[W]ASHINGTON — Vermont’s two senators are opposing a banking regulation reform bill that is favored by many banks and credit unions in the state.
Sens. Bernie Sanders, I-Vt., and Patrick Leahy, D-Vt., both oppose the measure because of concerns that it lifts regulations on some of the biggest financial institutions in the country. They both voted against advancing the measure Tuesday.
However, banks and credit unions in Vermont support elements of the package, which they say will provide relief from federal requirements established in the wake of the 2008 financial crisis that small institutions have struggled to manage.
The package revises some key parts of the 2010 Dodd Frank Act. It raises the threshold for banks that are subject to the highest level of regulatory scrutiny from those with $50 billion in total assets to those with $250 billion.
The bill also would make it easier for small banks to offer a wider range of mortgages, and it exempts them from a rule restricting banks from making certain types of investments.
The bill has support from Republicans and many Democrats.
A final vote is expected on the measure next week.
Sanders, who frequently targets Wall Street and large financial institutions in his political speeches, said on the Senate floor Tuesday that the proposal is out of step with what the American public wants lawmakers to work on.
“I can honestly say that I have not heard one person come up to me and say, Bernie, we have got to deregulate 25 of the largest banks in this country with cumulative assets of $3.5 trillion,” he said.
Sanders raised concerns that the bill will exempt large, powerful banks from important regulations, that it will allow institutions to offer “bogus subprime mortgages,” and will deregulate foreign banks.
“Are our memories so short that we have learned nothing from the 2008 Wall Street crash? Have we learned nothing from the savings and loan disaster of the early 1990s or the thievery of Wells Fargo over the last couple of years,” he said, proceeding to list several other financial events.
Kathy Austin, president and CEO of Community National Bank, said the bank is in favor of provisions in the bill that would loosen restrictions on mortgages, and those that would allow banks more time between reviews.
Community National Bank, based in Newport, has a total of $655 million in assets and 135 employees.
The policies implemented under the Dodd Frank Act increased requirements for data-gathering and additional reporting — tasks, Austin said, “that are frankly more burdensome on a smaller institution, because we don’t have the resources that some of the larger institutions have.”
“I think there’s a very important role that community banks play,” Austin said. “We have to take care that there’s an opportunity for banks of all size to survive and thrive.”
Austin said she understands the trepidation some lawmakers feel about rolling back regulations put in place after the 2008 financial crisis. However, she said she believes some changes could be made that would lift pressures on smaller banks.
“There’s room for some relief without unraveling the whole thing and throwing it out,” she said.
Chris D’Elia, of the Vermont Bankers Association, said this week that the group supports the bill.
Pressures related to Dodd-Frank “absolutely” have contributed to the consolidation of many small banks with larger ones, he said.
“Unfortunately some of these folks found themselves in a position where they were not able to grow in a way that was meaningful and appropriate,” he said.
VSECU, a prominent credit union in Vermont, also is in favor of some aspects in the legislation, according to public relations specialist Rachel Feldman — such as provisions related to exemptions for residential loans and protections for credit union employees who suspect financial elder abuse.
“While VSECU does not take a position on the bill in its entirety, we are supportive of the initiatives included in S.2155 which would positively impact VSECU and our members,” she said.
Joe Bergeron of the Association of Vermont Credit Unions said that at meetings with the Vermont senators on Capitol Hill recently, both showed support for policy changes that credit unions support.
He said they have encouraged the lawmakers to vote for the package. If they don’t, the group will urge them to pursue the policy changes related to credit unions through other vehicles, he said.
In a statement Friday, Leahy acknowledged that smaller financial institutions have been burdened by the response to the financial crisis a decade ago.
“Our community banks and credit unions did not cause the financial crisis, yet they are still paying the price for it. By extension, so are their customers,” he said.
He said that there are changes that could help small banks, and he would “no doubt” support those policy changes if they were in their own legislation. However, Leahy said, those initiatives have been “hijacked.”
“Essential relief for small banks has been coupled with significant loosening of rules for the biggest banks – banks that took hundreds of billions of dollars in taxpayer bailouts,” Leahy said.
He said that he is concerned that the legislation will expose taxpayers to “even more risks from big banks.”
Sanders said in a statement Friday that he favors policies in the bill that support community banks and credit unions.
“However, those provisions are a tiny part of this bill,” he said. “The overwhelming majority of benefits in this disastrous bill would go to the largest financial institutions in America that just 10 years ago plunged Vermont and the rest of the nation into the worst financial crisis since the Great Depression.”
Read the story on VTDigger here: Vermont senators oppose bill favored by small banks, credit unions.
