Will the CFPB serve up a small financial institution Rapture?
Investor's Business Daily reports the American Bankers Association is less than thrilled with the Consumer Financial Protection Bureau in the future. With the new Dodd-Frank Act rules expected, small banks fear that Consumer Financial Protection Bureau bureaucracy will drown them out of business. It's the kind of change small banks can't see a good reason in which to believe.
Consumers protected with enforcement
All United States Financial institutions should watch out since "change is coming" and they'll have to follow new rules, according to interim chief of the CFPB, Elizabeth Warren. Warren has spoken time and time again about how the United States consumers' financial rights will be protected by the Consumer Financial Protection Bureau with the Customer Financial Protection Bureau's budget. Half of the spending budget will be going to supervision and enforcement.
Community banks and credit unions are worried about their own Rapture
By the end of the decade, over 1,000 banks will most likely go out of business if the Dodd-Frank rules are established, according to ABA representatives. Any information requested, in any format requested, must be given to the Consumer Financial Protection Bureau by banks. The resources taken to put this together could be devastating to small banks. The Home Mortgage Disclosure Act is meant to stop predatory lending, which the CFPB would want to make sure of. The bureau will probably ask for even more information from a borrower so it can decide if there has been any discrimination.
ABA Chairman Stephen Wilson told Investors Business Daily that all of this amounts to bad news for community banks and credit unions, as smaller financial institutions tend to make loans that larger banks keep away from. There are fewer sources of capital if small banks start shutting down. This is passed on to customers in higher rates and fees, argues Wilson.
"If we tie up our capital system, it's going to take money away from the people who need it to create jobs," warned U.S. Chamber of Commerce President Tom Donohue.
Some don't want Elizabeth Warren
The Consumer Financial Protection Bureau doesn't have a chairman still even though it is anticipated to launch on July 21. Elizabeth Warren will likely be nominated by Obama, but numerous lawmakers who support the banking industry have attempted to derail the Warren nomination. The Consumer Financial Protection Bureau has too much power, Republicans argue. Warren is hoping the Consumer Financial Protection Bureau will be "toothless" she claims.
In just two and a half years, the Sarbanes-Oxley Act of 2002 changed 16 rules. Over 250 rule changes will be required by the Dodd-Frank Act in a matter of years.
Citations
American Bankers Association
aba.com/default.htm
Florida Realtors
floridarealtors.org/NewsAndEvents/article.cfm?id=259538
Investor's Business Daily
investors.com/NewsAndAnalysis/Article/572889/201105201812/1000-Small-Banks-May-Be-Shut-Down-Due-To-Dodd-Frank.htm
sec.gov/about/laws/soa2002.pdf
Rep. Sean Duffy (R-Wisc.) fights for community banks and credit unions
youtube.com/watch?v=8yqmp_kIucQ
