Region’s three reps vote for Dodd-Frank repeals
All say regulations imposed in wake of financial crisis squeezing local banks
Three area Congressman joined with their Republican colleagues Thursday in a vote repealing many of the provisions of the Dodd-Frank banking regulations enacted in the wake of the economic collapse of 2009.
All three said the regulations were strangling community banks and preventing local investment and business growth.
The legislation now moves on to the Senate, where it would require 60 votes and its chances of passage have been deemed less favorable by Senate Majority Leader Mitch McConnell, R-Ky.
Dodd-Frank, which passed in 2010 with almost no Republican support, “included a prohibition on federally insured banks from engaging in risky trading, a new liquidation authority to safely shut down teetering financial giants to avoid future bailouts and the creation of the independent Consumer Financial Protection Bureau to oversee credit cards, mortgages and other financial products,” according to the Los Angeles Times.
Perhaps one of the most significant aspects of the Financial Choice Act — approved Thursday by a margin of 233 to 186 with all Republicans but one voting in favor and all Democrats voting against — is its restrictions on the Consumer Financial Protection Bureau.
The CFPB “has provided consumers about $12 billion in refunds, mortgage principal reductions and other relief since opening in 2011. It played a key role in penalizing Wells Fargo & Co. for its creation of about 2.1 million unauthorized accounts,” the Lost Angeles Times explained.
The new legislation, among other things, specifically prohibits the bureau from writing any regulations on payday and car-title loans, makes the director subject to removal by the president for any reason and eliminates its independent funding stream, meaning Congress can reduce or enhance the agency’s budget as its members see fit.
But the regulations aimed at safeguarding against another financial collapse had another financial impact, said area members of Congress — they actually aided Wall Street at the expense of local banks.
“Since the 2009-2009 financial collapse, small banks are struggling under a maze of bureaucratic red tape imposed on them by Washington’s misguided Dodd-Frank law,” U.S. Rep. Patrick Meehan, R-7 of Chadds Ford, said in a prepared statement.
“Dodd-Frank’s one-size fits all regulatory scheme gives Wall Street an unfair advantage over the small banks so important to helping growing businesses access capital,” Meehan said. “It’s a concern I’ve heard repeatedly as I’ve visited small banks and credit unions — and the entrepreneurs and small firms that depend on them.”
The new legislation “ends the era of ‘too big to fail’ bailouts, lifts the burden of the most crushing regulations on community banks and it cracks down on insider traders and other white-collar criminals that don’t play by the rules,” Meehan’s statement said, adding “the end result will be more jobs in our communities and more financial independence for our families.”
“The Financial CHOICE Act would increase competition and economic growth by creating a regulatory framework small banks are able to comply with — allowing them to focus on serving their customers,” U.S. Rep. Ryan Costello, R-6 of Chester County, said in a statement posted on his Facebook page.
“Over 500 bank branches in PA closed under the regulatory weight of Dodd-Frank,” Costello wrote. “In Pennsylvania, many consumers and small businesses rely on these financial institutions for mortgages, car loans, and every day banking.”
A certified public accountant and member of the Small Business Committee, firstterm Rep. Brian Fitzpatrick, R-8 of Bucks County, offered a detailed analysis of the new bill on his website.
He pointed out that the Congressional Budget Office analysis of the bill indicates it would reduce federal deficits by $24.1 billion over the next 10 years while only costing $1.8 billion to implement.
“Dodd-Frank promised to end ‘too big to fail,’ but instead gave us ‘too small to succeed,” Fitzpatrick said in a prepared statement. “Unlike big banks, which can afford an army of lawyers and regulatory experts to navigate the DoddFrank loopholes, the community banks and credit unions that empower entrepreneurship and local lending have been squeezed out.”
“Wall Street and the big banks don’t like the Financial CHOICE Act — in fact they fought against the bill, its consumer reforms and increased accountability. But that’s OK, because I work for you, not them,” said Fitzpatrick’s statement.
After citing support for the bill from Nick DiFrancesco, president of the Pennsylvania Association of Community Bankers, Fitzpatrick went on to list a number of organizations that also support it — including the Mortgage Bankers Association, the American Insurance Association and Credit Union Association.
This last organization is familiar to Fitzpatrick as it ranks third in the list of his campaign contributors, according to FollowTheMoney. org, which tracks campaign financing.
At $10,000 given toward his campaign, Credit Union National Association comes in just $1,000 less than the American Bankers Association, his second largest single contributor.
Overall, according to National FollowTheMoney, Fitzpatrick received nearly $209,000 of the $2.1 million he raised for his first campaign from the finance, insurance and real estate industries — $44,125 of that specifically from financial and securities contributors.
Meehan, who has raised $9.7 million in contributions over the course of four elections, has received $1.4 million from the finance, insurance and real estate industries, according to FollowTheMoney.
More specifically, he has accepted nearly $290,000 in donations from the securities and investment industries.
Costello, over the course of two elections, has raised $4.3 million and, at $523,600, the financial, insurance and real estate industries are the second highest contributors to his campaigns.
More specifically, he has received $79,450 in contributions from securities and investment companies, according to FollowTheMoney.