Regulation has helped, not hurt, bank lending
March 28, 2017
The assault on the Dodd-Frank Act continues today with another hearing held by the House Financial Services Subcommittee on Financial Institutions and Credit, looking at “The State of Bank Lending in America.”
The real point of this hearing is to promote one of the more stubborn and completely bogus myths foisted on the American people: that the Dodd-Frank Act and other financial regulations have decreased bank lending. Nothing could be further from the truth.
Here is just a sampling:
At the press briefing for the release of the 4th Quarter Banking Profile, Federal Deposit Insurance Corporation Chairman Martin Gruenberg reported that:
“The banking industry had another largely positive quarter. Both quarterly and full-year earnings were up from the prior year, loan balances increased, overall asset quality improved, and the number of unprofitable banks and ‘problem banks’ continued to fall.”
To those who say that small and community bank lending has been hit particularly hard, one need look no farther than this video, posted on The American Banker website, which posed the question, “How much has regulation really curbed lending?” to Joo-Yung Lee, head of North American financial institutions at Fitch Ratings, the quick answer is: not much.
Further, a recent article from CNBC states definitively: “Despite critics' claims, Dodd-Frank hasn't slowed lending.”
It is more than just bank lending that’s on solid footing, however. Banks themselves are doing better than ever. The Wall Street Journal reported that U.S. banking industry annual profits hit record highs in 2016. According to the FDIC, of the country’s almost 6,000 banks, only 248 were unprofitable, and community banks saw their profits grow the fastest.
Don’t be fooled into buying in to one of the most pervasive and flat-out bogus myths offered up by Wall Street’s biggest banks, its lobbyists, and its trade associations.