Posted on 12th Sep 2012 @ 12:34 PM

The Department of Treasury recently returned to an issue in its “official blog” that’s been much on the minds of community bankers since the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. In the August 28 blog, “Wall Street Reform & Main Street Banks,” Treasury said it often receives questions about how Main Street banks are affected by the historic law.

“We recognize that small banks were not the cause of the financial crisis,” Suzanne Elio, Treasury Department spokesperson for Domestic Finance, wrote. “Main Street banks are integral to the ability of consumers and small businesses to access capital and protect their savings. Wall Street Reform enables us to strengthen the overall financial system while preserving the critical function of Main Street banks.”

The Treasury blog includes an infographic that purports to show how Wall Street Reform helps Main Street banks in six areas: (1) expanding deposit insurance coverage; (2) overhauling deposit insurance assessments; (3) strengthening the deposit insurance fund; (4) regulating nonbank institutions, thereby leveling the playing field; (5) exempting small banks from CFPB examination and requiring the CFPB to consider the impact of proposed rules on small banks; and (6) exempting small banks from many of the new derivatives rules.

So is Dodd-Frank helping community bankers?

Not everyone agrees with Treasury. For example, in its response to the Treasury blog, the American Bankers Association didn’t answer the question with a yes or a no. Rather, it noted that it has identified “multiple issues facing community banks that have stemmed from the Dodd-Frank Act.” These include capital requirements, the creation of the another regulatory supervisor, FDIC coverage and assessment base changes, mortgage finance changes, QM and QRM changes, interchange restrictions, municipal advisor regulations, the OTS/OCC merger, preemption changes, changes for savings and holding companies, new swap regs, and the Volcker Rule.

That doesn’t sound like a yes to us.

The Treasury blog also reminded us of a recent NAFCU Compliance Blog, “Is this What a Level Playing Field Looks Like? 2996 Pages in Six Weeks.”

In NAFCU’s blog, which actually predated the Treasury blog by almost two weeks, Steven Van Beek, reviews some May 24, 2011 testimony by Elizabeth Warren in which the CFPB architect acknowledges, “If we continue on our current regulatory trajectory, traditional banks and credit unions will be put at a further disadvantage that could push many out of business.” Warren added, “The CFPB is committed to working with smaller institutions to reduce regulatory costs.”

Sounds good, right? Well, not in retrospect.

Warren’s testimony, given what has transpired since, prompted Van Beek to add up the page count of just a few of the CFPB’s recent proposals (TILA/RESPA, HOEPA \high-cost mortgages, remittances, mortgage servicing, appraisals, and Reg. B) and pose this question to the CFPB:

Is proposing 2996 pages of new regulations - within a six week period - how you envisioned “working with smaller institutions to reduce regulatory costs”?

Van Beek added one question for proponents of Dodd-Frank and the CFPB: “Is this what a level playing field looks like?”

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