Category Archives: small business sources of capital

Dodd-Frank turns 6

This summer (July 21) will mark the sixth anniversary of Dodd-Frank…

with what critics say is “no end in sight” to the squeeze on small businesses served by the small community banks the bill — sponsors originally said — was designed to help.

(At 22,000 pages, and having spawned 27,000 pages of new regulations, the act certainly had a major impact.)

Research out of the Minneapolis Federal Reserve suggests that adding just two members to the compliance department to process these regulations makes a third of small banks unprofitable.

At the end of 2014, there were 20 percent fewer community banks today than there were before this legislation took effect, and they continue to disappear at a rate of one per day.

In a typical year in recent American history, 100 new banks are created, but since Dodd-Frank passed, only three have been created in total.

Meanwhile, the big banks are now 80 percent larger than before the financial crisis.

Small banks, it’s true, have only 10 percent of the banking industry’s assets, but make one-quarter of the country’s commercial loans, two-thirds of its small business loans, and three-quarters of its agricultural loans.