Examining Dodd-Frank’s first five years

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Rep. Tipton’s Report

Last week marked five years since President Barack Obama signed the Dodd-Frank Act into law, making this an opportune time to look back at the impact this misguided legislation has had on the financial services industry, especially on how it has impacted community banks and credit unions in Colorado.

Dodd-Frank was supposed to lift the economy out of a recession, promote financial stability and end the “too big to fail” phenomenon. In actuality, the legislation has created more market uncertainty, escalated costs for consumers and accelerated the failure rate of small main street banks.

The 2,300-page bill rewrote the playbook for small banks across the nation that had nothing to do with the 2008 financial crisis. Prior to the passage of Dodd-Frank, these banks could rely on their unique knowledge of their communities to provide character loans to small businesses. Now they are inundated with new rules and regulations that have created an unbearable compliance burden that eats up capital previously used for community lending.

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