Warren: Big banks should stop using smaller ones to weaken regulations

by 16 Feb 2015
Last week, Sen. Elizabeth Warren (D-Mass) claimed the 2010 Dodd-Frank Wall Street reform law has helped benefit community banks and small lenders rather than big banks.
Warren, an outspoken lawmaker for the mortgage industry, made the statement at a Senate Banking Committee hearing on community bank regulations, where she also rebuked Daniel Blanton, chairman-elect of the American Bankers Association (ABA), who testified according to The Hill.
“If you claim community banks were particularly hard hit by Dodd-Frank’s new rules,” Warren asked Blanton, “why are they making more money since the rules went into effect and doing much better than big banks?”
Blanton, as well as community banking representatives, have stood up for exemptions from parts of Dodd-Frank, like mortgage lending stipulations that they said should be applied only to big banks. They are afraid that small and medium banks will feel the repercussions from the big banks’ role in the 2008 economic collapse.
Warren demonstrated small banks have been profitable since the financial collapse by pulling data from the Federal Deposit Insurance Corporation (FDIC). The information showed community bankers’ earnings increased at a higher rate in 2014 than in the banking industry as a whole, according to The Hill.
Blanton retorted, stating that he did not believe the regulations were making the banks do better. He claimed the process to do mortgages was even more difficult due to the regulations.
“We should be very skeptical of regulatory relief bills that are promoted as helping small banks, but are pushed by ABA lobbyists for the big banks,” said Warren, speaking to her accusation at the hearing that big banks were using small banks to weaken regulations.
Warren also said at the hearing that many bank lobbyists do not necessarily have the interests of community banks at the forefront, as they may portray.
Recently, the Consumer Financial Protection Bureau proposed to tweak mortgage regulations for smaller lenders, a victory for smaller banks and mortgage companies.


  • by PR | 2/16/2015 10:12:49 AM

    More lies from Warren

  • by Warren Goldberg | 2/16/2015 11:18:14 AM

    What world is Elizabeth Warren living in?? Where is she getting this information?

    It may be true that smaller community banks have been more profitable in the past few years. But the profits raked in by the "Big Box Banks" have been RECORD-BREAKING!

    There are a number of reasons which include:
    1) Big Box Banks benefit from economies of scale. The overwhelming costs for compliance per employee are lower when you have 50,000 employees rather than 100 or 1,000.
    2) Because of SAFE licensing requirements, the Big Box Banks all but have their MLO's captive, unable to leave even if they wanted to. (This is ESPECIALLY true in New York.) While MLO's at the Big Box Banks are simply "registered" with the NMLS, if these MLO's wish to resign and go to a small community bank, they would have to be tested and obtain their licenses. While licensing in and of itself is not a bad thing, it is time consuming. Once the Big Box Bank employer learns of their MLO applying for their own license, they are threatened with termination. The result (ESPECIALY in New York) is a Loan Officer who is now unemployed and unable to be hired elsewhere (sometimes for MONTHS) until his licensing is approved by his state.

    Respectfully Ms. Dodd, before making such ludicrous claims which ultimately degrade your credibility as well as insult the thousands of hard-working industry professionals, I suggest you confirm your facts with one of our industry's reputable trade groups, rather than your office's spin doctors.

    Warren Goldberg, CMPS®
    President, Mortgage Wealth Advisors, Inc.

  • by JOHN DURHAM | 2/16/2015 12:11:09 PM

    I find it hard to believe you are sincere. Anyone who has done even a small amount of research into the financial position of TBTF banks has learned they are insolvent (from "off book" bets) and the FED is doing everything they can (buying $Trillions of their hot derivatives, giving them unlimited money at near zero interest) to keep them afloat. Additionally, even though the big banks own Congress and are making the People pay their debts, you are writing the first piece I've read written by anyone who says these banks are in the money. Where do you get your information from, Cracker Jacks boxes?


Is TILA-RESPA a good or bad thing long term?