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Trump - Dodd-Frank Reform

2&2 Slider To Leyritz said:
Just because those community banks are doing well for other reasons doesn't mean that the regulation didn't significantly reduce the amount of small business loans available. Those are two different concepts. The ABC store across the street from me is doing well, but that doesn't mean I can get Pappy there.
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huh? The article pointed out that there are multiple variables that impact the health of community banks. The OP stated DF "crippled" small business' ability to invest, which is a gross over-exaggeration. The article pointed out that while the regs did add a layer of added compliance cost to the community banks that the big banks have enough investment diversity to cover/absorb, the community banks can and have made up for it other ways - but the main profit drag on them is low interest rates (coupled with the natural reverberations of the recession on the overall economy - which ironically could have been avoided by....proper regulations)

I know it fits your narrative to bogeyman regulations, but you haven't proven anything here and neither has the OP. The evidence does not support you. :noidea:
 
Obviously there are higher reg costs for community banks post D-F but having been a credit officer for a big-ish bank that competed against community banks I can say with certainty they were still putting shit loans out there, especially in the small business arena, that a large bank wouldn't dream of. A lot of the regulatory action is tiered by total asset size and the smaller CBs still have a lot more flexibility than the big boys.

I know #anecdotes and all but it's hard for me to imagine looser credit standards on small business lending out there is needed.
 
We actually got a note from our broker-dealer today indicating that the Trump administration plans to either delay or do away with the implementation of the Department of Labor's fiduciary rule. Shame from my perspective; wasn't going to have any affect on the way I do business but would have curbed practices of other advisors who sometimes skirt the line between what's best for the client and what's best for their bottom line.
 
bmoneydeac said:
Obviously there are higher reg costs for community banks post D-F but having been a credit officer for a big-ish bank that competed against community banks I can say with certainty they were still putting shit loans out there, especially in the small business arena, that a large bank wouldn't dream of. A lot of the regulatory action is tiered by total asset size and the smaller CBs still have a lot more flexibility than the big boys.

I know #anecdotes and all but it's hard for me to imagine looser credit standards on small business lending out there is needed.
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How dare you give actual, practical and direct knowledge!
 
Interesting that the ICBA as well as Ben Bernake both noted the negative impacts of Dodd-Frank on small business and farm loans. We're talking about a law that has tens of thousands of pages of regulations and no doubt imposes billions of dollars in compliance costs across the economy. Bank of America will absorb those costs. For a community bank new hires that are not geared towards driving revenue are very meaningful. Per the Minneapolis Fed Reserve Office - adding just two staff members at a small bank not focused on raising revenue would cause a third of all these banks to be unprofitable. And you wonder why they may be taking added risk? It isn't really a hard equation.

Banks represent about 85% of the capital raise for small business. And over half of that comes from small community banks. And small community banks facing increased costs have been merging with larger banks or struggling. 17% of credit unions went out of business between 2010 and 2015 - largely as a result of this regulation and its costs (96% of credit unions manage / control less than $100MM in assets). And 14% of community banks between 2010 and 2014 were absorbed by bigger banks (largely on the back of this law).

At the end of the day a law like this helps large institutions consolidate themselves in their position. And the smaller guy faces an out sized impact on their business. The big guy already has advantages. But since D-F's passage the big guy's consolidation of market share has doubled from the pace it achieved on average between 1994 and 2010. Yet those of you who would normally want to help the small guy and would complain about the big guy are defending against any reform? That's a bit surprising to me. Especially since consolidation can serve to increase the overall risks tied to the financial system - not mitigate it.
 
