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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.Home > Blogs > A Matter of Opinion > Archives > 2009 > October > 06 > Entry
Guest column: Act would limit small banks’ ability to cater to customers
This column is written by John J. Limbert, president of National Bank & Trust Co. in Wilmington.
I disagree with Richard Stock’s Sept. 8 commentary, “Bankers tying consumers to railroad tracks yet again.”
Stock must have left the theater early, because in many of those old movies, the “consumer” was rescued by good old Dudley Do-Right, or, in present-day terms, the community bank.
The Consumer Financial Protection Act that Stock is so passionate about would create a sweeping, powerful new government agency to regulate hundreds of thousands of businesses that either directly or indirectly extend credit and allow customers to pay over time, including through layaway plans and gift cards.
However, regulation of the lenders that are not depository institutions would still rest with the individual states, which failed to take swifter action to regulate the non-bank lenders that provided much of the subprime credit that Stock complains about.
In 2007, Ohio finally placed regulation on mortgage brokers and non-bank lenders. They are now subject to the state’s Consumer Sales Practices Act, which is among the toughest consumer laws in the country. Ohio’s attorney general is going after fraudulent lenders that are harming consumers, and he should.
Meanwhile, the proposed new regulator would do little to nothing to protect consumers. The new agency would, however, have the ability to determine what products are sold to whom, how they are sold and at what price. There will be no more entrepreneurship within the banking industry. We will all be forced to offer the same “vanilla” products at the same price.
Think about this when you shop at a local grocery or jewelry store that knows you by name and finances your purchases via its private layaway plan or private credit card. The unintended consequences will be staggering.
This new agency would have powers to regulate more than 45 industries, and add yet another layer of government bureaucracy to an already disjointed and dysfunctional system.
No one disagrees that consumers need to be protected from abusive practices. But community banks are not the problem. We operate fairly and honestly and always put customers first. That is what separates a local bank from the out-of-town suits at the mega banks.
Don’t take away my ability to meet the special needs of my customers. While community bankers didn’t get involved in the exotic financial products that got Wall Street in trouble, there are countless examples of local bankers offering non-standard loan products to help consumers. Under the proposed Consumer Financial Protection Act, a community banker would have a much harder time helping customers because of new regulatory restrictions, and costs to consumers would be higher.
My bank simply can’t absorb more fees and assessments, more paperwork and compliance costs, and further examinations from a new regulator. U.S. Rep. Barney Frank’s H.R. 3126 empowers the Consumer Financial Protection Act with nearly unlimited authority in each of these areas.
My bank is already well regulated and supervised and subject to robust consumer compliance exams by existing bank regulators. Community banks like mine don’t have the luxury that the mega banks do of having a fleet of lawyers and dozens of compliance officers to figure out how to shift these new costs around.
Call or e-mail your representative in Congress and tell him or her to not vote for H.R. 3126. It would be bad law.
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