For those of you whose memory reaches back to 2010, you’ll recall the nation’s economy was not then vibrant. More to the point, the Dow Jones Industrial Average had fallen over six thousand points in the prior 17 months and the housing industry lay in shambles. So to the rescue came the United States Congress, aimed at shoring up real estate lending practices by enacting the Dodd-Frank bill.
With regulatory oversight the intent, this 2319-page law, signed into law by President Obama on July 21st of that year, established a myriad of regulatory committees promulgating programs to which banks thereafter adhered. Although those rules masqueraded as reform, most were as convoluted as they were arcane. The results were predictable: duplicative and often contradictory rules which promoted neither safety nor soundness. Mortgage lending became a nightmare with layers of red tape so burdensome that many potentially profitable firms simply abandoned the banking business. Only the mammoth institutions, with direct links to the federal regulators and the U.S. treasury, prospered.
Of the nearly 500 banks headquartered here in 1994, less than 180 remain. The smallest ones maintain too few assets to keep up with the ever growing compliance costs. It’s for this reason the community banks, accounting in 1994 for nearly half of the California’s banking, are now down to just 11 in number.
I’d now like to convey my complements to then-Senator Thomas Dodd, retired Congressman Barney Frank, former President Obama and the congressional staffs which foisted this monstrosity onto the law books. By putting out of business almost all the community banks here in the Golden State, where my private mortgage loan firm operates, virtually all my competition is now gone. The muscle-bound giants that still process loans, such as Chase, Wells-Fargo and Bank of America, must do so in compliance with the Dodd-Frank rules. As the loans generated by my non-chartered company are exempt from these bizarre requirements, I can easily outmaneuver the few remaining behemoths.
I’m not sure if there’s a moral here, but I’m at least willing to offer thanks to legislative lunacy in facilitating my profitable enterprise.