnecessary and unduly 
burdensome requirements, if doing so is in the public interest. My bill 
would provide this authority to the FDIC, the Office of the Comptroller 
of the Currency, and the Federal Reserve, and would apply to financial 
institutions with less than $10 billion in assets.
  The aim of my legislation is to allow the financial regulators to 
exempt community banks from highly complex regulations designed to 
protect our financial system from systemic risks that would arise from 
the failure of larger banks. All banks, large and small, should be 
well-capitalized and properly regulated, but that does not mean that 
our financial regulators must impose a ``one size fits all'' regulatory 
regime across the board without regard to the risks posed to the 
financial system by banks with fundamentally different business models 
and of vastly different sizes.
  Some regulations that are appropriate or essential for larger banks 
may make no sense when applied to community banks. For example, current 
law requires community banks to demonstrate that they are in compliance 
with the Volcker Rule--which restricts proprietary trading and hedge 
fund investments by banks--even though community banks rarely engage in 
such trading. Even so, community banks must shoulder the burden of 
complying with this complex regulation. My bill would allow the 
regulators to exempt community banks from the Volcker Rule.
  As the GAO has noted, smaller banks are ``disproportionately affected 
by increased regulation, because they are less able to absorb 
additional costs.'' These costs are significant. According

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to industry representatives, the cost of complying with regulations 
absorbs 12 percent of total bank operating expenses, and is two-and-a-
half times greater for small banks than for large banks.
  The cost of regulation puts community banks at a competitive 
disadvantage vis-a-vis larger banks. Over the past 2 decades, the share 
of the U.S. banking industry represented by community banks has 
declined from 40 percent to just 18 percent. Over the same period, the 
share of the market represented by the five largest banks has grown 
from roughly 18 percent to 46 percent. I am concerned that unnecessary 
regulation will accelerate these trends, and ironically, contribute to 
the further consolidation of the banking industry into a handful of 
``too big to fail'' banks.
  Community banks play an essential role in meeting the credit needs of 
their customers, particularly small businesses, homeowners, and 
farmers. Although community banks represent just 18 percent of total 
banking assets, they are responsible for half of our nation's small 
business loans. With small business formation at generational lows, it 
is essential that we preserve and protect their access to credit, as 
they are the major driver of job creation in our country. In addition, 
community banks provide \3/4\ of our Nation's agricultural loans, a 
line of finance that requires highly specialized knowledge of farming 
and a long-term perspective suited to agricultural cycles.
  Regulators should be able to tailor their regulations to take the 
distinctive nature of community banks into account. My bill would allow 
regulators to exempt community banks from unnecessary and burdensome 
regulations where it is in the public interest to do so. I urge my 
colleagues to support it.

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