FACT CHECK: COMMUNITY BANKS WIN WITH FINANCIAL REFORM

WASHINGTON – Giant Wall Street banks are spending millions of dollars to lobby against financial reform.

 

These giant firms face one problem, money can’t buy you love.

 

So, to try and sway public opinion, they are trying to take advantage of the well deserved reputation of their responsible smaller colleagues, community banks.

 

Some giant Wall Street firms abused their customers and took enormous risks that nearly brought down our economy while our nation’s nearly 8,000 community banks have been responsible actors who have paid dearly for big banks’ mistakes. The financial reform bill reflects those differences, imposing greater costs and restrictions on the superbanks, reining in the abuses that caused the crisis, but allowing community banks to continue serving their communities.

 

“This financial and economic crisis has clearly demonstrated the need for meaningful financial regulatory reform that protects America’s taxpayers and the integrity of our financial system. The best way to accomplish this is by ending too-big-to-fail and regulating and enforcing rules on the unregulated financial players. ICBA welcomes the draft legislation released today by Chairman Dodd because it moves financial regulatory reform forward and aims to safeguard future generations by reining in the systemically dangerous institutions that were at the heart of this economic catastrophe.” R. Michael Menzies, Chairman of the Independent Community Bankers of America (ICBA), March 15, 2010

Levels Playing Field: For the first time, community banks will no longer have to compete with unregulated non-banks. The Consumer Financial Protection Bureau (CFPB) will have the ability to adopt rules that prohibit unfair or deceptive practices, and the Bureau will have the power to enforce these rules on large banks, mortgage companies, and major players in the shadow banking industry.

One Exam & Enforcement Regulator: Rules written by the new CFPB will be enforced by the same regulator (OCC or FDIC) that enforces safety and soundness rules for banks with assets below $10 billion. Small community banks will continue to follow the same rules they follow today – like the Truth in Lending and Truth in Savings Acts. The CFPB will not be able to tell banks what products to offer or to cap interest rates.

Preserves Dual Banking System: This system allows for critical checks and balances and diversity of financial institutions, promotes consumer choice and is sensitive to financial institutions of various complexity and size.

Consumer Protections Consistent with Safety and Soundness: Rules written by this agency must take into account the costs and benefits to consumers and businesses.

No New Fees or Assessments, Fairer Assessments: The CFPB will not charge small banks fees or assessments and the FDIC will change the way it charges banks assessments to reflect the size of companies’ liabilities, easing the burden on community banks.

Advance Warning System: Creates a systemic-risk regime that would rein in the size and scope of too-big-to-fail institutions so they never again have the ability to nearly topple our economic system.

Ending Too Big to Fail Bailouts: The FDIC will have full resolution authority for the orderly unwinding of systemically dangerous institutions that fail.

Easier Mortgage Disclosure: The Consumer Financial Protection Bureau will create one form that combines the two federal mortgage disclosures currently required, eliminating this burden to small community banks.