Please Respond Mr. Geithner
On September 8th, 2011, the United States House of Representatives Committee on Financial Services recently sent a request to the US Secretary, Mr. Timothy Geithner. The Committee is looking for an update from the Financial Stability Oversight Council (FSOC- Chaired by Geithner) on what they are doing to identify and eliminate unnecessary or duplicative regulatory burdens. The letter quotes Geithner's speech on June 6th, 2011 where he said we have "a very complicated regulatory structure with multiple agencies, with closely related and sometimes overlapping missions and roles."
The new regulations under the 3,000 page Dodd-Frank Act requires 400 new regulations. It has been estimated by the Federal Register, the first 102 rules will require US firms to spend almost 11 million man-hours per year to comply. In a fun comparison made by the Committe, it only took 7 million man-hours to build the Empire State Building. The Act's new rules deal with everything from lending practices to the quality of assets to documentation, and they will continue to affect the pace of lending and the relationship of local banks to local businesses. The end client will get hit with more paperwork and fine print as a requirement of Dodd-Frank, even as the law sets up a bureau that was specifically designed to eliminate excessive paperwork.
TruPoint partners endorses the need to strengthen and improve protections. However, it must be done with efforts to streamline and simplify. While big banks already have large compliance staffs to deal with CRA, Fair Lending, HMDA and other bank compliance areas, community banks must consider additional compliance staff or move staff from customer care or other productive departments to fill out government paperwork. During our tough economic times, this massive expansion of government into the private sector goes against the old adage that government should “do no harm.”
TRUPOINT Partners celebrates the fact that the Financial Services committee sees that community banks and credit unions are over-burdened and need relief. There is a clear need to audit old regulation, compare to new regulation, eliminate and clean up outdated or duplicative regulations. Lets hope that Mr. Secretary responds quickly and diligently.