WASHINGTON, June 15, 2016 - Representatives of small, rural
banks are pleading for Congress to ease the regulatory burden that resulted
from the Dodd-Frank reforms enacted after the Great Recession.
While most of the hundreds of regulations required under
Dodd-Frank were aimed at the big financial institutions blamed for the
financial crisis, witnesses told a House Small Business subcommittee hearing
last week that small, community banks often have been affected by a “trickle
down” effect. Committee staffers said this occurs when supervisors, “informally
and perhaps not wholly intentionally, create compliance expectations for
smaller banks that resemble expectations created for larger institutions.”
Shan Hanes, president of the First National Bank of Elkhart,
Kansas, tried to show the lawmakers how increased regulations are affecting banks
that serve small communities like Elkhart, with a population of about 2,000. Hanes
held up two sheets of paper and said they represented the forms a bank like his
had to fill out 20 years ago for a home mortgage, when he first got into
banking.
Next, to represent today’s requirements, he held up a
half-inch thick stack of papers and riffled it in the air. “They have made
things so complicated, customers won’t even read the document,” Hanes said.
Hanes was joined at the hearing by Roger Beverage, CEO of
the Oklahoma Bankers Association (representing the American Bankers
Association) in asking for relief for small banks from what they said was the
onslaught of new regulations that followed the passage of the Dodd-Frank Act in
2010. They said the new rules, with the added compliance costs, are driving
small community banks out of business.
A third witness, Marcus Stanley, policy director for
Americans for Financial Reforms, agreed that some reforms are needed, but he
said some of the proposals being considered by Congress to help smaller banks
are written too broadly and that larger banks could use these “loopholes” to once
again game the system.
Rep. Judy Chu of California, the subcommittee’s ranking
Democrat, also cautioned against moving too quickly, noting that in the
financial collapse that prompted the Dodd-Frank law, more than $16 trillion in
wealth disappeared as the bottom fell out of the housing market. “Our top
priority,” Chu said, “is to protect consumers.”
Rep. Tim Huelskamp, R-Kan., chairman of the Subcommittee on
Economic Growth, Tax and Capital Access, said that in many instances, rural
banks are staying alive by merging with larger institutions that may not
understand the local community.
“In rural towns without many other alternatives for access
to capital, the results of top-down regulation can be devastating and impact
the whole town,” Huelskamp said. “Home mortgage lending, small business
lending, agricultural lending ‒ all areas where community banks play a lead in
providing capital‒ become much more difficult, and much more costly to
consumers.”
#30
For more news, go to: www.Agri-Pulse.com
