I recently met with local bankers around Missouri's Fifth District to get their input on a number of issues, and listen to concerns. Many shared with me the negative impact a particular regulation is having on rural banks.
The regulation is the new Qualified Mortgage rule that was issued by the Consumer Financial Protection Bureau (CFPB).
It started as a well-intentioned rule, but was combined with an exception that was too narrow. And to top it off, a dose of worrisome execution was then thrown in. The intent behind the rule was good. It was meant to make sure consumers get a fair shake, banks are able to work with families buying their first home, and entrepreneurs wanting to expand can access capital. But the exemption relied upon a narrow definition that treated our thriving rural communities as mere suburbs of Kansas City--something we all know is not the case.
The services of community banks play a unique and important role in our economy, both in Missouri and in our nation as a whole. Their value has always been associated with a unique combination of services, as well as the personal level of attention they can bring to their customers.
If the definition stands as it is, rural bankers will face great difficulties in lending, and rural consumers will face great difficulties in getting loans.
That is unacceptable.
Immediately following this meeting with bankers, I wrote a letter to CFPD Director Richard Cordray. I explained my opinion that the rule should be re-evaluated and a more expansive definition of rural should be put into place.
I followed my letter with a phone call to Director Cordray. He was very sympathetic and understands this will negatively impact these communities.
He says he is now actively working to alleviate the problem. I wanted to update you on this situation, as it is one I will continue working on until a good solution is reached. I will continue to keep you informed as well.