Patrick McHenryChairman

Washington, July 22, 2014 - While some media attention has focused on one particular witness who will appear at Wednesday’s Financial Services Committee hearing to assess the Dodd-Frank Act on its 4th anniversary, others will be testifying about the realities of Dodd-Frank.

Wednesday’s hearing will feature four witnesses from across the country who will discuss the real world harm Dodd-Frank is having on hardworking taxpayers and America’s Main Street Economy.

In testimony submitted to the committee ahead of tomorrow’s hearing, community banker Dale Wilson, of the First State Bank of San Diego in San Diego, Texas, describes a “tsunami of regulation” for his bank and similar community bankers throughout Texas.

“Dodd-Frank is adding to (an already increased) regulatory burden for all institutions with 5,933 pages of proposed regulations and 8,002 pages of final regulations,” said Wilson. “Managing this tsunami of regulation is a significant challenge for a bank of any size, but for a small bank with only 17 employees, it is overwhelming,” Wilson added.

In his testimony, Wilson goes on to describe the overall impact of Dodd-Frank for community bankers and the local citizens they serve.

“Since the passage of Dodd-Frank, there are 80 fewer Texas banks. These banks did not fail,” Wilson said, but rather “could not maintain profitability in an environment where the regulatory compliance costs are increasing between 50 and 200 percent…Each bank that disappears from the community makes that community poorer.

“The real costs of the increased regulatory burden are being felt by small town borrowers and businesses that no longer have access to credit. There are other costs as well. When a small town loses its only bank, it loses is lifeblood. The town finds it more difficult to improve the schools, hospitals, and other infrastructure needs like water projects if there is no local bank. I know it was not the intent of Congress when it passed Dodd-Frank to harm community banks, but that is the awful reality.

The committee will also receive testimony from Anthony Carfang, who consults with state and local governments, hospitals, universities, and regional banks in the area of treasury management.

Carfang’s submitted testimony echoes Wilson’s description of the increased red tape burden of Dodd-Frank.

“The Dodd-Frank Implementation, only partially complete, is already having a chilling effect on business. One element of that is the creation of two ultra-powerful authorities, the Financial Stability Oversight Council (FSOC) and the Consumer Financial Protection Bureau (CFPB),” said Carfang.

“These largely unaccountable agencies are designed to operate outside of the constitutional framework of checks and balances. For our clients, the FSOC especially, with virtually unconstrained resources, introduces new regulatory and political risks. The result is business and financial intuitions need to operate with checklists to seek out safe harbors, rather than find ways to meet the needs of their customers,” Carfang added.

Paul Kupiec, a former FDIC official and current Resident Scholar at the American Enterprise Institute, will also testify and debunk the myth asserted by Dodd-Franks supporters that Dodd-Frank ended “Too Big to Fail.”

“Ironically, Dodd-Frank’s heightened expectations of a government’s commitment to remove the possibility of a future financial crisis may increase the probability that such a crisis will occur and require government support for the largest financial intuitions that have been identified as too-big-to-fail,” said Kupiec.

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