State Licensing Efficiency Act

Floor Speech

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H.R. 2643, the State Licensing Efficiency Act, will expand the State's ability to use a federally accepted registry, the Nationwide Multistate Licensing System, to expedite background checks.

For many State-licensed financial service providers, the current background check process is inefficient, but this registry has a proven track record of being effective while also reducing regulatory burden.

Under the SAFE Act, the current NMLS, developed by State banking commissioners, has been used to oversee the mortgage industry since 2008. To date, the Conference of State Bank Supervisors has channeled over 1.3 million fingerprint checks of mortgage loan originators.

Citing an absence in Federal law, the FBI has prevented its use to conduct background checks for other financial services, including money transmitters, debt collectors, pawnbrokers, and check cashers.

Whereas a State wishing to conduct a criminal background check through traditional means may wait several weeks and sometimes even months for their response, NMLS communicates directly with the FBI and often receives the same results, as we have heard, in just 24 hours.

H.R. 2643 would expand the current system to include those financial service providers who are already licensed by the State and require a Federal background check.

The NMLS provides increased collaboration between State banking departments, reduces the risk of bad actors by preventing them from continuing to operate, and improves the safety and soundness of the financial system as a whole. In short, NMLS provides an added level of assurance to community banks that their business customers and vendors are operating legally.

Supported by the Conference of State Bank Supervisors, expanding the use of NMLS provides State regulators a secure and efficient means by which to conduct background checks on license applicants.

I want to be clear. As we have heard in the past, this bill does not create any requirements for background checks or fingerprints, but greatly increases efficiency and transparency.

In addition, by no means does this bill encourage States to require or mandate States to license or register any additional class of financial service providers.

This act authorizes only State-licensed loan originators and other State-licensed financial service providers to be processed through NMLS for background checks authorized under the laws of the State. Simply put, by expanding its use, NMLS will save industry and, ultimately, the consumer money.

At the end of 2014, there were around 20,386 professionals registered in the NMLS system. Those individuals, as we have heard, required over 105,000 background checks outside the NMLS system. If our bill becomes law, we would reduce that number by 80 percent because we would be using one system instead of 50, saving industry $1.1 million by removing duplicate background checks.

Finally, in my home State of Texas, the expansion of NMLS is supported by State Banking Commissioner Charles Cooper, who we talked about tonight. I want to take a moment to thank Commissioner Cooper for his leadership on this issue.

In addition, I want to thank my own staff and the staff of CSBS, who have worked tirelessly to support our efforts in pushing this legislation through. Without them and the support of my colleagues on the committee and Chairman Hensarling, none of this would be possible. I thank Chairman Neugebauer, and I thank Ms. Moore.

Mr. Speaker, I urge passage of H.R. 2643.

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