by Ray Hayes
Pres. Trump has promised over and over again that he will be the biggest supporter of small businesses. If this is true, I believe reforming the Dodd-Frank Act should be one of the top priorities. Now, let’s be clear he has already revised the act under one of his Executive Order but more has to be done. In summary, the Dodd-Frank Wall Street Reform Act is a law that regulates the financial markets and protects consumers. The Trump administration has already stated that the Act prevents banks from lending more to small businesses. Therefore, plans seem to be in place to make more revisions and completely reform the Act in the near future.
Karen Mills from The Hill provided a list of ideas for Dodd-Frank reforming that could benefit small businesses:
- Simplify capital requirements for community banks – These requirements limit the ability of community banks to lend, and make it harder for small businesses to access capital.
- Streamline federal regulatory guidance – There are at least seven federal entities with some jurisdiction over banking regulation, resulting in duplicative and sometimes conflicting guidance. This makes it difficult for community banks to navigate the system, and inhibits the entrance of innovative financial technology.
- Collect the data to create sound policy – The Act currently mandates the collection of this data by the Consumer Financial Protection Bureau. Given how critical this data is to creating sound policy, the implementation of this provision must be a priority.
- Protect small business borrowers – Without these protections, it is difficult for small businesses to understand the terms of their loans or compare across lenders, inhibiting the efficiency of the small business lending market and potentially encouraging bad actors