Banks push to be excluded from Dodd-Frank Act

by MPA25 Mar 2015
Since Republicans gained control over Congress last year, mortgage professionals have been vying for a change to one of the industry’s biggest regulations—the Dodd-Frank Act.

Now, a coalition of 10 banks have come together to make the pitch that they should not be held to all regulatory restrictions in Dodd-Frank.

 “Regional banks welcome appropriate government regulation, based on risk and business model, to assure our safety and soundness,” William Moore, executive director of the coalition of banks, said.

The 10 banks, including BB&T and SunTrust Banks Inc., are among 31 bank holding companies required by the Federal Reserve to do stress-test assessments twice annually. The stress tests are used to gauge potential impact of a severe economic downturn as part of the Dodd-Frank financial reform law.

Another Dodd-Frank requirement is the writing of “living wills,” which state banks’ plans for dismantling themselves in times of financial duress.

The bank coalition argues that Dodd-Frank treats all banks with assets in excess of $50 billion the same and according to Tony Plath, a finance professor at UNC Charlotte, there is “a world of difference between the operation, business model and level of risk present.”

Moore echoed Plath sentiments, adding that although regional banks are large; their business models closely resemble that of smaller community banks.

"Regional banks didn't cause the systemic financial crisis of 2008, and they don't carry the kind of risk associated with large Wall Street banks," Moore said. "They don't look like the big money center banks, they don't act like them, and they shouldn't be regulated like them."

Plath told the Winston-Salem Journal  he believes the banks will gain traction with regulators and legislators as long as the Republicans maintain leadership.

In a recent survey by the Collingwood Group, respondents in the mortgage industry said reigning in Dodd-Frank would be the most important thing the new Congress could do to improve the housing market.

Fewer than 50% of respondents selected “Repeal Dodd-Frank” or “Abolish the Consumer Financial Protection Bureau (CFPB) and the results that were submitted indicate that industry professionals favor a tempered approach with reasonable modifications to these two reactionary reform measures stemming from the crisis, according to the Collingwood Group.

Many industry professionals felt Dodd-Frank should be revised to remove barriers to innovation and to reduce the cost of building a mortgage.

Back in December, Congress attempted to roll back Dodd-Frank but faced stiff opposition from Senator Elizabeth Warren and her supporters. 


  • by Pat Anderson | 3/25/2015 10:31:13 AM

    I didn't cause it either and want to be excluded from all Dodd Rank regulations too.

  • by Viva la Revolucion | 3/25/2015 12:17:19 PM

    What the small banks fail to realize is that Dodd Frank and the CFPB were designed to run them out of business, and drive all the mtg. business to the "TBTF" banks whose lobbyists they paid to write the legislation, and was passed into law without anyone reading it, and the director of the CFPB was unconstitutionally "recess" appointed, which congress has no spine (let alone desire or incentive) to dismantle. Good luck with that, it's not only not a level playing field, it's a corrupt one to boot.

  • by Cheryl M | 3/25/2015 2:36:57 PM

    Well said Viva! While there many are flaws in Dodd Frank no one seems to be able to fix it starting in small segments and so forth. The CFPB on the other hand from personal customer experiences does work for the consumer (from what I have seen) Though their cfpb "system" needs more transparency (said before) I do not believe the cfpb is driving the small banks out, but evening out the playing field. Think of the Cfpb as a mini arbitration forum for the consumer against those TBTF banks. If you look at the numbers in small doses the cfpb is working. BUt, where are those small doses of fixes in the Dodd Frank Act? The last fix for the cfpb is to provide more transparency in the process of communicating to the consumer the status of an individual complaint. So far, from my experience consumers still do not understand the process and potential value of the cfpb "System" hence, still making them the "Bad Guy." Additionally, the Supreme Court Justices ruled the CFPB appointment was not unconstitutional. Sorry.


Should CFPB have more supervision over credit agencies?