By Ty Higgins, Ohio Ag Net
The Wall Street Reform and Consumer Protection Act, also known as Dodd–Frank, was made law in 2010 by President Obama. The law was in response to the financial crisis of 2007–2008, making major changes in all federal financial regulatory agencies and almost every part of the nation’s financial services industry including, and some would say unfairly, smaller community banks.
Since 2010, the number of community banks in the United States has decreased by 2,000, according to statistics from the Federal Deposit Insurance Corporation. It is argued by the Trump Administration that small community banks have been unfairly harmed by Dodd-Frank, compared to big banks, which can use their substantial resources to navigate Dodd-Frank’s costly and complex regulations.
This month, President Trump lifted some of those regulations on smaller banks by signing the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155), in an effort make financial regulations more efficient, effective, and appropriately tailored.
“This result for small banks is kind of like the Super Bowl,” said Scott McComb, CEO of Heartland Bank. “This is something that has been hoped for ever since a new administration was in place. The old administration did not want anything to do with repealing any part of Dodd-Frank.”
McComb said the Trump Administration understands business and repealing two regulations for every new one is welcomed in his highly regulated industry.
AUDIO: The Ohio Ag Net’s Ty Higgins visits with Scott McComb from Heartland Bank about changes to Dodd-Frank.
This regulatory changes passed both the House and Senate with strong, bipartisan votes.
“The restrictions lifted from smaller banks are tiered based on asset size,” McComb said. “Most of the relief is for banks with under $10 billion in assets, which account for about 90% of community banks and then there is a stair step relief up to $250 billion in total assets, which would be more regional and multi-state institutions.”
Most of the banks that will be positively impacted by S.2155 will be banks that are based in rural parts of the country and that have a high percentage of clientele connected in one way or another with agriculture. McComb says those that work directly with community banks to keep the farm going will see a difference in service.
“What most people don’t realize is that farmers are entrepreneurs in multiple businesses, from growing crops, trucking, real estate, selling implements and even sub contract and all of that matters when looking for a first position loan and things of that nature,” McComb said. “We are going to be able to spend a little more time with those clients and cater to their needs.”
President Trump emphasized that the reforms included in S. 2155 will foster economic growth by expanding sound lending and that now freed of unnecessary regulatory costs, community banks and credit unions will be able to direct more lending to small businesses and consumers, especially those in rural areas and small towns.