Iowa families, farmers and businesses benefit from Dodd-Frank reform

Over the past year, Congress and President Trump have taken a hard line on repealing burdensome regulations across all sectors in order to give long-overdue relief to hard-working Americans and put the economy back on track after nearly a decade of malaise.

Since the start of 2017, there’s been a considerable drop in unemployment, impressive job growth, increased economic opportunity and significant tax relief. However, more needs to be done to assist another important segment of our economy that directly impacts the lives of thousands of Iowans and Americans across the country – small financial institutions.

Whether looking to apply for a home mortgage, small business or agricultural loans, Iowans look to their community banks and credit unions to help finance their dreams. These small financial institutions concentrate on the needs of their communities and improve their local economies. They provide more than 50 percent of small business loans and nearly 80 percent of agricultural loans, and with close to 100 of them throughout Iowa, they are financing the important work of helping Iowans of all stripes to turn their dreams of owning a home, opening and growing a business, or running a family farm into reality.

However, since the passage of the 2010 Dodd-Frank Act, these small lenders have been struggling to survive and provide critical financial assistance to their communities.

Although Wall Street was responsible for the Great Recession of 2008 and 2009, the one-size-fits-all Obama-era regulations implemented in the Dodd-Frank Wall Street Reform and Consumer Protection Act punish community banks and hurt Main Street America instead of being rightly focused on the big banks and other institutions that caused all the problems.

Washington regulations, even when well-intended, tend to place small businesses at a competitive disadvantage because they can’t call upon an army of lawyers, lobbyists and compliance experts. Regulations aimed at reining in big corporations often have the perverse result of making them more dominant by squeezing out smaller competitors.

In this case, small financial institutions are drowning under this misguided law. They simply cannot keep up with complicated regulations and compliance costs, leading to closures and lost opportunities.

According to research from the Mercatus Center at George Mason University, the number of small banks declined by 27 percent from 2000 to 2014. While the decline in small banks began in the early 2000s, it was exacerbated by the increased regulations under Dodd-Frank. Of the small banks remaining, increased resources were put into hiring additional compliance employees while fewer resources were allocated to providing products and services for consumers, such as overdraft protection, home equity lines of credit and mortgage servicing.

While increased regulations may have been aimed at punishing big banks and Wall Street, it’s the Iowa families, farmers and small business owners who have been hurt the most.

The fallout of Dodd-Frank over the past decade was predictable and preventable. That’s why I voted against it. Significant parts of the law have been destructive for Iowa. I’m glad to have had the opportunity to vote in favor of important reform legislation that will help put things back on track for Iowa’s community banks.

The Economic Growth, Regulatory Relief, and Consumer Protection Act streamlines regulations and tailors existing rules to allow small lenders to avoid the complicated regulations aimed at keeping big banks and Wall Street in check. It will also free up resources for small financial institutions, making it easier for them to extend credit, loans and mortgages as well as provide other products and services to working families, small businesses and farmers throughout Iowa and the country.

This legislation is a bipartisan effort and the most significant reform of Dodd-Frank since the law’s enactment. The bill keeps the pressure on Wall Street while targeting relief to the community banks and credit unions that Iowans rely on every day to make their lives happen.

Recognizing the important role small financial institutions play in our lives and doing everything we can to help them succeed is needed for an economy to grow and succeed. The Senate has achieved a smart, bipartisan solution that would allow community banks and credit unions the ability to operate independently of onerous regulations. That, in turn, helps hard-working Iowa families, businesses and farmers achieve their goals. I encourage my colleagues in the House of Representatives to take up this bill and deliver long-overdue relief as quickly as possible.

Chuck Grassley of New Hartford has represented Iowa in the United States Senate since 1980.