Congressman Mike Coffman
(R-CO), chairman of the Investigations, Oversight, and Regulations
Subcommittee for the Small Business Committee of the U.S. House of
Representatives, presided over a hearing today to examine what
effect new financial regulations will have on small
Coffman called the hearing to scrutinize
the new Consumer Financial Protection Bureau (CFPB), created by the Dodd-Frank Wall Street
Reform and Consumer Protection Act. Major concerns have been raised
regarding the powers of this new agency to issue and institute new
rules free of congressional oversight.
“What we need to do is create a vibrant
marketplace. Creating onerous rules and regulations on an industry
is not the answer and is likely to have an adverse effect by
driving many providers out of the marketplace,” Coffman said. “A
banking relationship is a partnership. A bank that abuses its
customers might make money in the short term, but they will not be
in business very long.”
Congress passed the Dodd-Frank Act last
year in response to the financial crisis which, according to the
Department of the Treasury, was caused in part by “pervasive
failures in consumer protection.” An independent bureau within the
Federal Reserve, the CFPB was established under Dodd-Frank to
enforce federal consumer protection laws concerning mortgages,
credit cards, debt collection and loan servicing, among
Terry Jones, a Castle Rock resident,
traveled to Washington to testify before the committee today.
Jones, representing the Colorado Mortgage Lenders Association, said
his group was concerned that new rules issued by the CFPB could
adversely affect small businesses.
“We respectfully urge Congress and this
subcommittee to carefully monitor all these new rules to make
certain that they do not unwittingly harm American families, small
business, the housing and mortgage market or the nation’s economic
recovery,” Jones said.
Jones pointed out that over 75 percent of
the Colorado Mortgage Lenders Association’s members are small
businesses that employ less than 25 people. According to the U.S.
Chamber of Commerce, 26.7 million businesses in the country count
on home equity loans, credit cards, and other sources of consumer
lending to obtain seed capital to start their companies, to provide
working capital and to manage monthly cash flows. A study by the
Chamber in 2009 found that new rules tightening consumer lending
would likely reduce these important sources of credit to small
“Small businesses all over the country and
certainly in Colorado are one of the prime sources of new jobs and
new opportunities in their communities,” Jones said. “Small
business is a dynamic engine for economic
“No matter how well intentioned these rules
may be, they must not be allowed to harm the very consumer they set
out to protect or jeopardize the housing recovery or the nation’s
economic recovery,” Jones said.
“The CFPB is
the product of a rushed response to the 2008 Wall Street crisis and
even though small businesses and community banks didn’t cause the
crisis, they are the ones who may be negatively impacted,” Coffman
said. “The creation of a new agency with such broad regulatory
authority creates uncertainty, which often plays a role in
preventing businesses from growing their company and creating jobs.
With record high unemployment, we must do more to bring relief to
our most robust job creators - small businesses.”
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