By Michael Hill
Provident Bank is among the thousands of community banks across the country glad to see the beginning of the repeal of the law known as Dodd-Frank, blamed for over-regulating small banks, driving up their cost and driving some out of business.
“There’s a lot more paperwork and a lot more documentation for processes that we’ve been doing for 20 years. We didn’t cause the crisis. We’re a small community bank and it puts us to more compliance issues. We’re hiring people that aren’t generating business, they’re just filling out forms and following up on the regulations,” said Christopher Martin, chairman, president and CEO of Provident Bank.
Dodd-Frank became law after the financial crisis of nearly a decade ago, the result of irresponsible lending and banking practices. Many Republicans, and some skeptical Democrats, opposed Dodd-Frank then, as they do now, believing that the market should determine which institutions and which ones sink.
On Thursday, the House of Representatives approved the Financial Choice Act, rolling back many of the banking crisis era regulations designed to reign in the industry.
“I think what it does, it does put some constraints on Wall Street, which is important. It helps community banks a little bit, the smaller banks to maybe get outside some of these regulations,” Martin said.
“Which brings back the wild, wild west to our financial markets,” said Colorado Congressman Ed Perlmutter.
Consumer advocates blast the vote and call the bill the “Wrong Choice Act.”
“It’s shameful and it’s actually quite embarrassing that all of our Republican congresspeople, congressmen in this case, voted to support the Wrong Choice Act,” said New Jersey Citizen Action Executive Director Phyllis Salowe-Kaye.
The bill would weaken the Consumer Financial Protection Bureau and the requirement that retirement advisers must put clients’ interests before their own.
“This is really awful. We saw people lose their entire fortunes,” Kaye said.
Former Congressman Barney Frank, who co-authored Dodd-Frank, has acknowledged it needed tweaking. But, Republicans including candidate Donald Trump campaigned on repealing it.
Congressman Leonard Lance blames it for 42 community bank failures in New Jersey alone and says, the Choice Act “… reverses many of these failed provisions, empowers economic growth and strengthens penalties for those who engage in fraud, insider trading and other corrupt practices.”
But, Congressman Frank Pallone said the Choice Act “… reduces the ability of the Securities and Exchange Commission (SEC) to hold bad actors on Wall Street accountable, putting the American taxpayers at financial risk.”
Dodd-Frank has been blamed for its one-size fits all approach. It’s now the Senate’s turn to repair or repeal it.