The Texas congressman called on federal and state regulators to address laws impacting community financial institutions and the trend of “Too Small to Succeed.”

The House Financial Institutions and Consumer Credit Subcommittee met with financial and state regulators during a recent hearing to address overarching regulatory issues affecting small businesses.

The members of Congress and regulators discussed how federal and state agencies’ supervision and examination functions impact community financial institutions and ways to improve the process as well as well how agency rulemaking limits the operational activities of the businesses. They also reviewed how the regulations impact consumer choice and the availability of credit, according to subcommittee chairman U.S. Rep. Randy Neugebauer (R-Texas.)

“We have seen Democrat-led, bipartisan bills that have passed our committee blocked from going to the floor—all in an effort to protect Dodd-Frank. As a result, Republicans are left without a dancing partner in trying to reverse the trend of ’Too Small to Succeed.’ In my district, and I suspect in many of my colleagues’ districts, that is not an option,” Neugebauer said in his opening statement before the April 23 hearing.

Neugebauer added that federal and state regulators are in a unique position to address the impact of the regulatory framework facing community financial institutions.

“They have the authority in most cases to write rules that can begin to change the condition of ’Too Small to Succeed.’ Some have done a better job than others.” Neugebauer said.

Representatives of the Federal Deposit Insurance Corporation, Federal Reserve Board, Office of the Comptroller of Currency, National Credit Union Administration, Texas Department of Banking Conference of State Bank Supervisors and Consumer Financial Protection Bureau Office of Research, Markets & Regulations testified during the hearing.

During his testimony, David Silberman, the associate director of Consumer Financial Protection Bureau Office of Research, Markets & Regulations, said part of the bureau’s, “statutory mandate is to address consumer financial issues in an even-handed manner across all market participants. We continue to build out our risk-based supervision program both for banks and for non-bank financial firms. This approach is enabling us to provide more consistent treatment that ensures compliance with federal consumer financial laws and helps level the playing field among competing firms in mortgage origination, mortgage servicing, debt collection, student loan servicing, and other markets.”

Neugebauer stressed in his opening statement that each agency represented at the hearing has a role in the regulatory burdens facing small businesses that must be addressed.

“For example, community banks have undergone a significant capital restructuring as a result of Basel capital requirements. Credit unions are in the midst of moving to their own new capital structure that could result in considerable cost. Operation Choke Point has severely fractured any trust in the supervision and examination process between financial institutions and regulatory agencies,” he said.

Operation Choke Point has also impacted the availability of banking services for debt collection agencies.

ACA International, in discussions with members of Congress at the recent Washington Insights Conference, reviewed the implications of Operation Choke Point for its members and what can be done to help. U.S. Rep. Blaine Luetkemeyer (R-Mo.) has proposed legislation to end Operation Choke Point. Neugebauer is the sponsor of legislation to replace the CFPB’s director leadership with a bipartisan commission appointed by the president, which he also discussed at the Washington Insights Conference. ACA International supports the bills from Luetkemeyer and Neugebauer.

“It is my hope that today we can begin to restore some bipartisanship and work together to help our constituents on Main Street reach their financial dreams and enable our economy to reach its full potential,” Neugebauer said during the hearing.