President Trump delivered on a campaign promise, again. Dodd-Frank did not just hinder banks, it slowed growth in middle America. This upcoming year will be the time to get a mortgage or a loan from a bank that understands you.
This year, I know, I ranted and raved about the evils of Dodd-Frank. I asked you to think about the small and community banks. I showed you how it is slowly bleeding out middle America. I tried to explain how that affects you, no matter where you live. I was relentless.
I get it. It might have been overkill.
But, the personal biases for my small town people be damned. When Congress signed off on Dodd-Frank changes, it wasn’t just good for my country bumpkins — it was a victory for you.
The changes will loosen restrictions on the real backbone of American lending and keep the restraints on those ivory tower jerks who brought the housing market to a screeching — crashing — halt.
This isn’t Donald Trump trying to help Wells Fargo and PNC. He is the priest exorcising the banking regulation demon from the small communities of the country. Then the host body, well, bank can be healthy again.
So what changed?
Banking used to be about common sense, but after 2008 it turned into ‘common cents.’
Dodd-Frank took the personal touch out of bank loaning. I understand to most people loaning is a dollar game. However, there is a face to value on each loan.
The Qualified Mortgage rule took the actual loan borrower out of it. The loans had to meet the standard of government loans. Unbending, unwavering, inflexible standards. Long story short, it made it difficult to even qualify for a mortgage.
Then you factor in the very obvious “Ability to Repay” law and there can be no margin of error for lenders. If the borrower has a good history with the bank, but does not meet the check boxes on the form, no loan.
How bad did it get? Loans based on relationships drop 5 percent across the board. That had a profoundly chilling effect on both banks and the communities they serve.
The new law offered small banks a way out. It did it without letting big banks off the hook for regulations.
With the deregulation, small banks have an opportunity to go back to the personal loaning process. They can add the human element back into the process.
Dodd-Frank also cost community banks more. To keep up with the compliance in loaning, many banks would have to hire compliance officers or buy software. Often times the cost outweighed the profitability.
When it gets to the point that it costs more to regulate the loaning than bringing in new business, that is enough to cause a bank to stop loaning. This was the case across the country for community banks.
Under the changes to Dodd-Frank, now the threshold for some of those more burdensome regulations will go from $50 billion to $250 billion. Keep the fat cats in check, but allow the small and medium banks to go back to business.
Remember, they didn’t shoulder most of the blame for 2008. That was the big banks! But, those small and community banks do some heavy lifting for America.
How does this help you?
Small and community banks are the lifeblood of America. Whether you want to admit it or not the coasts need middle America. If not for the generation of economy, then for food. You know, farmers.
Those lesser banks control a small portion of America’s banking assets, but they provide a significant amount of our country’s small business loans and nearly all of our farming loans.
We need these banks to thrive for our country to thrive. That helps you in a litany of ways.
More importantly, this year business loaning and mortgage lending will take off. Mark my words. Remember, there will always be a few predators lying in wait with bad loans. There is nothing that can be done about that.
However, if you are in the market for a loan or a mortgage, it is more likely you will not only qualify, but receive a favorable pay back plan. If not, there will be other banks where you can shop around.
That is the true success of this deregulation: competition. The rules of Dodd-Frank sucked on the soul of lending competition for years. It killed hundreds of banks and left middle America struggling to come out of the recession.
Trump got to the heart of the demon and exorcised it from the banking system of America. May we now flourish. (If you can’t tell, I was raised Catholic.)
Article last modified on July 19, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: The Devil in Dodd-Frank Part 2: Exorcising the Demon - AMP.
Article last modified on July 19, 2018. Published by Debt.com, LLC .