Banking Reform Bill To Help Community Banks, Main Street America
‘Dodd-Frank’s imprecise, inefficient, one-size-fits-all framework dropped these small institutions into the regulatory maze that was intended for Wall Street. This has forced many to pare down their offerings or close their doors for good. That leaves would-be entrepreneurs, job creators, and existing small businesses who want to expand out to dry. Fortunately, we have an opportunity this week to begin putting things right.’
WASHINGTON, D.C. – U.S. Senate Majority Leader Mitch McConnell (R-KY) delivered the following remarks today on the Senate floor regarding the Economic Growth, Regulatory Relief, and Consumer Protection Act:
“Community banks, credit unions, and other small-scale lenders play a vital role in the U.S. economy. Research from Harvard indicates that community banks provide more than half of all small business loans. Let me repeat that: A majority of small-business loans are handled by community banks. This is even more pronounced in rural areas and farming communities, like those I represent in Kentucky. A whopping seventy-seven percent of agricultural loans come from community banks.
“In this era of online banking and multinational corporations, smaller institutions remain uniquely able to build community connections. Community bankers get to know residents and business owners on a personal level. That perspective lets them extend credit to small-scale entrepreneurs, farmers, ranchers, and other Americans who might not have access otherwise. So when small lenders close their doors, the effects on communities are very real.
“In 2014, an economist at MIT found that, on average, the closing of a single bank cut the number of new small business loans in the immediate area by more than 10 percent for several years. The problem was extremely pronounced in low-income areas, where a local perspective and personal relationships matter even more. In low-income America, a physical bank closure cuts lending to local small businesses by nearly forty percent. Long story short? The more vulnerable a community, the more they need local lenders.
“But since the federal government implemented massive new regulations under the 2010 Dodd-Frank Act, our community banks and credit unions have been getting squeezed. Dodd-Frank’s imprecise, inefficient, one-size-fits-all framework dropped these small institutions into the regulatory maze that was intended for Wall Street.
“For eight years, they’ve faced a staggering compliance burden that now consumes, on average, 24 percent of their net income. This has forced many to pare down their offerings or close their doors for good. That leaves would-be entrepreneurs, job creators, and existing small businesses who want to expand out to dry. Fortunately, we have an opportunity this week to begin putting things right.
“Today, the Senate continues considering a sensible solution that would streamline regulations and give smaller lenders a fighting chance. Senator Crapo’s Economic Growth, Regulatory Relief, and Consumer Protection Act is the product of thorough committee work. It’s an important step toward unwinding the harm caused by the Obama administration’s knee-jerk reaction to the 2008 financial crisis. And importantly, this bill has strong bipartisan support. On both sides of the aisle, members with a diversity of views on Dodd-Frank itself have recognized that this set of commonsense fixes deserves all of our support. I encourage all Senators to join them.”
Related Issues: Small Business, Economy