By Tim Devaney - 07/15/14 06:32 PM EDT
House Republicans said they are looking to rollback overly burdensome regulations on community banks during a hearing Tuesday.
The House Financial Services subcommittee on Financial Institutions and Consumer Credit examined nearly a dozen bills that Republicans say would provide much needed regulatory relief to some of the smallest banks around the country.
During the hearing, community banks told lawmakers they are being pushed out of business by an onslaught of rules in the wake of the financial crisis that are better suited for big, systemically important banks.
“Credit unions didn't cause the financial crisis and should not be subject to regluations aimed at those who did,” David Clendaniel, president and CEO of the Dover Federal Credit Union in Delaware, testified at the hearing.
But Democrats said these rules were put in place to prevent another financial collapse and warned against giving banks a “get out of jail free card.”
“If there is one among you who believe that banks do not break the law, would you kindly extend a hand into the air?” Rep. Al Green (D-Texas) asked the witnesses. “Do you want banks to have an absolute get out of jail free card so they can just take advantage of consumers?”
Many Republicans expressed concerns with the Justice Department's controversial Operation Choke Point, which requires banks to target customers, including many payday lenders, that operate businesses which federal regulators do not like, even if they are not illegal.
GOP lawmakers say this hurts banks by forcing them to turn away good business opportunities.
“The Department of Justice is picking winners and losers in the financial marketplace,” Rep. Garland Barr (R-Ky.) said at the hearing.
Meanwhile, Rep. Sean Duffy (R-Wis.) said Operation Choke Point takes away the opportunity for payday lenders and other targeted businesses to defend themselves in court by forcing the banks to cut off their funding before a trial in many cases.
“There's no ability to have a hearing, there's no ability to have a judge,” Duffy said. “We don't want bureaucrats in Washington sitting in the DOJ convicting people without a trial.”
But Lauren Saunders, managing attorney at the liberal National Consumer Law Center, defended Operation Choke Point.
“I don't think we need to wait for a trial to track down the people around the world who may be scamming people,” she said, adding, “I don't think it would be right to continue letting scammers debit consumers accounts just because we haven't had a trial yet.”