Dodd Defends His Legislation

Christopher Dodd - as in co-author of Dodd-Frank - defended a few criticisms in the Washington Post a few days ago.  A gem from this article:

"Small community banks were victims of the crisis, with hundreds failing as a result of the big banks’ risky gambles. That’s why they came to Congress and asked us to modernize and strengthen financial regulations, leveling the playing field against the shadow banking industry — entities such as payday lenders and mortgage brokers that had been created to avoid regulation.

"In one of the recent GOP debates, former Massachusetts governor Mitt Romney said that Dodd-Frank is “a killer for the small banks.” In fact, community banks, which were not responsible for the crisis, will pay lower premiums for deposit insurance and continue to work with their existing regulators. And in a nation with more than 6,000 banks, the bulk of the bill’s new regulations apply only to a few dozen of the largest ones, each holding more than $50 billion in assets.

Many community banks are concerned that regulators such as the FDIC have become overzealous. But that is a product of the post-crisis environment and not a result of this law, which, by design, will help community banks continue to serve as a lifeline to small businesses." -Chris Dodd, 2011

FDIC Exposer begs to disagree, as we have throughout this blog.  We wonder exactly what community banks Mr. Dodd is referring to.

Mr. Dodd quotes Mitt Romney above, and this is the statement he is referring to:

"What's happened in this country, [is] the absolute wrong time to have the absolute wrong people put together a financial regulatory bill was right now and Barney Frank and Chris Dodd. They were the wrong guys at the wrong time. Because what they did with this new bill is usher in what will be thousands of pages of new regulations. The big banks, the big money center banks in Wall Street, they can deal with that. They have hundreds of lawyers working on that legislation. For community banks that provide loans to business like yours, they can't possibly deal with a regulatory burden like that. Small community banks across this country are starving and struggling because of inspectors that are making their job impossible. It's a killer for the small banks. And those small banks loaning to small businesses and entrepreneurs are what have typically gotten our economy out of recession." -Mitt Romney, 2011

This may be a presidential candidate pandering to the little guys, or it could be the real deal.  Either way, this is an opportunity to make community banks, and their ties to small business, a major campaign point.