Congressman: Dodd-Frank rollback a lifeline for farmers, small businesses
Members of the U.S. House of Representatives are set to consider roll-backs of high-profile 2010 regulations signed into law after the financial and mortgage crisis.
The bill received bipartisan support but is likely to be changed by House Republicans, potentially setting up another battle with Senate opponents warning that deregulation of the financial industry could trigger another crash.
The Economic Growth, Regulatory Relief, and Consumer Protection Act loosens restrictions put in place in 2010 under a set of laws referred to as the Dodd–Frank Wall Street Reform and Consumer Protection Act.
Signed into law in 2010, the Dodd-Frank law placed tighter restrictions on lending practices by financial institutions, moreso on larger banks. It also created the Consumer Financial Protection Bureau, a federal department that has returned almost $12 billion to 29 million consumers and imposed about $600 million in civil penalties. It’s also been the target of criticism because it’s federally funded but not subject to congressional appropriations.
Supporters like Rep. Randy Hultgren, R-Illinois, say the regulations put in place by Dodd-Frank were overly burdensome for community banks and local credit unions.
“To think that a local community bank that’s making loans to farmers and small businesses is a threat to our national economy if they make a bad loan is ridiculous,” he said.
More than 40 community banks and countless credit unions have closed their doors since Dodd-Frank was enacted, Hultgren said.
The argument for deregulation has been that large banks are able to absorb the cost of government compliance much easier than community banks and credit unions with a much smaller payroll, making the addition of legal compliance assistance weigh more heavily on the institution’s bottom line.
Hultgren said that the larger banking institutions often called “too big to fail” had a hand in writing the Dodd-Frank legislation.
Before the Senate vote, a story identified Illinois Sen. Tammy Duckworth as a potential Democratic supporter of the legislation. She ultimately voted against it. She wouldn’t respond to requests for comment explaining her vote against the measure.
Opponents say deregulating these banks could lead to another financial calamity.
Massachusetts Sen. Elizabeth Warren said “the American people aren’t going to stand by while the big banks and other giant corporations run this economy and this Congress for their own benefit.”
Vanita Gupta, CEO of the Leadership Conference, urged lawmakers to oppose the bill saying it “would undermine one of our nation’s key civil rights laws and weaken consumer protections enacted after the 2008 financial crisis.”
Hultgren said the bill will likely get changed and sent back to the Senate before it lands on the president’s desk.