The Crescent-News: Robert Latta - Rolling Back Dodd-Frank
For countless families and businesses across America, the local bank is a pillar of the community. When someone has a product to sell, they go to their local bank to get a loan to start a business. It’s the place a husband and wife go to obtain a mortgage to purchase a new home. It’s where a teenager that just started their first job goes to open up a savings account.
Unfortunately, small community banks are in somewhat of a crisis. Since 2010, approximately one bank or credit union a day is closing its doors, making it more difficult for Americans to access needed capital. This hits especially hard in northwest and west central Ohio, which has more community banks than any other Congressional District in Ohio.
Much of this crisis can be traced to the implementation of Dodd-Frank, legislation that in theory was supposed to curb the practices on Wall Street that helped lead to the economic downturn in 2007. However, instead of solving the problem on Wall Street, government made it difficult for our banks on Main Street. The biggest financial firms are bigger than ever and “Too Big to Fail” is now the law of the land. Dodd-Frank has threatened the very existence of banks that know their customers’ needs and understand their local community.
For example, one small bank in my district told me about the difficultly of complying with federal regulations and what it ultimately costs their customers. Despite having less than a dozen employees, they would face twelve regulators at their bank. Who worked the teller window, made loans, and helped the bank operate when they were on call with the regulators?
Consumers are being harmed as well. Only 37 percent of Americans have access to free checking now — down from 75 percent before the passage of Dodd-Frank. Businesses have greater difficulty obtaining loans to grow and expand because of stifling regulations.
Recently, I voted to pass legislation, the Financial CHOICE Act, to provide relief to Ohio community banks and revitalize Main Street.
For starters, the Financial CHOICE Act ends the disastrous policy of “Too Big to Fail” and ensures that not one cent of taxpayer dollars is spent bailing out Wall Street banks.
The bill provides greater flexibility to smaller banks by allowing them to have regulatory relief if they meet specific capital reserve requirements. The legislation would also rein in federal agencies by requiring that any new regulation with more than a $100 million impact must be first approved by Congress. It also tailors federal regulations to include factors outside of assets such as the bank structure and risk. One-size-fits-all regulatory models don’t make sense when banks are of different sizes and are structured differently.
The Financial Choice Act also repeals the Department of Labor’s ‘fiduciary rule’ which would hamstring the ability of lower- and middle-income families to seek and find affordable financial advice. Everyone agrees that retirement advisors should act in the best interest of their clients, but this massive regulation, as currently constructed, threatens the ability of obtaining even basic financial help without costly up-front fees.
At the same time, I voted to ensure that bad actors in the financial system are punished. Under the bill, the Securities and Exchange Commission would be able to triple financial penalties for fraud, deceit, and manipulation that result in losses for investors.
On top of all these provisions, the bill also reduces the deficit by $25 billion.
Our local banks are a staple in their communities. But, they are struggling to swim upstream against a flood of federal regulations. The House has taken action to right the wrong of Dodd-Frank, and I encourage our friends in the Senate to continue this work and revitalize the Main Street economy.
(Republican Robert Latta of Bowling Green represents Ohio’s 5th Congressional District.)