As President Obama touts the Dodd-Frank Act as successful financial regulation legislation and denies that it is negatively impacting small banks, community bankers are reporting otherwise.
“Each new regulation…adds another layer of complexity and cost of doing business,” Thomas Boyle, a vice chairman at State Bank of Countryside in Illinois, said. “The Dodd-Frank Act will add an additional, enormous burden, has stimulated an environment of uncertainty, and has added new risks that will inevitably translate into fewer loans to small businesses.”
Community banks are being forced to comply with the 2,300 page law that was meant to regulate larger banks that are being held responsible for the recent financial crisis.
Smaller bank executives say that the cost of compliance is unfair to them becayse they did not have a role in the economic downturn.
“We’re small business people,” Michael Martin, the CEO of Lordsburg’s Western Bank, said. “We have to understand and comply with the regulations just like Wells Fargo. We don’t have 70 attorneys on staff to figure it out.”
Small bankers are particularly concerned with the new Consumer Financial Protection Bureau that was created by Dodd-Frank and seeks to regulate financial services products.
“This new bureaucracy [the Consumer Financial Protection Bureau] – expected to hire over 1,200 new staff – will certainly impose new obligations on community banks – banks that had nothing to do with the financial crisis and already have a long history of serving consumers fairly in a competitive environment,” Albert Kelly, Jr., the CEO of SpiritBank, said. “Thus, the new legislation will result in new compliance burdens for community banks and a new regulator looking over their shoulders."