by Mitch Kokai
Senior Political Analyst, John Locke Foundation
By imposing a massive load of new regulations on banks, supposedly for the purpose of cracking down on risky behavior by those “too big to fail,” Congress made life much harder on small and mid-sized banks.
Contrary to popular belief, large corporations love regulations. They have the resources to keep lawyers and compliance departments on staff in order to navigate the maze. But the compliance costs are much harder for smaller competitors to bear.
In an attempt to punish big banks, Dodd-Frank instead sped the consolidation of the banking industry. Consumers suffered as small banks increased fees and cut services to cover compliance costs. The burdensome regulations were one reason among many why the recovery from the Great Recession was so slow.
Last week, the U.S. Senate reached a bipartisan agreement to roll back some of the worst parts of Dodd-Frank, lifting regulations on banks with between $50 billion and $100 billion in assets, and lightening federal oversight of banks with up to $250 billion in assets.
Senate Republicans were joined by 17 Democrats, including New Hampshire Sens. Jeanne Shaheen and Maggie Hassan. Shaheen voted for Dodd-Frank in 2010, but even sponsor Rep. Barney Frank acknowledges the bill went too far.