Obamacare for your community bank and credit union. That’s the easiest way to explain President Obama’s financial regulation legislation known as Dodd-Frank. Both include complex webs of laws and regulations while operating from the assumption that Washington knows best.
Unfortunately, this top-down, bureaucratic approach has directly resulted in fewer choices and limited opportunity for hardworking American families. Similar to how Obamacare took away your doctor, Dodd-Frank took away your community bank.
But this week, House Republicans joined me in passing the Financial CHOICE Act, which I co-sponsored and helped introduce, to properly regulate the financial industry while ending taxpayer bailouts, increasing accountability, and supporting economic growth.
Ironically, Dodd-Frank exacerbated the very problem it promised to solve. Simply, Dodd-Frank made “too big to fail” banks even bigger. Rather than creating accountability for America’s largest banks, Dodd-Frank enshrined bailouts into official policy and even created a special “big bank bailout fund.”
Our Financial CHOICE Act focuses on accountability, ending taxpayer bailouts, imposing the toughest penalties in history for Wall Street fraud, and increasing transparency.
Just look at what has happened in the financial services industry since Dodd-Frank was passed into law. In 2010, there were nearly 7,100 community banks nationwide. Now, after Dodd-Frank imposed Wall Street-style regulations on local community banks, we have only 5,521 open for business, a major loss for small towns.
North Carolina has been hit particularly hard, losing nearly 50% of our banks over the past 7 years. At the beginning of 2010, North Carolina was home to 105 banks. Now, our state is home to only 60 banks. Within the 9th Congressional District, Anson Bank & Trust has been acquired by a larger bank, as have Park Sterling and Capital Bank.
Making community banks particularly susceptible are the thousands of pages of paperwork required by Dodd-Frank. The top-down, Washington-first approach has bound community banks to the same rigid requirements of Wall Street banks. Local bank leaders tell me they now hire more compliance officers than loan officers.
This is detrimental to our local economy, as small business owners rely on affordable credit to finance their operations and create good paying jobs. Dodd-Frank prioritizes filling out forms for bureaucrats over growing the economy.
Prior to serving in Congress, I was a board member for a local community bank. We knew who was creditworthy. We knew who we could trust. No amount of paperwork can replace the assurances provided by being engaged within the community and building lifelong relationships. The Financial CHOICE Act will return the focus of local community banks back to the community to reflect the value of these personal relationships.
Another troubling aspect of Dodd-Frank was the creation of the Consumer Financial Protection Bureau. Despite the idealistic name, even the liberal D.C. Court of Appeals calls the CFPB “unconstitutional” and a “threat to individual liberty.” The CFPB was given broad authority to write rules for your checking accounts, the fees on your mortgage or car loan, and what type of credit card offers you can receive, yet the agency lacks any sort of accountability or oversight, not even from the President or Congress.
The Financial CHOICE Act reforms the CFPB so that the agency can be focused on protecting consumers, while operating under appropriate oversight.
We need to restore common sense to Washington’s regulatory regime and return power to ordinary Americans. The Financial CHOICE Act increases penalties on Wall Street, ends taxpayer bailouts, supports community banks and credit unions, increases access to capital so small businesses can create jobs, and supports economic growth. This is a big win for the American people.
Congressman Robert Pittenger (NC-09) is Chairman of the Congressional Task Force on Terrorism and Unconventional Warfare, Vice Chairman of the Subcommittee on Terrorism and Illicit Finance, and serves on the House Financial Services Committee, with a special focus on supporting small businesses, community banks, and credit unions.