Sen. Elizabeth Warren has a talent for asking questions and for following logic. Watch her skewer Chairman-Elect of the American Bankers Association (ABA) Mr. R. Daniel Blanton at the Senate Banking Committee hearing on February 12, 2015.

Regulatory Relief for Community Banks and Credit Unions

We’ve heard a lot today about how smaller banks are being smothered by unnecessary regulations supposedly because of Dodd-Frank rules like the new mortgage rules that went into effect in the first quarter of 2014. Now, I’ve been looking for some hard data to support that claim.

According to the latest report from the FDIC, the banking industry as a whole, posted earnings of nearly $40 billion dollars in the third quarter of 2014. That was a 7.3% increase relative to the third quarter of 2013. In other words, the banking industry did substantially better after the mortgage rules took effect in January of 2014.

And here’s the kicker. Community banks did even better than the industry as a whole. According to the FDIC, year over year community bank earnings were up nearly 11%, compared with 7% for the industry as a whole. So, Mr. Blanton, if as you claim, community banks were particularly hard hit by Dodd-Frank’s new rules, why are they making more money since the rules went into effect and are doing better than the big banks?

[… Must Watch …]

The financial performance of the community banks shows that Congress and the regulators have done a pretty good job, I think, of tailoring the rules to protect community banks. 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.

If we really want to help the community banks, let’s start by getting rid of the $85 billion-a-year Too-Big-To-Fail subsidy we give to the biggest banks year after year. Small banks aren’t getting that. Or let’s start by holding big bank executives accountable for committing fraud, like we do with small bank executives for committing fraud. Those are the kinds of changes that would level the playing field for community banks.

— Sen. Elizabeth Warren

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