The American Bankers Association has a bone to pick along with the CFPB, writes Investor’s Business Daily. Community banks and credit unions think over 1,000 of their kind will disappear, due to what they see as over-regulation from the Dodd-Frank Act. They see this action as likely, and feel it would be an abuse of power on the part of the Consumer Financial Protection Bureau.
Strong enforcement arm in consumers’ corner
Elizabeth Warren, the interim chief of the Consumer Financial Protection Bureau, has warned that “change is coming” and that all U.S. financial institutions will have to play by new rules. Warren has spoken time and time again about how the United States consumers’ financial rights will be protected by the Consumer Financial Protection Bureau with the Customer Financial Protection Bureau’s budget. Half of the budget will be going to supervision and enforcement.
Community banks and credit unions fear their own Rapture
ABA representatives have stated publicly that if Dodd-Frank rules go into effect as they are currently written, more than 1,000 banks will be forced out of business before the end of the decade. Any information requested, in any format requested, must be given to the Consumer Financial Protection Bureau by banks. The resources taken to put this together could possibly be devastating to small banks. The Home Mortgage Disclosure Act is meant to stop predatory lending, which the Consumer Financial Protection Bureau would want to make sure of. The bureau will probably ask for even more information from a borrower so it can choose if there has been any discrimination.
According to Investor’s Business Daily, ABA Chairman Stephen explained that this is bad for credit unions and small community banks. They will make the loans larger banks won’t most of the time. The more small banks that shut down, the fewer capital sources remain accessible. This is passed on to customers in higher rates and fees, argues Wilson.
“If we tie up our capital system, it’s going to take money away from the people who need it to create jobs,” warned U.S. Chamber of Commerce President Tom Donohue.
Elizabeth Warren debated
On July 21, the CFPB will be launching. There is no permanent chairperson still. Warren will likely be nominated by President Obama, but numerous lawmakers who support the banking industry have attempted to derail the Warren nomination. The Consumer Financial Protection Bureau has too much power, Republicans argue. Warren is hoping the Consumer Financial Protection Bureau will be “toothless” she states.
By way of comparison, the Sarbanes-Oxley Act of 2002 – one of the more critical pieces of financial regulatory legislation, pre-Dodd-Frank – changed sixteen rules over two-and-a-half years. The Dodd-Frank Act will require more than 250 rule changes over several years.
Articles cited
American Bankers Association
aba.com/default.htm
Florida Realtors
floridarealtors.org/NewsAndEvents/article.cfm?id=259538
Investor’s Business Daily
investors.com/NewsAndAnalysis/Article/572889/201105201812/1000-Small-Banks-May-Be-Shut-Down-Due-To-Dodd-Frank.htm
SEC
sec.gov/about/laws/soa2002.pdf
Rep. Sean Duffy (R-Wisc.) fights for community banks and credit unions
youtube.com/watch?v=8yqmp_kIucQ
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