USAToday reports compliance officer Alesia Harlan’s concerns about 300 pages of notices, forms and tax documents for a single home loan, double the tree-killing load prior to Dodd-Frank’s passage. 455 home loans in 2010 created 2 months of work for Harlan, at modest City State Bank in Norwalk, Iowa. “I’ve yet to see the benefit to the customer,” said Harlan. “It’s highly technical and confusing for the borrower.” The 2300 page Dodd-Frank bill creating the Consumer Financial Protection Bureau (CFPB) is expected by some to result in 5000 pages of regulations. “Bank of America can fill a skyscraper with attorneys to comply with all the rules and regulations, but a community bank can’t do that,” said Jim Schipper, Iowa’s banking superintendent. “I know some bankers that are probably just going to quit making mortgage loans. I mean, what’s the point?” Regulations are so complex and costly to administer, many expect it to hasten the trend towards the very ‘banks to big to fail’ that the bill was supposed to protect consumers against. In a speech in Des Moines Iowa last June, Thomas Hoenig, outgoing president of the Kansas City Federal Reserve Bank said “It’s such a complicated piece of legislation, it will be to the benefit of the largest institutions, not because they want it to be, but because it forces consolidation, and that’s a tragedy for this country.” “It’s very much a concern for the typical bank in Texas,” said John Heasley, vice president of the Texas Bankers Association in Austin. “They’re already spending extensive funds for compliance costs, and Dodd-Frank is viewed as adding insult to injury.” “It almost looks as if the ‘too big to fail’ banks got a free ride,” Heasley said. “The banks in Texas, who had nothing to do with the origination of toxic mortgages, securitization of those mortgages, or the sale of credit default swaps, are being made to pay for the sins of others.”
(photo credit: USA Today)
1 thought on “Small banks bruised by new mortgage regulations, giving edge to mega-banks”
Ken
I don’t know that I would agree the banks in Texas didn’t have anything to do with the problem, but I would agree that some banks didn’t – just as manufactured housing had nothing to do with it. The Dodd-Frank Act, like the SAFE Act was an attempt to cover up federal government involvement and legislative involvement in the problem that was led by individuals with an agenda of increasing the power of the federal government over all of us.nnWhen I started making loans in the 1970s, there were only 3 required documents, pre Dodd-Frank Act there were about 30, and the number of docs just keeps growing since the passage of Dodd-Frank. The issue of compliance has become more and more important even as the complexity increases, which is why banks and credit unions are shelling out over a $100,000.00 a year for compliance officers on an average.nnIt is important that our industry continue to press Congress to create some relief from Dodd-Frank for manufactured home loans.
I don’t know that I would agree the banks in Texas didn’t have anything to do with the problem, but I would agree that some banks didn’t – just as manufactured housing had nothing to do with it. The Dodd-Frank Act, like the SAFE Act was an attempt to cover up federal government involvement and legislative involvement in the problem that was led by individuals with an agenda of increasing the power of the federal government over all of us.nnWhen I started making loans in the 1970s, there were only 3 required documents, pre Dodd-Frank Act there were about 30, and the number of docs just keeps growing since the passage of Dodd-Frank. The issue of compliance has become more and more important even as the complexity increases, which is why banks and credit unions are shelling out over a $100,000.00 a year for compliance officers on an average.nnIt is important that our industry continue to press Congress to create some relief from Dodd-Frank for manufactured home loans.