House hearing on Dodd-Frank and small banks

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Bob Moon: There’ll be a new cop on the bank beat this summer. The Consumer Financial Product Bureau will have limited enforcement powers over small banks and credit unions. But today, the House Financial Services Committee is letting small banks air their concerns over even that partial control, as our John Dimsdale reports from Washington.

John Dimsdale: Bob Ramsey is a bank analyst with FBR Capital Markets. He says smaller banks will take a bigger hit from, say, new paperwork requirements than big competitors would.

Bob Ramsey: Think about the fixed cost associated with changing the disclosures on your mortgage forms. To a company the size of the Bank of America, is immaterial once you spread it across thousands of customers. But if you’re a small community bank, the incremental cost is certainly much more significant.

He says those extra costs could crimp bank lending. But Travis Plunkett with the Consumer Federation of America says the financial reforms give small banks special consideration.

Travis Plunkett: The small banks had enormous influence on the legislative process and they were able to get themselves excluded from the bulk of the regulatory costs.

Plunkett says the consumer bureau has to closely scrutinize new regulations to make sure they don’t burden small banks and credit unions.

In Washington, I’m John Dimsdale for Marketplace.