Nightmare on Main Street

U.S. Reps. French Hill and Stephen Fincher Commentary

Nightmare on Main Street
Rep. French Hill of Arkansas' 2nd Congressional District and Rep. Stephen Fincher of the 8th Congressional District of Tennessee, both Republicans.

A devastating blow to Main Street: The number of community banks nationwide has declined by more than 1,500 since 2010, a rate of nearly one per day.

A recent report from the Harvard Kennedy School of Government, "The State and Fate of Community Banking," indicates that community banks' share of U.S. banking assets and lending markets has fallen from more than 40 percent in 1994 to around 20 percent today. 

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Hardworking Americans across our country are asking what is happening to their community banks — the financial backbone of Main Street, small business and rural America.

The direct response is the Dodd-Frank Wall Street Reform & Consumer Protection Act, the most sweeping financial regulation of our time. While the law presented itself as an effort to increase safety and security of the entire system, the consequences for many small and medium-sized financial institutions — and many consumers — has been devastating.

Five years ago, President Obama declared that with a few strokes of his pen the days of "too-big-to-fail" would be over, and the "countless businesses that [had] been unable to get the loans they need and [have been] forced to shut their doors" will have a chance to once again thrive.

Unfortunately for the American people, this promise of prosperity for small business was never fulfilled. Instead, Dodd-Frank has not only strengthened "too-big-to fail" by consolidating much of our banking industry to just a handful of institutions, but it has also created the equally terrifying concept of "too-small-to-succeed."

The target of Dodd-Frank may have been those on Wall Street, but its true impact has been on the people on Main Street who are hurting the most from the unprecedented increase in regulatory burden. 

Under Dodd-Frank regulations, a community bank's ability to extend credit is reduced, decreasing small business lending and destroying the opportunity to create new businesses and jobs. It is no coincidence that business formation is at its lowest point since the Carter Administration. 

These smaller banks simply cannot absorb the costs of such rapidly increasing regulatory compliance, thereby removing an important and reliable lending option for American families and businesses. 

The hardships felt across our country since this law's enactment, confirm that Dodd-Frank was essentially a rushed and politicized response to many political objectives, rather than a solution to address the real crisis at hand. 

The law's nearly 14,000 pages of rules and regulations have delivered crushing blows to our financial system, leading to one of the slowest economic recoveries in our nation's history. Sadly, there are still legislators in Washington who — despite this overwhelming evidence — continue to prop up the law by misrepresenting the economic realities. 

Our financial system is not strengthened by limiting choice and increasing the concentration of services and products in the hands of a few "too-big-to-fail" firms. The success and security of our system is reliant upon institutions of all sizes servicing consumers and businesses with diverse needs. 

It is a sad consequence of the Obama economy that community banks are being forced to close their doors on the people that need them the most. It is time for those of us — in the private and public sectors — who support jobs on Main Street to take immediate action and demand that the Obama administration provide regulatory relief to these institutions and return common sense and transparency to our financial regulations system.

(French Hill represents the 2nd Congressional District of Arkansas in the U.S. House of Representatives, and Stephen Fincher represents the 8th Congressional District of Tennessee. Both Republicans, Hill and Fincher serve on the House Committee on Financial Services and two of its subcommittees: the Subcommittee on Capital Markets and Government Sponsored Enterprises and the Subcommittee on Oversight and Investigations.)

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