Warren: Wall Street using small banks to weaken rules

Sen. Elizabeth Warren (D-Mass.) says big banks are using small banks to weaken financial regulations.

The accusation came during a Senate Banking hearing on Tuesday that sought to examine ways to provide regulatory relief to community banks and credit unions.

Warren said big Wall Street firms bent on beating back rules set forth in the Dodd-Frank financial reform law are behind the push.

{mosads}”The big banks are going to keep using the small banks as cover for their special rollbacks,” Warren said. “That’s what they did before the [2008 economic] crisis and that’s what they’ve been doing after the crisis. We shouldn’t fall for that trick.”

Most regulators define a community bank as having less than $10 billion in assets, among other criteria. Community bank officials are pushing to increase that limit to $50 billion so that they qualify for the same Dodd-Frank exemptions as big banks.

By comparison, JPMorgan, the largest U.S. bank, reported $2.6 trillion in assets in 2014.

Community bankers argue that the 2010 law has unfairly burdened the community banking industry and that Dodd-Frank regulations written to rein in the biggest banks are crippling growth in their industry.

Sen. Richard Shelby (R-Ala.), the panel’s chairman, and other Republicans have signaled that they would like to use the new GOP-controlled Congress to provide regulatory relief against Dodd-Frank.

“Unfortunately, we have heard that innovation tailored for Main Street is being smothered by unnecessary regulations originally designed for Wall Street,” Shelby said at the hearing.
 

Shelby said that “added regulations have caused hundreds of banks and credit unions to simply stop offering certain products. They are instead forced to spend valuable resources on compliance staff.”

Warren’s opposition comes as the community banking industry is taking particular interest in getting exemptions from regulations coming out of the Consumer Financial Protection Bureau (CFPB) — the agency she fought to have created as part of Dodd-Frank before she was elected to the Senate.

“Rolling back important protections to help the bigger banks just puts community banks at a greater disadvantage,” Warren sad.