Saying Missoula Federal Credit Union wasn’t Morgan Chase, Sen. Jon Tester on Wednesday announced bipartisan legislation that would relax a number of banking regulations put in place after the financial crisis in 2008.
The deal, struck between Tester and Senate Banking Chairman Mike Crapo, R-Idaho, along with other red-state Democrats, looks to ease a number of rules they believe are hurting rural banks and borrowers seeking access to capital.
“Montana’s Main Street banks didn’t cause the financial crisis and they shouldn’t be subject to the same regulations as Wall Street,” Tester told the Missoula Current on Wednesday. “We’ve seen rural communities dry up because rural entrepreneurs and first-time homebuyers can’t access credit.”
The legislative compromise would ease regulations on smaller community banks, along with some larger lenders that have faced tougher oversight since Democrats enacted financial reform regulations in 2010.
While not all Democrats praised the measure, Tester said the legislation would achieve elusive reform and shows that it’s still possible “to sit down and have honest negotiations to come to a compromise.”
“Glacier Bank isn’t Goldman Sacks and Missoula Federal Credit Union isn’t Morgan Chase, and we cannot and should not be asking these community banks to run the regulatory gamut that exists for the big guys,” Tester said. “This legislation will change that by making it easier for small financial institutions to lend to Montana families.”
Tester said the measure would ease mortgage rules for small lenders while protecting consumer information. It includes free fraud alerts for one year for those victimized by Wells Fargo and Equifax, and it allows consumers to freeze their credit for free.
It also protects children from identity theft by allowing parents to control information shared with credit bureaus, and it shields veterans from having certain medical debt appear on their credit reports.
Tester said the agreement would benefit small and mid-sized banks while holding larger banks, including U.S. Bank and Capital One, to higher standards.
“This legislation will ensure the backbone of our rural communities – our small business owners – aren’t forced to play by Wall Street rules,” Tester said. “When a two-bank town becomes a one-bank town, it makes it hard for businesses to compete. When a one-bank town becomes a no-bank town, their access to capital goes down and their ability to grow dries up with it.”
The legislation has won widespread support from a number of Montana organizations, including the Montana Bankers Association, Montana’s Credit Unions and Montana Independent Bankers. The Montana Association of Realtors also supports the measure.
“Home ownership is one of the top driving factors in our economy today and makes for better communities and neighborhoods,” said John Herring, president of the state realtors group. “This Legislation will strengthen Main Street in rural America by increasing access to capital, cutting burdensome regulation, and most importantly, protecting Montana consumers.”