September 16, 2014


WASHINGTON – Today, Senate Banking Committee Chairman Tim Johnson (D-SD) held a hearing titled “Examining the State of Small Depository Institutions.”

Below is Chairman Johnson’s statement as prepared for delivery:

“Good Morning. I call this hearing to order.

“Today, we have two thoughtful panels that will help us explore the current state of our nation’s small depository institutions.

“For many years, it has been a priority of mine to support efforts that tailor supervision and regulations for small, often rural, financial institutions. Such an approach that also maintains appropriate safeguards and consumer protections can help ensure we have a truly level playing field for institutions. To that end, since I have served as Chairman of this Committee we have had regular meetings, briefings and oversight hearings, as we are doing again today, to encourage a balanced approach with respect to oversight of smaller institutions.

“I believe the regulators have been responsive and are thinking more about small institutions than ever before. Specifically, I believe there has been significant improvements by the regulators regarding exams, rules and outreach to small institutions. The agencies are also currently undertaking a comprehensive review of their rules, with a specific focus on reducing burden and duplication for small institutions.

“In addition, this Committee has taken other steps to address reasonable concerns of small institutions. It acted on a bill regarding ATM plaques. The Senate acted to ensure that community banks’ viewpoints are represented on the Federal Reserve Board. Ranking Member Crapo and I weighed in with the Federal Reserve Board to ensure that community banks were treated appropriately under the new Basel III rules. We asked the NCUA to take another look at the impact of their risk-based capital proposal on small, rural credit unions. And we prioritized incorporating small institutions’ ideas into our Housing Finance Reform bill.

“When an unintended consequence of the final Volcker Rule appeared, Members pushed regulators to swiftly remedy the issue, which they did. The CFPB is also currently reconsidering its definition of “rural” as it relates to mortgage lending because of concerns raised by Members. I also asked Inspectors General to conduct an audit of each agency’s examination process for small institutions to ensure that exams are conducted fairly and transparently, which resulted in improvements at each of the agencies. It is also my hope that the full Senate can unanimously pass Senator Brown and Senator Moran’s bipartisan bill regarding privacy notification, another common sense bill to reduce regulatory burden for small institutions, which is supported by over 70 Senators.

“Today, we will continue our conversation to find ways to improve the regulation and supervision of small institutions. That said, we must not forget the lessons of the past, and any effort at regulatory relief must find the right balance with safety and soundness as well as consumer protection to succeed. I look forward to hearing the viewpoints of today’s panelists on these important questions and issues.”