Consequences of Financial Regulatory Reform- Dire Warning of Things to Come

As is always the case in Washington those with money get what they want and those without money get screwed. It happens all the time, a crisis occurs in our country and Congress begins meddling with the system by passing more laws. The fact of the matter is that the banking crisis could have been avoided if Congress had not demanded that banks provide loans to low income people who couldn't afford the price of the house in the first place. The end result is that Fannie and Freddie are both now broke and continue to require cash infusions by the government each month just stay in business. Congress is now on the verge of passing the largest bank reform bill in history which they say that it will prevent a crisis from occurring next time. But it won't prevent anything. First the current bill was written by the large banks so it contains enough provisions so it doesn't hurt them in the least. Second more regulations always mean more costs to do business which while it can be absorbed by the large banks cannot be absorbed by their competitors, the small community banks. The big banks win and the small banks, the ones that lend to the small farmers and small businesses in this country, lose. Great job as always Congress you have now killed ability of small businesses to get access to the cash they need to create jobs and make this country prosperous.

From the WSJ Opinion Page
The End of Community Banking


Creditworthy borrowers will be denied loans as small banks devote more and more energy to regulatory compliance.

By SARAH WALLACE

The comprehensive financial reform agreed upon by the House and Senate on Friday, along with all the new regulations of the past year, could signal the end of community banking. The new reforms will give more power to the Federal Reserve to regulate how my bank and others like it do business.

What does all this mean for our customers? Less credit will be available, costs will increase, and we will be less able to make loans to regular people who were creditworthy in the past. This is the perfect storm for the small retail banking customer. We will start to see more small community bank failures and mergers because of voluminous regulation.

I have served as the president and now the chair of the board of directors of First Federal Savings and Loan Association in Newark, Ohio, since 1980. First Federal is a $200 million, federal mutual thrift. We were created to provide people a safe place to deposit their money, and loan that money back into the community in order to meet housing needs. Additionally, we utilize a significant portion of our profits to give (yes, I said give—not lend) to worthy community organizations and projects.

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