In efforts to ease the pains of mid-size and regional banks, the House voted on Tuesday, May 22nd to undue parts of the Dodd-Frank Act of 2010. Despite not being a full repeal, this latest act is the largest undoing of any banking rule that was put into place after the 2008 financial crisis. These new rules are a big opportunities for small businesses who saw financing opportunities fall heavily due in no small part to tough regulations on non-large scale financial firms.
In the past, for most small businesses, local banks and investment arms were the first stop to get a startup loan for a company. Shortly after the Financial Crisis, financing was made incredibly difficult with the amount of cash smaller banks were required to have on hand when lending to small firms. Now that regulations have been eased, we can expect to see an uptick in small business lending very soon.
Most in Congress hope that the recent act will “allow banks with up to $250 billion in assets to escape some of the toughest rules put in place by the Dodd-Frank Act in 2010 to shore up the banking system.” Lawmakers also claim that the undoing of the bill will allow small banks and credit unions to make more loans to American families.
According to the NPR, “The bill also includes a host of other changes ranging from easing some home mortgage rules to weakening reporting requirements designed to protect against racial discrimination in lending.”
Larger banks such as JPMorgan Chase, Bank of America, and Wells Fargo will still observe the tougher rules of the original Dodd-Frank Act.
President Trump promised to deregulate things as soon as he arrived in Washington and with this new act of Congress his plans are in full swing which is a huge accomplishment for his administration and a big win for small and midsized financial institutions.