Academic journal article ABA Banking Journal

Stop the Steamroller

Academic journal article ABA Banking Journal

Stop the Steamroller

Article excerpt

There's an interesting chart in the ABA At Your Service department on page 36. It demonstrates that banks are not holding back credit to small businesses. Only 2% of those surveyed by the National Federation of Independent Business said "Financing" was their biggest problem.

Guess what was?

"Government requirements and red tape." That was at the top of the list at 22%, followed by "Taxes," at 21%.

If community bankers were asked the same question, we would guess the percentage of bankers citing "Government requirements and red tape" as their biggest problem would be well north of 22%.

A common theme for any small business, be it a foundry, dry cleaner, or bank is that the burden of complex laws and their implementing regulations fall most heavily on small players, despite all the rhetoric and intentions to the contrary.

Big companies have their challenges, to be sure. Large banks face stricter or increased requirements in many cases. But their greater resources, both in people and funds, help immensely. They wrestle with higher costs, competitive restrictions, and possibly a lower EPS. But not survival.

It's true that there are still plenty of small businesses around that have survived OSHA, ERISA, and the alphabet soup of other government edicts. And as we pointed out here last month, bankers can be quite adaptable in dealing with the crush of regulations, as they have shown with CRA, FIRREA, Sarbanes-Oxley and dozens more. But the Dodd-Frank Act is of a magnitude greater than all previous banking laws combined. And it is in addition to everything else. Yes, banking will survive Dodd-Frank, but it's quite possible that some--perhaps many--banks will not. …

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