Financial lobby urging for weakening of Dodd-Frank
Says harms small banks, drags down economy
A banking trade association is urging the Senate Banking Committee to weaken the 2010 DoddFrank law, saying its regulatory burden on banks is hurting the economy by curtailing lending.
Specifically, the Consumer Bankers Association asked that the asset threshold for banks to face the law’s increased regulatory burdens be raised, and that the embattled single-director Consumer Financial Protection Bureau the law set up be turned into a bipartisan commission.
The group wrote in a letter to Senate Banking Committee Chairman Mike Crapo, Idaho Republican, and ranking Democratic Sen. Sherrod Brown of Ohio that the current $50 billion asset threshold lets the law cover too many smaller banks.
“Subjecting financial intuitions that do not pose a significant threat to the economy to heightened reporting and stress testing … places an unnecessary burden that redirects vital capital and staff resources towards compliance, ultimately reducing lending to communities and businesses,” CBA President and CEO Richard Hunt wrote.
House and Senate Republicans are preparing for an overhaul of the Dodd-Frank financial regulatory law, which aimed to discourage risky investments by big banks that contributed to the financial crisis of 2008. President Trump supports significant changes to the law, a move that could be approved by the House as early as June.
“We are doing a major elimination of the horrendous DoddFrank regulations. Keeping some obviously, but getting rid of many,” Mr. Trump said last week in a White House meeting with CEOs.
Dodd-Frank also created the
“Subjecting financial intuitions that do not pose a significant threat to the economy to heightened reporting and stress testing … places an unnecessary burden that redirects vital capital and staff resources towards compliance, ultimately reducing lending to communities and businesses.” — Richard Hunt, CBA President and CEO
CFPB, which has the power to regulate the consumer lending industry, including mortgages, credit cards and auto loans.
The current setup has the agency run by a single director, Richard Cordray, who was appointed by then-President Barack Obama.
The director can be fired by the president only for cause, an arrangement that the Trump administration is challenging in a court battle over the agency’s structure.
Mr. Hunt said a bipartisan commission in charge of the CFPB “would provide a balanced and deliberative approach to supervision, regulation and enforcement for the long-term, as well as offer a stable form of leadership.”
He also said eliminating single-director control of the regulator would provide for more stability and predictability in an “ever-changing political landscape.”
“Understanding that stability is a component of a healthy regulatory environment, a single director structure susceptible to changing political viewpoints jeopardizes industry certainty and makes it difficult for banks and credit unions to develop long-term plans to serve consumers and small business,” Mr. Hunt said.
The current financial sector setup has the Consumer Financial Protection Bureau run by a single person, Richard Cordray, who can be fired only for cause. President Trump aims to challenge that situation.