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2&2 Slider To Leyritz said:
Also, and this has gone largely unpublicized, but the lack of viable funding options opened up a huge amount of sheisters/scammers to prey on small businesses. I've had several acquaintances get duped into private lender schemes where they are to put up $5k or $10k as origination fees for alleged group non-institutional bank loans, allegedly backed by large bank or international letters of credit, only to have the brokers claim that the loan "fell through" and run off with their money. The scammers will line up 10 or 20 businesses in a pool, collect the consolidated fees, and go dark on all of them at once. The FBI has been chasing them and trying to freeze accounts and sue them for recovery, but that money is long gone by that point.
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And it isn't surprising. If the small banks get forced into stern terms by the big banks and are unable to lend, guess who would rush in to fill the gap for small businesses like farms, etc.? Loan sharks, etc.
 
DeacMan, do you know anything about propose reform or are you just assuming any reform will benefit small businesses? I think it's possible reforms under this administration could tilt the balance further toward big banks and hurt small businesses.
 
WakeandBake said:
huh? The article pointed out that there are multiple variables that impact the health of community banks. The OP stated DF "crippled" small business' ability to invest, which is a gross over-exaggeration. The article pointed out that while the regs did add a layer of added compliance cost to the community banks that the big banks have enough investment diversity to cover/absorb, the community banks can and have made up for it other ways - but the main profit drag on them is low interest rates (coupled with the natural reverberations of the recession on the overall economy - which ironically could have been avoided by....proper regulations)

I know it fits your narrative to bogeyman regulations, but you haven't proven anything here and neither has the OP. The evidence does not support you. :noidea:
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Nobody on this thread, other than you, is discussing the overall health of community banks; their health is not the issue. The issue being discussed was small business access to financing. The point is that community banks' inability to offer financing to small businesses because of DF hurts those small businesses. Whether or not the community bank is able to make profits elsewhere instead of via small business loans is not relevant to the impact of DF on the small businesses that cannot get the loans.
 
DeacMan said:
Interesting that the ICBA as well as Ben Bernake both noted the negative impacts of Dodd-Frank on small business and farm loans. We're talking about a law that has tens of thousands of pages of regulations and no doubt imposes billions of dollars in compliance costs across the economy. Bank of America will absorb those costs. For a community bank new hires that are not geared towards driving revenue are very meaningful. Per the Minneapolis Fed Reserve Office - adding just two staff members at a small bank not focused on raising revenue would cause a third of all these banks to be unprofitable. And you wonder why they may be taking added risk? It isn't really a hard equation.

Banks represent about 85% of the capital raise for small business. And over half of that comes from small community banks. And small community banks facing increased costs have been merging with larger banks or struggling. 17% of credit unions went out of business between 2010 and 2015 - largely as a result of this regulation and its costs (96% of credit unions manage / control less than $100MM in assets). And 14% of community banks between 2010 and 2014 were absorbed by bigger banks (largely on the back of this law).

At the end of the day a law like this helps large institutions consolidate themselves in their position. And the smaller guy faces an out sized impact on their business. The big guy already has advantages. But since D-F's passage the big guy's consolidation of market share has doubled from the pace it achieved on average between 1994 and 2010. Yet those of you who would normally want to help the small guy and would complain about the big guy are defending against any reform? That's a bit surprising to me. Especially since consolidation can serve to increase the overall risks tied to the financial system - not mitigate it.
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first, you just assumed up there that since there are a lot of pages it "no doubt" imposes billions.... you gotta do better than that. As to the added burden of compliance, you gotta weigh the effects of not having good regs on small banks (see post above form bmoney). As my article pointed out, many small banks are finding ways to make profits.

Second, D/F didn't happen in a vacuum. Correlation isn't causation. The reverberations of the recession and low interest rates have been the driving force, per the guy who heads the community bank association in my quote.
 
