Washington, D.C. - Congressman John Faso (R-Kinderhook) today voted to approve the Financial Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs (CHOICE) Act (H.R. 10). The legislation passed the House by a vote of 233 to 186. CHOICE would end Dodd-Frank’s too-big-to-fail bailouts for financial firms and creditors, deliver stronger consumer-fraud protections for all Americans, and provide much-needed regulatory relief to community banks and other small financial institutions. The bill also included an amendment drafted by Rep. Faso to reinstate the dividend-waiver process available to financial institutions called mutual holding companies (MHCs) prior to Dodd-Frank’s new Federal Reserve rules. The amendment passed the House by a bipartisan vote of 235 to 184.
The 2008 financial crisis led to the enactment in 2010 of the Dodd–Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), which instituted new capital-formation rules and a new regulatory framework for all financial institutions. Community banks have been especially hard hit by Washington’s new paperwork and regulatory requirements, despite not being the cause of the 2008 financial crisis. Over the last few years, this sector has lost one financial institution per day, on average. Community lenders and thrift institutions, not Wall Street, are the primary sources of capital for small business lending. Regulatory relief would alleviate the burdens on lending to small businesses, which account for 70 percent of all new jobs created in the US. In addition, consumer fees have risen under Dodd-Frank: Prior to the law’s implementation, 75 percent of banks offered free checking. But by 2015 only 37 percent of banks had free checking accounts. Furthermore, there are 15 percent fewer credit card accounts since 2008, and the personal savings rate has declined from 6.1 percent to 5.2 percent. Banks have been saddled with an estimated 73 million new paperwork hours since Dodd-Frank’s implementation. And the number of unbanked or underbanked individuals in the U.S. has spiked by more than 3 million people since Dodd-Frank became law. Before Dodd-Frank there were eight large banking institutions in the US; today there are four. Big banks have gotten bigger under Dodd-Frank.
“Dodd-Frank enshrined the risky ‘too-big-to-fail’ mentality in the banking industry while dramatically increasing the regulatory burden on mid-sized and community banks, institutions which had nothing to do with creating the financial crisis. These are precisely the lenders doing business with the local job creators who create jobs and opportunities for families in our communities. The Financial CHOICE Act reduces regulation on banks that maintain a high capital requirement. Banks which maintain greater capital are inherently more secure and more stable. I am pleased to support the CHOICE Act in order to reduce Washington regulations on local financial institutions and boost the jobs and economic activity provided by our community banks,” said Congressman Faso.
“I was particularly pleased to successfully include an amendment to the legislation which helps community banks organized as mutual holding companies, such as the Bank of Greene County. Dodd-Frank eliminated their ability to have the mutual holding company waive their receipt of dividends and required a costly process to secure these waivers. In the case of the Bank of Greene County, Dodd-Frank required the bank to annually mail waiver ballots to their depositors – who are the owners of the bank – at a cost of over $150,000. My amendment allows this expense to be shifted into bank capital, the same process available to them and others prior to Dodd-Frank. The Bank of Greene County is controlled by its local depositors which ensures that the bank cannot be subject to a hostile takeover from those outside the community. My amendment is critically important to ensuring these local banking institutions are not taken over by the big banks and driven out of our communities,” said Faso.
Read the Financial CHOICE Act here. Learn more about Rep. Faso’s amendment supporting MHC dividend waivers here.
“Small community banks are the lifeblood of small business. Without the capital they provide through lending, 70 percent of new jobs would never be created. The Financial CHOICE Act provides much-needed regulatory relief to small community lenders to help us compete against big banks. At the same time, the Financial CHOICE Act introduces the stiffest penalties for financial fraud in history. Thank you to Congressman Faso for getting this done for our district,” said Donald E. Gibson, President and CEO of the Bank of Greene County. “The Bank of Greene County also supports Congressman Faso’s amendment, which helps community banks with a charter like ours better attract investors and ensure the longevity of small banks across the nation.”
“Community banks have been the drivers of economic growth and funding for their local communities. They were not responsible for the financial crisis but were unduly burdened by some of the provisions of Dodd-Frank and passage of the CHOICE Act is a helpful step in giving community banks some needed regulatory relief. We particularly support allowing regulators to tailor oversight to be appropriate for the unique risks of the individual bank, and making it easier for community banks to originate portfolio mortgages to creditworthy borrowers in their communities who may not fit the pre-imposed cookie-cutter standards,” said President and CEO of Ulster Savings Bank William C. Calderara.
“I applaud the passage of the Financial CHOICE Act, which will eliminate unnecessary regulations on Main Street and help level the playing field for community banks such as the Bank of Richmondville,” said Randy Crapser, President and CEO of the Bank of Richmondville. “The added regulations and paperwork that have resulted from Dodd-Frank have made it harder for smaller banks like ours to serve our communities. We support Congressman Faso’s vote in support of this important legislation.”