Small Banks Hope Financial Choice Act Will Roll Back Regulations

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A new law rolling back banking regulations has passed the U.S. House.

Now, small banks in North Dakota are considering how it will affect them.

Some banks want the Financial CHOICE Act to usher in needed change and they hope lighter regulations follow.

“We’ve been having to address regulations over the last many years that have been growing and have really impacted our ability to deliver those products and services,” Craig Larson, Starion Bank CEO says.

Larson says following the 2008 financial crisis, all banks were placed under the same regulations no matter their size and that’s where the problem lies.

“The regulations that we’re under are a one size fit all,” Larson says.

The more than 70 small and midsize banks that make up the North Dakota banking industry hope that deregulation will help them afford to provide more services to their customers all across the state.

Services like smaller loans.

Larson says the problem with smaller loans is the cost of providing them doesn’t go down regardless of their size.

“When a small bank makes a small loan of course it just really makes that loan very expensive compared to a large loan,” Larson says.

After the 2008 financial crisis, there was a push to protect consumers through legislation like the Dodd-Frank Act and the creation of the Consumer Financial Protection Bureau.

“Banks are having to hire more people just to deal with the rules and regulations and nothing to do with helping the consumer,” Rick Clayburgh, President and CEO North Dakota Bankers Association says.

Which means for smaller banks, there’s less money and time allocated to services like smaller mortgages.

So banks like Starion hope this bill results in less time working to comply with federal regulations and more time serving customers.

“If some of these regulations make it very difficult or expensive or onerous or risky to provide services, you may have to ask yourself, can you still provide that service?” Larson says.

The federal legislation looks to roll back bank regulations and take back the consumer protection bureau’s ability to monitor financial institutions for compliance with consumer protection laws.

The Financial CHOICE Act passed the house without bi-partisan support.

And it will now go to the Senate for consideration.

Copyright 2021 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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