The Subcommittee on Financial Institutions and Consumer Credit held hearings Wednesday on the effect Dodd-Frank will have on small businesses and financial institutions.
Witnesses railed against the Durbin amendment, which would reduce the swipe fees that small businesses pay on every credit and debit card sale, and expressed continued concern about the Consumer Financial Protection Bureau's role. Establishing price-controls for interchange fees, the witnesses argued, would severely limit banks' profitability, stifle innovation and lower productivity.
John Buckley, president and chief executive officer of Gerber Federal Credit Union, expressed pleasure that the Financial Stability Oversight Council would have some veto power over rules proposed by the CFPB, but argued that that power should be strengthened.
Witnesses almost unanimously agreed that regulations imposed by Dodd-Frank would be overly burdensome. The lone voice of dissent came from Peter Skillern, executive director of the Community Reinvestment Association of North Carolina, who called the Act "small business friendly."
"Small businesses are facing a tougher credit market and slower recovery," Skillern told members of the Subcommittee; he said the Act "stands up for the little guys" in the industry, and will provide a "level playing field" for small financial services companies to compete with megabanks and non-regulated financial services companies.
"Most importantly, Dodd-Frank provides a more stable financial system for small banks and small businesses by mitigating the systemic risks and lending abuses by megabanks and unregulated financial institutions that catalyzed the financial crisis," he said.
His fellow panelists disagreed. Albert Kelly, president and chief executive officer of Spirit Bank, on behalf of the American Bankers Association, said that the health of the banking industry is closely linked with the economic strength of the nation's communities.
"Banks are working every day to make credit available," Kelly said. "Those efforts, however, are made more difficult by regulatory costs and second-guessing by bank examiners." The cumulative burden of Dodd-Frank's rules would demand a massive consolidation on banks' parts, he said.