Thread: Dodd Frank & Bank Regulations.

Here's an article that hits close to home for me:

Does Dodd-Frank really end ‘too big to fail’?

As a community bank, we've spent a considerable amount of time lately scrubbing the loan portfolio, loan policy, and preparing for what seems to be trouble come January, 2014. In a nut shell, the Dodd Frank imposes stricter regulations on banks such as: higher capital requirement, strict lending requirements, and a variety of other regulations. Basically It feels like the the government is telling banks how to run. They can do this because any bank that wants to stay in business must be FDIC insured. Federally chartered bank are audited by the Office of Comptroller of Currency which reports to the fed, FDIC, and the new bully the CFPB (Consumer Financial Protection Bureau). Even state chartered banks can't escape CFPB and FDIC regulations.

Some people may feel like more regulations are good, because it keeps your money safer right? Dodd Frank also supposedly ends the 'Too Big To Fail" theory. But it smells fishy, I've told my colleagues that the Dodd Frank act puts the squeeze on community banks and allows big banks like BOA, JP Morgan, and Citi to thrive due to their large amounts of capital. I fear that causing small banks link mine to tie up more capital and stricter lending guidelines cuts profitability, and really just makes it hell on earth. The fact that we have to allocate time to prepare is already eating up dollars. Community banks are extremely important to you guys, they give you options which are favorable most of the time. If fewer community banks exist you'll be even more likely to get jerked around by big banks.


But then, I was passionate about more regulations after the GLB caused meltdowns

Gramm

This act ultimately created predatory lending and sub prime nonsense.

So my question to you guys is, where do we find the medium? What would make you happy? How many of you use community banks as opposed to big banks? In light of this, how many of you are likely to migrate to a smaller bank? Do you feel like the government is running the financial industry? If yes, how did you feel when the financial crisis hit us?

I'm on the fence. Dicuss.

Originally Posted by Hocus Pocus

Here's an article that hits close to home for me:

Does Dodd-Frank really end ‘too big to fail’?

As a community bank, we've spent a considerable amount of time lately scrubbing the loan portfolio, loan policy, and preparing for what seems to be trouble come January, 2014. In a nut shell, the Dodd Frank imposes stricter regulations on banks such as: higher capital requirement, strict lending requirements, and a variety of other regulations. Basically It feels like the the government is telling banks how to run. They can do this because any bank that wants to stay in business must be FDIC insured. Federally chartered bank are audited by the Office of Comptroller of Currency which reports to the fed, FDIC, and the new bully the CFPB (Consumer Financial Protection Bureau). Even state chartered banks can't escape CFPB and FDIC regulations.

Some people may feel like more regulations are good, because it keeps your money safer right? Dodd Frank also supposedly ends the 'Too Big To Fail" theory. But it smells fishy, I've told my colleagues that the Dodd Frank act puts the squeeze on community banks and allows big banks like BOA, JP Morgan, and Citi to thrive due to their large amounts of capital. I fear that causing small banks link mine to tie up more capital and stricter lending guidelines cuts profitability, and really just makes it hell on earth. The fact that we have to allocate time to prepare is already eating up dollars. Community banks are extremely important to you guys, they give you options which are favorable most of the time. If fewer community banks exist you'll be even more likely to get jerked around by big banks.


But then, I was passionate about more regulations after the GLB caused meltdowns

Gramm

This act ultimately created predatory lending and sub prime nonsense.

So my question to you guys is, where do we find the medium? What would make you happy? How many of you use community banks as opposed to big banks? In light of this, how many of you are likely to migrate to a smaller bank? Do you feel like the government is running the financial industry? If yes, how did you feel when the financial crisis hit us?

I'm on the fence. Dicuss.

In recent years, I've felt like the banking industry has been running the government, not the other way around. The Gramm–Leach–Bliley Act is a great example of this. This didn't help anyone except the banks, one of which, CitiGroup, had already broken the law and was given amnesty while they rewrote that law in their favor. Yes, regulations will generally hit the little guy hardest, and every effort should be made to mitigate that, but if the last ten years have shown us anything, it's that the banking industry can't be trusted to regulate itself.

Originally Posted by WickedTribe

In recent years, I've felt like the banking industry has been running the government, not the other way around. The Gramm–Leach–Bliley Act is a great example of this. This didn't help anyone except the banks, one of which, CitiGroup, had already broken the law and was given amnesty while they rewrote that law in their favor. Yes, regulations will generally hit the little guy hardest, and every effort should be made to mitigate that, but if the last ten years have shown us anything, it's that the banking industry can't be trusted to regulate itself.

You bring up a very good point. So then how do we know the big bank cats aren't in on this in order to squeeze out the small guys. That has been my suspicion all along.. This regulation deal seems like a front to me.

Originally Posted by iravedic

Hocus, as you know I work in and around the banking industry as well. I think it is absolutely an effort to 'squeeze' the community banks, but I'm not convinced it is driven solely by the big banks. They really aren't in a position to take over in many community banking locales. I do think the regulators want to see more consolidation of the community banks in to larger aggregate groups thereby spreading the risk over a wider deposit base.

As to whether Dodd Frank eliminates too big to fail - in the abstract it should, in practice I seriously doubt it will go down as cleanly as envisioned by the act.

Yeah but a consolidation of community banks means higher operational risk.

Too big too fail can't be eliminated by Dodd frank, because this act is merely a bug on the windshield to them. Boa has gotten sued so many times this year but they just keep churning. What do they do? Lay off and close branches. The Internet allows super banks to operate in remote areas and necessarily have a branch.

To big to fail is a myth anyway.