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DFA Could Drive Small Banks From Lines of Business

American Bankers Association article republished:

07.24.12

In related news, ABA Government Relations Council member Jim Hamby told a House panel Friday that the Dodd-Frank Act has compounded the regulatory burden, and the law could drive community banks out of lines of business.

It’s frightening to consider that regulators have promulgated only a quarter of Dodd-Frank’s more than 400 rules, said Hamby, who is president and CEO, Vision Bank in Ada, Okla. “New laws or regulations might be manageable in isolation, but wave after wave, one on top of another, will undoubtedly overrun many community banks,” he said.

Hamby, who was testifying on behalf of his institution at a House Oversight and Government Reform Committee hearing, explained that as the regulatory burden increases, banks’ ability to lend diminishes. He emphasized that Congress must be vigilant in its oversight to ensure that Dodd-Frank rules are adopted only when the benefit clearly outweighs the burden.  

Hamby cited the “qualified mortgage” -- or QM -- designation under the pending ability-to-repay proposal and the municipal advisers registration proposal as two “particularly problematic” provisions that, if done wrong, could drive banks out of lines of business. Read Hamby’s testimony.

To read more ABA Newsbytes visit www.ABA.com.