By Rosalyn Steward, Assistant Chief Counsel
New Orleans was the second and final stop for Advocacy’s Regional Regulatory Roundtables series in Louisiana. The roundtable was held on June 8, 2017, and opened with welcoming remarks from Acting Chief Counsel Major Clark, who provided a history of the Office of Advocacy. Senior Counsel Claudia Rodgers then explained that Advocacy has taken to the road in response to the recent Executive Orders for regulatory reform. The initial phase of the regulatory reform process requires each agency to form a regulatory reform task force to start looking at rules in each agency to see what needs to be reformed or revised. Sometimes the solution is simply eliminating the regulation, other times the solution requires recrafting the regulation.
Advocacy works with regulatory agencies as they are promulgating regulations so we have great relationships with them, and are assisting them in their regulatory reform effort by hearing from and communicating the needs of small businesses. Advocacy asked that the roundtable participants be as specific as possible, because the more specific comments can be, the better able Advocacy can take their feedback back to Congress, the White House and federal agencies.
The Louisiana director of the NFIB stated that paperwork is a burden for small business, and that any meaningful regulatory reform should include paperwork reduction. In addition, the Affordable Care Act (ACA) has affected small business because the premiums have gone up. However, another small business owner weighed in that the ACA has actually saved him money. The divergence on the effect of the ACA on small business is an example of why it’s so important for Advocacy to hear from different sectors and different size small businesses.
Another regulation small businesses flagged for reform by small business was the Consumer Finance Protection Bureau (CFPB) Payday Loans rule. A compliance officer for a payday loans small business stated that of her company’s sixty-five store fronts, 70-75% of the storefronts served rural communities where traditional banks won’t lend, but her loan company gets unfairly stigmatized as a predatory lender. Her concern was that despite the change in administrations, there has not been a change with respect to the CFPB’s course on this rule. She stated that her company participated in the Small Business Regulatory Enforcement Fairness Act (SBREFA) panel for this rule, but it felt like a formality because the concerns of small business were not reflected in the final rule. Further, she stated that the CFPB should be comprised of a panel instead of led by a single director. A representative from the Senate Small Business committee responded to the concerns of those in the payday lending space citing a Government Accountability Office report on CFPB and potential changes in Dodd Frank that could affect the CFPB organizational structure.
Another call to action was made by Guy Williams from Gulf Coast Bank, a leading small business lender in the state of Louisiana. Mr. Williams asserted that the U.S. is losing a community bank every day, and a primary reason for the loss of community banks is due to regulatory complexity favoring the large businesses that can afford to hire a lawyer and compliance teams to stay on top of regulatory compliance. Mr. Williams also mentioned that CFPB’s TILA–RESPA Integrated Disclosure (TRID) mortgage disclosure rule raised costs for compliance and lengthened the closing process, which work to the disadvantage of the consumer. Advocacy Interagency Director Charles Maresca responded that Advocacy is exploring how the regulations can be written in a more streamlined way that would reduce the burden on small business.
A representative of a title insurance company in Metairie, LA that has been in business for over 40 years brought up the Department of Labor’s (DOL) Fiduciary Rule, which went partially into effect the day after the New Orleans Roundtable on June 9, 2017. The representative explained that the regulation fundamentally changes the way that financial advice is given by making financial advisers legally liable if they don’t act in the best interest of their clients, yet the regulation does not define “best interest”. The insurance providers in the room argued that they’re not challenging the need for good advice, but the effect of this rule may drive out middle market money managers because they don’t want to take on liability. The title insurance providers stated that financial management is forward looking, and the processes employed by managers for crafting financial plans can be examined, but reviewing the investments in hindsight is impracticable. A DOL representative present in the room acknowledged their sentiments and asked the insurance companies to send her their suggestions for improving the rule.
All in all, there were great discussions surrounding regulations and specific improvements federal agencies can make to lighten the burden on American small businesses.
Advocacy was in Louisiana for Regional Regulatory Reform Roundtables June 7-8.
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For more information on Advocacy’s mission, our regulatory reform efforts or to find out where the next Regional Regulatory Reform Roundtables will be held, please visit: https://advocacy.sba.gov/regulation/regulatory-reform/.
Rosalyn Steward is an Assistant Chief Counsel for Advocacy whose portfolio includes international trade and education. She can be reached at Rosalyn.steward@sba.gov.