The head of the Consumer Financial Protection Bureau and SouthDakota's U.S. senator, Tim Johnson, received an earful Wednesdayregarding the heavy compliance burden on credit unions as well ascommunity banks emanating from Dodd-Frank and other new federallaws and which is triggering a spate of mergers.

In unusually candid remarks at a quietly-called Sioux Fallsroundtable, a string of top managers from South Dakota creditunions and small banks complained that the ”mountain of newregulations-18,000 pages over the past three years – coming out ofWashington D.C.” is driving numerous mergers of smallerinstitutions unable to bear the cost.

More than 100 bank and CU top managers attended the session on auniversity campus conducted by Richard Cordray, CFPB director, andSen. Johnson, a Democrat and chairman of the Senate BankingCommittee.

Leading the testimony for the Credit Union Association of theDakotas as a participant was Jeff Schmidt, chief operating officerof the $68 million Voyage CU, itself the product of a 2011merger.

“During 2011 we saw five credit unions–almost 10% of the total–involved in mergers and in each of the five mergers, management andvolunteers cited regulatory burden as a primary reason to merge,”declared Schmidt who also serves as the state's chairman of CUAD'sGovernmental Affairs Committee.

“I am sure that it isn't a shock to you Mr. Cordray or anyoneelse at the CFPB that credit unions are subject to substantiallymore regulation now than just a few years ago but what I thinkmight surprise you is that of the 46 credit unions left in SouthDakota, 24–more than half–have six employees or less,” saidSchmidt.

The wave of new regulations has overwhelmed the staffs of thesesmall credit unions prompting them to look for mergers, hesaid.

“These credit unions don't have an attorney on staff, they don'thave a team of full time compliance specialists, and they don'thave the manpower to read and comment on 18,000 pages of proposedrules, interpretive rulings or policy statements,” saidSchmidt.

Of the 100 attendees, some 70 were CEOs of banks who voiced alsovoiced concerns about mergers but hit on mortgage rules hinderingtheir operations, officials said.

“It also was just limited to South Dakota financialinstitutions,” said a spokesman for the CUAD noting apparently adesire by CFBP and the senator to keep a local focus “rather thanbring in North Dakota or Minnesota representatives.”

Schmidt told Credit Union Times he thought the meeting wasproductive “in that they heard our concerns” but as one participantput it, “let's see where this goes from here.”