Fi­nan­cial lobby urg­ing for weak­en­ing of Dodd-Frank

Says harms small banks, drags down economy

The Washington Times Daily - - POLITICS - BY DAVE BOYER

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.

ASSOCIATED PRESS

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.

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