King Announces Bipartisan Agreement to Cut Red Tape for Maine Community Banks and Credit Unions, Strengthen Consumer Protections

King, Hatch proposal to provide regulatory relief to small financial institutions included in agreement

WASHINGTON, D.C. – U.S. Senator Angus King (I-Maine) this week joined with a group of his colleagues to announce a bipartisan agreement that will improve the U.S. financial regulatory framework, promote economic growth, provide new protections to consumers, and strengthen small financial institutions in Maine. The agreement comes after months of hearings and outreach to stakeholders, companies, and consumers and includes measures from members on both sides of the aisle.

Included in the agreement is language modeled after the Community Bank Relief Act, bipartisan legislation Senator King introduced with Senator Orrin Hatch (R-Utah) that preserves financial safety measures and broadens small bank lending opportunities to provide families, small businesses, and start-ups better credit options. Specifically, it would require the Federal Reserve to expand the number of institutions to which the Small Bank Holding Company Policy Statement applies by increasing the asset size threshold from $1 billion to $3 billion.

            “Community banks and credit unions support our state’s businesses, encourage job growth, and help Maine’s hardworking men and women achieve greater financial stability and better credit options,” Senator King. “But today, these institutions are faced with burdensome regulations that were intended to reign in Wall Street in the wake of the financial crisis. Maine people and small businesses should not be paying for these misdeeds. Better tailoring regulations for small financial institutions will help rebalance regulatory costs with their benefits without compromising the safety and soundness of the financial system.  This commonsense agreement comes after months of measured, thoughtful negotiations and would provide much needed regulatory relief to stimulate our economy and help people across our state. This is an example of how Congress can and should work.”

“Access to affordable credit, including mortgages, is a credit union hallmark and fundamental to economic growth,” said Todd Mason, President and CEO of the Maine Credit Union League and Synergent. “ That’s why the credit unions of Maine thank Senator King for trying to rein in arbitrary restrictions, unnecessary regulations, and cyber threats, all of which increase costs, and reduce access to needed loans.  By providing relief in these areas, Senator King will help Maine credit unions continue serve their 700,000 members and small business owners with affordable financial services.”

“The Maine Bankers Association is pleased that Senator King is joining members of the Senate Banking Committee in support of a bi-partisan bill to refine language in previously passed banking legislation,” said Chris Pinkham, President and CEO of the Maine Bankers Association. “Maine banks have found that restrictive regulatory language has limited lending flexibility to Maine consumers and small businesses. Bankers have found lending to be challenging as national regulatory standards do not always work in a rural state like Maine. Passage of this legislation will expand lending opportunities for Mainers while maintaining safety and soundness standards for Maine’s already well-capitalized banking industry.”

The package is targeted toward helping community banks, credit unions, mid-sized banks, regional banks and custody banks. It includes important consumer protections, particularly for veterans, senior citizens, and victims of fraud. Along with the Community Bank Relief Act, several provisions in the agreement are modeled on legislation Senator King has supported:

Section 101. Minimum Standards for Residential Mortgage Loans.

This section, modeled after a provision in the CLEAR Relief Act, provides that certain mortgage loans that are originated and retained in portfolio by an insured depository institution or an insured credit union with less than $10 billion in total consolidated assets will be deemed qualified mortgages under the Truth in Lending Act (TILA) while maintaining consumer protections.

Section 106. Eliminating Barriers to Jobs for Loan Originators.

This section, modeled after the SAFE Transitional Licensing Act, provides that an individual will be deemed to have temporary authority to act as a loan originator for 120 days under the S.A.F.E. Mortgage Licensing Act of 2008 if such person is (1) a registered loan originator who becomes employed by a state-licensed mortgage company or (2) a state-licensed loan originator who becomes employed by a state-licensed mortgage company in a different state.

Section 109. Escrow Requirements Relating to Certain Consumer Credit Transactions.

This section, also modeled after a provision in the CLEAR Relief Act, provides an exemption from escrow requirements under TILA for certain loans made by an insured depository institution or an insured credit union.  

Section 110. No Wait for Lower Mortgage Rates. 

This section, also modeled after a provision in the CLEAR Relief Act, (1) removes the three-day wait period required for the combined TILA/RESPA mortgage disclosure if a creditor extends to a consumer a second offer of credit with a lower annual percentage rate, and (2) expresses the sense of Congress that the CFPB should endeavor to provide clearer, authoritative guidance with respect to certain issues. 

Section 203. Community Bank Relief.

This section, also modeled after a provision in the CLEAR Relief Act, provides that banking entities will be exempt from Section 13 of the Bank Holding Company Act if they have (1) less than $10 billion in total consolidated assets, and (2) total trading assets and trading liabilities that are not more than five percent of total consolidated assets.

Section 302. Protecting Veterans’ Credit.

This section, modeled after the Protecting Veterans Credit Act, amends the Fair Credit Reporting Act to exclude from consumer report information: (1) certain medical debt incurred by a veteran if the hospital care or medical services relating to the debt predates the credit report by less than one year; and (2) a fully paid or settled veteran's medical debt that had been characterized as delinquent, charged off, or in collection.  It also establishes a dispute process for consumer reporting agencies with respect to such veterans’ medical debt. 

Section 303. Aiding Senior Protection.

This section, modeled after the SeniorSafe Act, extends protections to certain people who, in good faith and with reasonable care, disclose the suspected exploitation of a senior citizen to a regulatory or law-enforcement agency.

This agreement is also supported by Senators Mike Crapo (R-Idaho), Joe Donnelly (D-Ind.), Heidi Heitkamp (D-N.D.), Jon Tester (D-Mont.), Mark Warner (D-Va.), Bob Corker (R-Tenn.), Tim Scott (R-S.C.), Tom Cotton (R-Ark.), Mike Rounds (R-S.D.), David Perdue (R-GA), Thom Tillis (R-N.C.), John Kennedy (R-L.A.), Jerry Moran (R-Kansas), Tim Kaine (D-Va.), Joe Manchin (D-W.V.), Claire McCaskill (D-M.O.), and Gary Peters (D-Mich.).

Legislative text is in the process of being finalized and will be released upon completion. For a section-by-section summary, click HERE