The Dodd-Frank Act is unlikely to be repealed, although it may be tweaked, according to John Walsh, the acting comptroller of the currency, who spoke before a crowd of about 400 bankers and bank directors at the 2012 Acquire or Be Acquired conference Monday in Phoenix.
The banking industry has been pushing for a repeal of Dodd-Frank, or at least major changes.
The Office of the Comptroller of the Currency (OCC) supervises about 2,000 banks and federal savings associations, most of them community institutions with less than $2 billion in assets.
Walsh said he didn’t see how Dodd-Frank could be repealed because some of the work of implementing it has already been done, including the merger of the Office of Thrift Supervision and the OCC.
“We just spent a year and a half joining the OTS and the OCC,’’ he said. “I’m not sure how you just send everybody back to their two buildings.”
Walsh said there may be pieces that could be changed, although that would be up to Congress.
Even though many of Dodd-Frank’s new rules apply only to banks and thrifts above $10 billion in assets, some will impact community banks as well. For example, the new Consumer financial Protection Bureau (CFPB) will have minimum standards for mortgages, new disclosure requirements, a new regime of standards and oversight for appraisers and an expansion of the Home Mortgage Disclosure Act requirements for lenders. The bureau also must define and ban “unfair or abusive” practices.
“Each change will have a proportionately larger impact on community banks due to their small revenue base,’’ Walsh said.
He said checking accounts will be impacted as debit card fee income falls as a result of the Dodd-Frank Act. Also as a result of the law, banks of all sizes will have to evaluate the quality of securities investments they make, without relying on the rating agencies to evaluate the appropriateness of such investments. Small, community banks don’t have the resources of larger banks to do such assessments in-house.
Walsh said economic weakness and regulatory burdens are putting more pressure on bank management and told the crowd: “Believe me when I tell you that I feel your pain.”
He also acknowledged that more decisions are being made in Washington, D.C., decisions that formerly would have been made in local OCC district offices when economic times were better.
“In difficult times or in particular when difficult decisions are being made…. we do subject more of those decisions to review,” he said.
Joe Kesler, the president and chief executive officer of First Montana Bank in Missoula, Montana, who attended the conference, said he would most like to have the Consumer Financial Protection Bureau disbanded.
Even though the CFPB’s rules are supposed to apply to banks of $10 billion in assets or more, and Kesler’s bank has about $300 million, he thinks the bureau’s decisions will trickle down to banks of his size. First Montana Bank has a mortgage business, and the CFPB has begun putting together new rules for residential mortgages.
“The big uncertainty cloud is the impact of the CFPB,’’ he says. “It’s troubling we can’t plan for the future.”