Treasury defends Dodd-Frank to community bankers

Wolin’s comments come after some in the banking community have said that small banks would face excessive regulations under Dodd-Frank, and as the House Financial Services Committee is preparing to take aim at the law this week. Rep. Spencer Bachus (R-Ala.), the chairman of that panel, also addressed the ICBA summit on Monday, telling attendees that Dodd-Frank would harm small banks, even though they didn’t contribute to the financial crisis. 

Bachus’s committee is scheduled to mark up this week, among other measures, a bill he introduced that would place a bipartisan, five-member panel atop the new Consumer Financial Protection Bureau instead of a single director, an idea that has been endorsed by ICBA. Legislation that would make it easier for the Financial Stability Oversight Council to overturn CFBP rulings is also on the committee’s agenda.

At the conference on Monday, Bachus made the case that his CFPB bill would put the new bureau in line with other government entities that are led by commissions rather than directors, including the Securities and Exchange Commission and the Federal Deposit Insurance Corp. He added that the House had voted to have the CFPB run by a commission during the debate over Dodd-Frank, but the plan was later dropped in conference.

“Some in Washington have reacted to this idea as though I’m attacking motherhood and apple pie,” Bachus said. “You would think the idea of having a bipartisan commission govern an independent agency was simply unheard of.”

For his part, Wolin said that that the team implementing the CFPB would at times create panels to gather input from small banks when considering whether to propose a regulation, and that CFPB staff were already reaching out to community banks and credit unions.

He also said that Dodd-Frank, among other things, rolled back the funding leg-up that larger banks had, and would bring tougher standards on capital for those bigger institutions. 

And he noted that Camden Fine, ICBA’s president and chief executive, had said that financial reform “bodes well for community banks.”

“As community bankers, you understand the devastation of the financial crisis,” Wolin said. “You know the families who have lost their homes. You know the small-business owners who have closed up shop. And many of you — like those businesses — have suffered from the effects of a financial crisis that you did not cause.”