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- Key insight: Hill is trying to reshape the banking landscape under the Trump administration but encountering pushback in the Senate.
- What’s at stake: He is gunning for the CFPB, urging the agency to replace the 1033 rule on personal financial data rights and the 1071 rule on small business lending.
- Forward look: Hill said his goal is simple: slash compliance costs so banks can focus on serving customers.
SAN DIEGO—House Financial Services Committee Chair French Hill, R-Ark., lamented that he has personally introduced two primary pieces of legislation on digital assets and housing that remain blocked in the Senate.
In a speech on Tuesday, Hill urged a room of bankers to lobby their individual senators to move legislation forward that would provide relief to community banks. Hill said he is trying to lower compliance costs for banks, reform the Consumer Financial Protection Bureau and launch an all-of-government assault on fraud.
Hill and House Republicans have tried to attach several bills with community banking reforms — including provisions on brokered and custodial deposits — to the 21st Century ROAD to Housing Act. But the Senate version of the housing bill that passed in March stripped out the community bank regulatory relief provisions.
“We’ve advanced those bills in the House and we need CBA bankers’ help to work with our friends in the Senate, and with the Trump administration, to make it a big success so we can get those bills signed into law this year,” Hill said in a 20 minute address at CBALive, the annual conference of the Consumer Bankers Association.
Hill also said that the House would be introducing “a series of reforms” this year for the Consumer Financial Protection Bureau, but did not provide details. He urged the CFPB to swiftly pass new rules to replace two Biden-era rules: the 1033 rule on personal financial data rights, and the 1071 rule on small business lending data collection.
“There are questions that many of you have in your boardrooms and with your leadership, how will the Trump administration propose to reform the CFPB?” he said. “When will they propose a replacement for the 1033 rule? When will they propose a replacement for the 1071?”
The Trump administration still does not have a confirmed head of the CFPB, he noted. Acting CFPB Director Russell Vought is serving a second, 210-day stint as acting director, which ends in August. Vought is in a legal battle with the CFPB’s union over a plan for mass layoffs at the agency.
Bankers want the federal government to play a role in combating fraud, Hill said, as he called for a more integrated effort between the Secret Service, bank supervisors and state attorneys general to reduce electronic debit and credit fraud. He supports having fraud losses broken out separately on call reports.
Retailers also should play a larger role in policing fraud given that a significant portion of fraud losses are linked to retail transactions, he said.
“I think the retailers need to have a lot more pressure on them about what they’re doing to protect against electronic debit or credit fraud at the point of sale, because a lot of those losses are borne by the banks,” he said.
Hill mentioned that Vice President JD Vance is currently leading a major federal initiative called the Task Force to Eliminate Fraud, but its focus is on Medicare fraud.
Hill said he is seeking advice from bankers on which regulatory hurdles should be cleared first. He also criticized the Dodd-Frank Act for treating all banks with the same broad brush.
“We don’t think all banks should be treated the same and in Dodd-Frank, passed back after [sic] the global financial crisis, the compliance burden, the capital restrictions, the management restrictions, all those costs were raised dramatically,” Hill said “Our whole approach legislatively is to customize that effort and tailor regulations according to business strategy, complexity and size. I don’t understand what is so partisan about that.”
Because the Senate’s housing bill was passed without the community bank provisions Rep. Hill championed, the two chambers are likely headed toward a conference committee to resolve their differences. Hill expressed disappointment that the Senate did not include his reforms, noting that community banks of under $10 billion in assets are responsible for approximately 60% of all residential construction loans.
Senate Republicans have sought to break the deadlock in the Senate by exploring a strategic “trade” in an effort to win passage of community bank provisions.
Republicans on the Senate Banking Committee have discussed adding the House’s community bank deregulation bills to pending cryptocurrency legislation, the CLARITY Act or Digital Asset Market Clarity Act. And in return, the House would be expected to pass the Senate-approved version of the housing package.