[Congressional Record Volume 163, Number 70 (Tuesday, April 25, 2017)]
[Senate]
[Pages S2515-S2516]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



               Reforming Finance for Local Economies Act

  Mr. KENNEDY. Mr. President, I rise today to discuss my bill, the 
Reforming Finance for Local Economies Act, which I introduced earlier 
this week. This bill is very simple and straightforward. It would 
exempt community banks and credit unions with assets of less than $10 
billion from complying with the loan-killing, anti-jobs disaster that 
we commonly refer to as Dodd-Frank. Every reasonable person with a 
passing knowledge of our banking system knows the destabilizing effect 
that Dodd-Frank has had on local economies, community banks, and the 
Nation's credit unions.
  Just last week, President Trump turned to the problems wrought by 
Dodd-Frank by signing two Presidential memorandums to take a look at 
the Orderly Liquidation Authority and the systemic risk designation 
process at the Financial Stability Oversight Council. I applaud the 
President's efforts in that regard. I believe they are desperately 
needed. Reforming this flawed law is crucial to the future success of 
the American economy.
  Some of my colleagues were here when Dodd-Frank was passed in 2010. 
As we all know, it was intended to prevent another 2008-like banking 
crisis by strengthening Federal Government regulation of financial 
services. But in the process, as so often happens, Congress actually 
crippled America's small community banks and credit unions that played 
absolutely no role--none, zero, nada--in instigating the 2008 meltdown. 
And that is not just my opinion. Our Federal Reserve Chair, Dr. Janet 
Yellen, appeared before the Senate Banking Committee earlier this 
year--actually, February 14. When it was my turn to ask her questions, 
I asked her the following simple question: ``What did community banks 
do wrong in 2008?''
  This was the Chairwoman's answer: ``Well, community banks were not 
the reason for the financial crisis. It was larger institutions that 
took risks and risks that developed outside the banking system.''
  Let me read that first sentence again. Chair Yellen: ``Well, 
community banks were not the reason for the financial crisis.''
  I believe she is right. The fact is that our smaller banks and our 
credit unions are smothering under the weight of Dodd-Frank. I will 
give you an example of what I am talking about. The Truth in Lending 
Act passed by Congress is actually 22 pages long. The Federal Reserve 
Act, setting up our Federal Reserve System, is 32 pages long. Glass-
Steagall, about which we heard a great deal, was 37 pages long. Dodd-
Frank is a breathtaking 2,300 pages with 22,000 pages of regulations. 
You can stand on the thing and paint the ceiling.
  That is why so many community banks no longer exist. Those that have 
managed to survive have seen their costs go up, their profits go down, 
and their ability to make small business and consumer loans curtailed--
all as a result of the unnecessary, heavy hand of government. In fact, 
since Dodd-Frank was passed in 2010, this country has lost 1,700 small 
institutions. The reason is very simple. Dodd-Frank has forced 
community banks and credit unions to merge, consolidate, or to go out 
of business because of the heavy hand of regulation and because they 
can't make the loans that they normally would be able to make.
  Nationwide, we have been losing an average of one community bank or 
credit union a day--every single day--since Dodd-Frank was passed 
because of its costs, which have driven our banks to sell or merge with 
larger banks. It is so ironic that this forced consolidation--forcing 
our smaller banks and credit unions to either merge with or be bought 
out by larger institutions--has caused even greater concentration of 
assets on the books of even larger and, in some cases, too-big-to-fail 
banks that Dodd-Frank was supposed to do something about.
  My legislation will help 5,785 American credit unions. It will help 
5,461 community banks in our country survive. Specifically, financial 
institutions with assets of less than $10 billion--if you are a 
financial institution and you have less than $10 billion in assets, you 
will be exempt completely from Dodd-Frank, its 2,300 pages and its 
22,000 pages of regulations. We are talking about a lot of banks.
  Banks with less than $10 billion in assets make up 92 percent of our 
Nation's banks, according to the FDIC. Banks with less than $10 billion 
in assets provide 48 percent of all small business loans, 16 percent of 
residential mortgages, 44 percent of lending to purchase farmland, 43 
percent of lending for farm operations, and 35 percent of commercial 
real estate loans. If my bill passes, these institutions will no longer 
have to reduce their products and service offerings in order to divert 
resources to compliance, to interpretation, and to execution.
  The expertise of our smaller banks and credit unions in America in 
evaluating risk will no longer be reduced to some algorithm--some 
mathematical exercise. Instead, our institutions will be able to 
deliver the desperately needed capital to the customers they know so 
well because that is what community banks and credit unions do. They 
take in local deposits, and they make loans to local borrowers whom 
they know and whose creditworthiness they can closely monitor because 
community bankers, as we all know, are relationship bankers. They don't 
participate in widespread subprime lending. They don't use derivatives 
to speculate, and they never did. Most of them have fewer than 100 
employees.
  The type of regulation they need--and I am not suggesting they don't 
need regulation. What I am suggesting is the type of regulation they 
need--because of the risks our small institutions take--is much 
different than the

[[Page S2516]]

regulation needed by a $700 billion or a trillion-dollar bank.
  I am certain that the proponents of Dodd-Frank were well-intentioned 
when they wrote and passed it. But 150 years ago, doctors used to bleed 
their patients with the best of intentions. They stopped doing that 
because their patients died. That is why I suggest today that we 
eliminate Dodd-Frank for our smaller institutions. Making Dodd-Frank 
applicable to community banks and credit unions is a lot like using a 
sledgehammer to go after a gnat. It is way over the top.

  Now, certainly our smaller institutions need regulation. Certainly, 
they need regulation to ensure that they are stable and secure. Our 
small institutions know that. They know they need it. They want it. 
They welcome it. But even after my bill becomes law, community banks 
are still going to be subject to a strict regulatory scheme established 
by dozens of applicable Federal statutes. I am talking about the 
Banking Secrecy Act, the Electronic Fund Transfer Act, the Truth in 
Lending Act, and the Equal Credit Opportunity Act, and I could go on 
and on.
  All of these statutes will still apply to our smaller banks and 
credit unions. Our smaller banks and credit unions--now exempt, if my 
bill passes, from Dodd-Frank--will still be under the supervision of 
the Federal Reserve. They will still be under the supervision of the 
Comptroller of the Currency. They will still be regulated by the 
Federal Deposit Insurance Corporation, the National Credit Union 
Administration, and even the Department of Justice.
  America's smaller lending institutions need some relief. What they 
need is relief from the destabilizing consequences of Dodd-Frank. The 
Reforming Finance for Local Economies Act, in my estimation, is a step 
in that direction. I would also like to say, in closing, that I am 
pleased that both President Trump and Senate Republicans are committed, 
as we are, to paving the way for new businesses and the jobs they 
create through regulatory reform as our actions have already proven 
this year.
  However, I would also like to stress that helping our community banks 
and credit unions is a bipartisan issue and one that I hope will garner 
support from many of my colleagues, not only just on the Republican 
side of my aisle but by friends on the Democratic side of the aisle.
  I welcome their support. I look forward to working with my fellow 
Senators on the Banking Committee to find some commonsense solutions 
that will help grow our local economies.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Strange). The Senator from Louisiana.