During a Senate Banking Committee hearing last week that focused on community banks after the financial crisis, Sen. Elizabeth Warren (D-Mass.) asked witnesses if a two-tiered regulatory system would be appropriate as small institutions struggle to comply with Dodd-Frank Act regulations that were meant for big banks.

“After the crisis, there was nearly a panic about people who couldn't get access to credit, and one of the responses, of course, was Dodd-Frank,” the Consumer Financial Protection Bureau organizer said during the June 13 hearing.

“But one of the concerns I have about Dodd-Frank is that we now have a regulatory system that, while Dodd-Frank made some distinctions between large and small banks, small banks are still subject to many regulations that were written for the larger financial institutions,” she said.

“And so, what I'm concerned about is that we now have a regulatory system for which many parts are neutral on its face, but the impact on smaller financial institutions that can't afford to hire an army of lawyers to get out and interpret this rule, turns out to be crushing,” Warren said.

“The question I want to ask is whether or not we are reaching a point where we really should think about a two-tiered regulatory system,” the freshman senator said.

The FDIC officials on the panel didn't directly answer Warren's question, but Inspector General Jon Rymer said the bank regulator currently addresses the issue in the supervisory process, scaling exams based upon an institution's risk profile and complexity.

“It's hard to write rules in advance and set thresholds that work for all cases,” he added.

The exchange caught the attention of NAFCU, and President/CEO Fred Becker sent Warren a letter expressing support for the idea and offering to discuss the topic further with Warren or her staff.

“We would like to express our strong support for a two-tiered regulatory system that would take into account the unique structure, activities and mission of the nation's not-for profit credit unions,” Becker wrote in the letter sent Tuesday.

“This two-tiered structure should separate nation's credit unions from the regulatory scheme directed toward the large Wall Street banks and other entities whose activities led to the financial crisis,” Becker's letter said.

Matt Cournoyer, press assistant for Warren, said his office had no additional comment beyond Warren's remarks during the hearing.

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Warren Asks: Time for a Two-Tiered Regulatory System?

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