2&2 Slider To Leyritz said:
Nobody on this thread, other than you, is discussing the overall health of community banks; their health is not the issue. The issue being discussed was small business access to financing. The point is that community banks' inability to offer financing to small businesses because of DF hurts those small businesses. Whether or not the community bank is able to make profits elsewhere instead of via small business loans is not relevant to to impact of DF on the small businesses that cannot get the loans.
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no its no irrelevant at all, it is germane. The argument was that DF hurt community banks' bottom lines and in some cases shuttered them, leaving fewer options for small businesses (crippling was the term) to invest. A profitable thriving community bank is able to offer more/better loans and take more risk, no? And the more community banks are open and thriving is better for small business - it was your argument. :noidea:

your quote:

DF was significantly reducing small banks as a financing option for small businesses, who can't get attention and/or reasonable deals from the larger banks. So the net result is that DF was significantly inhibiting small business' ability to get funding.
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WakeandBake said:
no its no irrelevant at all, it is germane. The argument was that DF hurt community banks' bottom lines and in some cases shuttered them, leaving fewer options for small businesses (crippling was the term) to invest. A profitable thriving community bank is able to offer more/better loans and take more risk, no? And the more community banks are open and thriving is better for small business - it was your argument. :noidea:

your quote:
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No, that wasn't the point. You're missing it. They survived in other ways that didn't involve lending to small businesses.
 
 
WakeandBake said:
first, you just assumed up there that since there are a lot of pages it "no doubt" imposes billions.... you gotta do better than that. As to the added burden of compliance, you gotta weigh the effects of not having good regs on small banks (see post above form bmoney). As my article pointed out, many small banks are finding ways to make profits.

Second, D/F didn't happen in a vacuum. Correlation isn't causation. The reverberations of the recession and low interest rates have been the driving force, per the guy who heads the community bank association in my quote.
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OK. $36 billion good enough for you. That's per Forbes. $10.4 billion last year alone. And they still have not written or implemented many of the rules . . . six years after the law was passed. And your point about some small banks still making profits is noted. That's the whole idea of a business. And you cannot deny the overall impact in the reduction of small banks and credit unions since the law's passage. Are you for further consolidation in the banking industry? If so, I'm surprised.
 
ArsenalDeac said:
We actually got a note from our broker-dealer today indicating that the Trump administration plans to either delay or do away with the implementation of the Department of Labor's fiduciary rule. Shame from my perspective; wasn't going to have any affect on the way I do business but would have curbed practices of other advisors who sometimes skirt the line between what's best for the client and what's best for their bottom line.
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This is the biggest thing that sticks out to me. The Fiduciary Rule was going to be a win/win for everybody involved except for those trying to take money off of retirees and people who are uneducated, and now it won't be put into place in April.

The fact that they think it's "overly protective of people who don't need protecting" is comically out of touch.
 
That was not the argument they were making. They are moving the goalposts.

The argument is that D/F hurts small business.

How?

By putting more regs on small banks, who are small businesses' main lenders.

How?

The new regs meant more compliance costs, and small banks don't have the profits of the bigs, and therefore couldn't absorb the added cost and still offer loans to small businesses like they did before.

How does that affect small businesses?

Many community banks closed, limiting the options for small businesses to find loans.

Is it accurate?

Many closed, but new regs played only a partial role in this, and other factors played a larger role ie: low rates and heavy recession toll on economy.
 
DeacMan said:
OK. $36 billion good enough for you. That's per Forbes. $10.4 billion last year alone. And they still have not written or implemented many of the rules . . . six years after the law was passed. And your point about some small banks still making profits is noted. That's the whole idea of a business. And you cannot deny the overall impact in the reduction of small banks and credit unions since the law's passage. Are you for further consolidation in the banking industry? If so, I'm surprised.
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lol if they havent written or implemented any of the new rules, how has it "crippled" small business? Settle down and stop contradicting yourself.

$10.4 billion is what percentage of the gross community banking industry? Sounds like a big number so Im interested to hear how much of a slice of the overall industry that makes up.

I am for the little guy. In fact, my wife and I just took out a small business loan last month from a microlender.

I'll add that I am not against tweaking to account for economies of scale etc, but you haven't said what the reform is, so I am assuming you want to rip the regs away.
 
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