By Mark R. Warner
We all know the stock market is booming. The economic recovery that began at the end of President Obama’s term has continued to gain steam under President Trump. In cities like Washington, D.C., it is almost like the great recession never happened.
But when you get outside the Beltway, to rural communities across Virginia, you get a different picture.
The truth is, rural America continues to feel the lingering symptoms of the financial crisis.
Many rural banks have closed or consolidated. That means farm loans and mortgages are harder to come by. That means it’s harder for entrepreneurs to open a business in their hometown.
A big part of the problem is excessive regulations – intended for the largest banks – are making it too expensive, too time consuming for small banks and credit unions to serve consumers, farmers, and small businesses.
That’s why I introduced bipartisan legislation (S.2155) earlier this year, with Sen. Tim Kaine and a bipartisan group of senators, to cut red tape for small community banks and credit unions, create new consumer protections, and help jumpstart Virginia’s economy.
This past week, the House of Representatives passed our bill. It now heads to President Trump’s desk for his signature.
While our bill passed both the House and the Senate this year with strong bipartisan majorities, the effort to reform our banking laws to protect main street America’s access to credit has been years in the making.
I was elected to the Senate in the midst of the 2008 financial crisis, at a time when our system needed major reform. As a member of the Banking Committee, I helped write key portions of the Dodd-Frank financial reform bill that cracked down on Wall Street’s excesses and reined in the big banks. I’m proud of my vote to pass Dodd-Frank, and I believe our system is safer as a result.
But Congress never gets major legislation 100 percent right the first time.
Eight years later, we know that parts of Dodd-Frank intended to prevent banks from becoming “too-big-to-fail” have actually made some community banks and credit unions “too-small-to-succeed.”
In Virginia, we only lost one community bank and four credit unions during the financial crisis. We’ve lost over a quarter of our community banks and over a third of our credit unions since the passage of Dodd-Frank.
Small community banks and credit unions don’t have big teams of lawyers and accountants to help them comply with government regulations like the big banks do. Some of the community banks I’ve heard from only have one or maybe two loan officers.
Despite their size, community banks and credit unions are at the heart of our economy. According to a 2015 Harvard study, community banks provide over three-quarters of all agricultural loans in our country and half of all private small business loans. They’re the ones who help entrepreneurs open or expand their businesses, help farmers buy new equipment, or help you buy that new car or new house.
The fact is Virginia’s community banks and credit unions didn’t cause the financial crisis, and they didn’t get big taxpayer bailouts either. They shouldn’t be saddled with regulations intended for the biggest banks.
When small community banks and credit unions are spending their time on government paperwork, they’re not issuing mortgages, they’re not making loans to small businesses, and they’re not helping grow our economy.
Our bill begins to fix this, by tailoring regulations so that small banks and credit unions are better able to compete.
What our bill does not do is reduce oversight on the big banks or any foreign financial institutions, but it does include the biggest expansion of consumer protections in quite some time. Here are just a few examples:
For the millions of Americans hit by data breaches like the Equifax hack, it guarantees free credit freezes and unfreezes and year-long fraud alerts.
For active duty service members, it provides free credit monitoring services.
For renters, it provides new protections against unfair evictions.
And for veterans, it prevents credit bureaus from harming their credit scores because of payments delayed by the VA.
While these consumer protections will make a big difference for many Americans, ultimately the changes in our bill are relatively modest. We leave the vast majority of Dodd-Frank in place — and that’s a good thing.
But for main street consumers who depend on their local bank or credit union, and for anyone who believes Congress should put aside partisan politics to get things done, the bill is a big win.
Senator Mark Warner, a Democrat, represents Virginia in the U.S. Senate. He serves on the Senate Banking, Finance, Budget and Rules Committees, as well as the Senate Intelligence Committee, where he is vice chairman.