New Law a Positive Step for State, National Economies

August 15, 2018

The passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act (S.2155) by Congress this past May is an important step forward that will help unshackle banks and credit unions – and our economy – from Obama-era regulatory burdens put in place as part of the 2010 Dodd-Frank Act.

I had the opportunity to advocate for passage of the bill during several visits to Washington, D.C. Last fall, State Banking Commissioner Bob Davis and I met with members of the S.C. congressional delegation, including meetings with Sens. Graham and Scott, to share how this legislation would positively impact our S.C.-based community banks and credit unions. This spring I visited Secretary of the Treasury Steve Mnuchin to further champion deregulation.

The bipartisan legislation, signed into law by President Trump on May 24, is an important step toward freeing our economy from overregulation while maintaining needed safety and soundness.

S.2155 doesn’t overturn Dodd-Frank, but rather makes technical corrections and adjustments to improve financial operations and reduce burdensome regulations.

Dodd-Frank created a regulatory nightmare for our local community banks and credit unions, effectively punishing institutions that played no role in the financial crisis of the Great Recession.

These small- to mid-sized institutions are vital to the well-being of cities and towns across South Carolina. There were many aspects of Dodd-Frank, such as more onerous mortgage regulations and one-size-fits-all banking regulation, which hindered rather than helped our state.

Some of the immediate results expected from the act include:

Helping small- and mid-size banks and credit unions to be able to make more mortgage loans to families;
It shields elderly consumers against fraud by encouraging bank staff to report with immunity suspicious behavior if they suspect seniors could be getting financially scammed; and
It allows community banks and credit unions to operate without being tied up in expensive and excessive red tape.

What S.2155 doesn’t do, contrary to what some claim, is weaken consumer protections, deregulate massive global banks or “gut” Dodd-Frank.

The new legislation represents financial regulatory reform that will allow banks and credit unions, particularly medium and smaller institutions, to focus more of their time and resources on serving their customers and communities.

What that means is South Carolinians will see their banks’ and credit unions’ regulatory costs reduced. Savings can be passed on to consumers in the form of lower interest rates on loans and higher interest on savings accounts, checking accounts, certificates of deposit and other financial products.

Dodd-Frank, which has grown to more than 22,000 pages of regulations, is a good example of what is often called the law of unintended consequences.

It may have been will-intentioned, but Dodd-Frank was passed while emotions were inflamed and ultimately proved more punitive than positive.

The new legislation is a step in the right direction of modernizing financial regulations that make sense for both consumers and our financial institutions.

By helping community banks and credit unions meet the needs of their customers as the Economic Growth, Regulatory Relief, and Consumer Protection Act does, everyone benefits.