The Congress is considering a proposal to create a new mega-regulator designed to address abusive financial practices. Not only would this approach undermine small community banks and cause more harm than good, but it also misses the best opportunity to protect consumers: namely, addressing the too-big-to-fail concentration risks among our nation’s biggest banks that have cost Americans over $7 trillion in economic worth.
No one disagrees that consumers need to be protected from abusive practices, but community banks aren’t the problem. Community banks operate fairly and honestly, and always put their customers first. It’s what separates a local bank, with ties to the community, from the out-of-town suits at the big banks. The proposed new consumer financial product regulator will make it harder for community banks to meet the unique needs of consumers and small businesses in our area, and will make consumer products like mortgages and credit cards more expensive for everyone. Small banks like mine can’t afford the fleets of lawyers that the megabanks can to help absorb new costs the government imposes through regulations.
Congress should focus on the unregulated entities and the huge banks that pose a systemic risk to our economy. Community banks and their customers will be harmed if policymakers lump us into the same category, and under the same regulations, as those firms. No disclosure or product approval system like the one before Congress could offset the damage done by a few behemoth financial entities that brought our economy to its knees.
The Commercial Bank