Excessive regulation: Time to put some Main Street common sense into banking regulations

One of the biggest problems with Big Government today is that it too often seeks to regulate with a one-size-fits-all approach.

But, life on Main Street and reality in business are far more complex. The risk and the ability to absorb the cost of compliance are far greater for massive Wall Street banks than for small community banks. Yet most regulations in government today treat both the same.

These regulations have resulted in a crushing burden of duplicative and costly requirements on banks, while doing little to alleviate risk. Furthermore, the regulations also serve to sideline community bankers from their primary obligation, which is to provide loans and financial services to the families and business that fuel Main Street and job creation.

States are having a similar problem with agencies such as the Consumer Financial Protection Bureau, which ignore proven regulatory models in favor of one-size-fits-all rules. The result: Less access to credit for Main Street, more power for big government and less competition for Wall Street.

That is why I have worked with Members on the House Financial Services Committee to find legislative solutions that apply a risk-based approach to regulating the banking industry. There are a number of possible solutions and I want to work with my colleagues to find the right one for our economy — one that allows banks to continue to serve their customers, while ensuring the safety and soundness of the American banking system.

My strong opposition on the wrong-headed Operation Choke Point is a perfect example. This was a federal regulatory crackdown imposed by the Administration with ideological, rather than consumer concerns in mind. The goal was to put certain industries out of business by imposing stifling regulatory burdens on the banks that served them. It was the ultimate example of regulatory overreach, imposing more harm than help for end consumers.

Our small community banks play an important role: Helping families achieve the American dream of homeownership, allowing small business owners obtain loans to start up and create jobs, and providing loans for farmers who feed America, just to name a few. While we’ve pushed Operation Chokepoint back into a box, I believe we need a broader solution to prevent such overreach in the future.

I believe it is time for Congress to create a safe harbor for state licensed businesses, such as small community banks, to free them from unnecessary, burdensome regulatory requirements from Uncle Sam when they are already operating in a safe and legal way at the state level.

This week Congress is marking up additional language designed to create a common sense approach to regulating small community banks and other financial institutions that help Main Street thrive. Meanwhile, Democrats in the Senate continue to block Banking Committee Chairman Richard Shelby’s compromise bill, which contains vital community bank regulatory relief in the aftermath of Dodd-Frank. While they insist on protecting every word of a five-year-old bill with many flaws, Main Street suffers.

It is time for the Congress and President Obama to come together and enact regulatory relief for Main Street.

Mr. Stivers is a Republican representing Ohio’s 15th District in the U.S. House of Representatives and a member of the Financial Services Committee.