July 12, 2010 Lending Compliance Update

In a recent blog I reported my belief that work on the financial reform bill would be completed by the July 4 holiday. But obviously I was wrong.

Congress did get some work done before the holiday. They renamed the bill the Dodd-Frank Wall Street Reform and Consumer Protection Act. They also fought a battle over funding.

The bill would have resulted in $18 billion in new fees on large banks. Some in the Senate considered the fees a new tax. A compromise replaced fees with early payment of TARP money and an increase in deposit insurance premiums for large banks.

Barring any other unforeseen circumstances we expect the law to be signed within a couple of weeks.

The impact of the new law on community banks is still unfolding. One of the primary complaints about the law has been the presumed burden associated with the new regulatory agency created by the new law. Some community banks are taking comfort in the fact that they will not be examined by the new agency. The mission of the new regulatory agency is to examine large banks for compliance issues and to pass new rules intended to stop the abusive practices. While community banks will not be examined by the new agency, they will be subject to the new laws passed by the new agency. No bank, large or small, will avoid the regulatory burden.

Stay tuned further further details

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