Washington D.C., December 5, 2013.– Hearings on lagging post-recession recovery rates in the small business lending market confirm new rules are hurting community lenders and stalling job growth in small businesses, Rep. David Schweikert (R-AZ) said Thursday.
“After an economic recession, this administration decided to do the opposite of what needed to be done to boost innovation, growth and jobs,” said Schweikert “They promoted a law that has grown extremely market-restricting in recent history. The Dodd-Frank Act’s new rules are very complex and they have increased compliance costs that are proving to be destructive to small lenders and the customers they serve.”
Rep. Schweikert, Chairman of the House Subcommittee on Investigations, Oversight, and Regulations, heard small business owners and lenders explain the effects of new lending regulations in a series of hearings this week focused on the stall in small business growth. Industry experts who testified say that as a result of post-recession regulations, small business lenders and credit unions are focusing their resources on compliance and not funding as many loans to mom and pop shops requesting capital. The cost of compliance for small banks, in both time and money, has created a skittish lending market.
Responding to questions from Rep. David Schweikert in Thursday morning’s hearing, on the regulatory landscape and burdens on small financial institutions, S.C. Bankers Association CEO Fred L. Green cited a significant reduction in flexibility to determine a consumers borrowing capacity compared with a decade ago, noting the many, burdensome hoops lenders must jump through in order to award a small business loan.
According to the Federal Deposit Insurance Corporation, the number of banking institutions in the U.S. has fallen to its lowest level since at least the Great Depression, and many of the smallest banks have merged or closed. Small lenders that have not merged as a way of coping with increased compliance costs are offering fewer loans for consumers and small businesses.
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Contact Maggie Zehring: margaret.zehring@mail.house.gov
(202) 680- 9613