Capito Makes Case for Bill to Let Banks Appeal Reg Exams

By Wack, Kevin | American Banker, December 27, 2011 | Go to article overview

Capito Makes Case for Bill to Let Banks Appeal Reg Exams


Wack, Kevin, American Banker


Byline: Kevin Wack

WASHINGTON a Rep. Shelley Moore Capito, the West Virginia Republican who chairs the House financial institutions subcommittee, doesn't seem like much of a bomb thrower.

Although she mostly votes with her more conservative peers, her reputation is more of a pragmatist than an ideologue.

But Capito is the co-author of one of the most controversial financial services bills of the past year a legislation that would give banks the right to appeal an exam rating to other regulators.

While community bankers have hailed the bill, the agencies are quietly seething, viewing it as interfering with their abilities to do their jobs.

The sixth-term representative recently spoke to American Banker about her bill, the Dodd-Frank Act, the Consumer Financial Protection Bureau and the future of Fannie Mae and Freddie Mac.

Here is an edited transcript of the interview:

Q: Back in July, the top Republicans on the House Financial Services Committee held a press conference on the first anniversary of Dodd-Frank. Everyone who spoke at that press conference gave the law an F except for you. You gave it a D-minus. Why?A: Well, I think I said at the time that, a year later, some of the Dodd-Frank issues a in terms of transparency and accountability and reshaping some of the regulatory controls that were not in place a at least kept it from flunking.

The other parts that I think weighted it down to the D-minus were the over-burdensome regulations, some issues on the CFPB. I had problems a and still do a with the resolution authority.

Right now, I'm still going to give it a D-minus because in my view it's spinning. Nobody really knows where it's going to go.

Q: Your exam bill with Rep. Carolyn Maloney has raised concerns with regulators. What would you say to those that worry the bill would undermine the long tradition of independent bank examinations in the U.S.?A: This isn't an attack on examiners. What we're trying to get at is a problem we've heard repeatedly, that there's a disconnect between what's going on in Washington, what they've testified in our committee a "Yes, we're watching this, and we know that getting capital to small businesses is really important. And we're encouraging institutions to support their longtime customers, even though their real estate market is falling down."

In reality, there's a disconnect between then what happens at the examiner's level, in terms of kind of ratcheting down on financial institutions.

So this is basically trying to find a way to take what we're hearing from Washington, the FDIC and such, and say, 'OK, this is what you're saying. We'll put it into legislation as guidance for the examiners.'

Now, just because there's been a long history of non-interference in the independence of examinations doesn't quite mean that that's something that has to be continued.

I think we have a role to play here. And that's a liaison between our constituents and a federal agency. I mean, that's what our jobs are basically.

Q: The CFPB has been up and running since July. Has it done anything so far that worries you?A: Let me tell you what I don't worry about. They're touting the shorter mortgage form with disclosure. I think that's been in the process of legislation for years. Makes sense, but good luck getting it done. They're still going to have the mound of papers under it for legal issues. So that doesn't worry me.

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