Saturday, July 25, 2015
Hartzler: Dodd-Frank has made it tougher to get a mortgage
After the financial collapse in 2008, in an effort to rein in the power of banks considered “too big to fail,” Congress passed the Dodd-Frank Wall Street Reform bill, applying new regulations to the financial sector. Five years after its implementation, however, Dodd-Frank continues to do the opposite of what it proposed, consolidating financial assets and power in Wall Street at the expense of those on Main Street.
One of the primary reasons for Dodd-Frank’s failure is the faulty premise that financial deregulation caused the crisis. The cause was the poor quality of regulations, not the quantity. Dodd-Frank compounded the problem, imposing a host of new regulations without differentiating a trans-national global bank from your local credit union.
Not accounting for the fact that a local credit unions’ needs may differ from, say, Goldman Sachs’, Dodd-Frank turned “too big to fail” into “too small to succeed.” To that point, facing an additional $1 million in Dodd-Frank regulatory burdens, the owners of Shelter Financial Bank in Columbia decided it was too costly for the bank to run profitably. In September 2012, Shelter Financial closed its doors.
Dodd-Frank has resulted in a loss of a valuable source of business capital. It has made it tougher for low- and moderate-income Americans to secure a mortgage to buy a home. It has even curtailed or eliminated some bank services, such as free checking, that we used to take for granted. Further, this policy is still forcing smaller banks across the nation to either close or merge with larger banks—exacerbating the problem by forcing more money into bigger banks.
Small banks are closely tied to communities, serving their neighbors and friends with whom they have formed a local bond. Many of your friends and neighbors may rely on these institutions for everything from everyday banking to large loans to start a small business. These are valuable institutions, and they are under attack from big-government policies like Dodd-Frank.
Alongside my colleagues in Congress, I am working to remove the detrimental effects of Dodd-Frank and ease the burden on small banks and credit unions who can best meet the needs of the people and local communities they serve.