Monday, November 15, 2010

Opinion: Giving Small Banks a Chance to Thrive - Elizabeth Warren -

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The bankers I have talked with are not looking to Washington to solve their problems. But they are looking for a market that allows them to compete. They are looking for a regulatory structure that doesn’t require an army of lawyers, and a level playing field that lets customers see the true cost of a product -- so lenders do not need to compete against a phantom price.
We are only at the beginning of our work and most of the consumer agency’s authorities have yet to phase in. But the direction of the agency is coming into focus. We want to level the playing field by streamlining regulations and eliminating outdated or ineffective rules. We want to make it easy for banks—large and small—to meet their obligations to their customers and to make the costs and risks of credit clear.
My first week here, the agency’s implementation team launched a mortgage disclosure project with the ultimate goal of giving consumers better information while reducing the number of redundant federal forms. It is only a start -- but a good one.
We want to build outreach to small providers into this new agency’s DNA. Whether in Washington or outside the beltway, we are aiming to maintain a continuing conversation with community bankers and credit unions to make certain that they are included from the beginning in all initiatives.
This effort is critical not only because of the instructions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, but also because it is the right thing to do.
A generation of flat wages and rising basic expenses has hammered families. Too many middle class families have spent all their income and all their savings, and they have taken on debt to pay for college, to cover serious medical problems or just to stay afloat a little while longer.
Too often that debt is poorly understood, and terms buried in the fine print have cost customers dearly. The new consumer agency can serve families by making credit easier to understand and making markets more competitive.
But families can’t benefit over the long run if only a handful of banks are left standing. Families will be protected only if they can count on a robust, diversified banking industry. To serve American families, the new consumer agency needs to work with America’s community banks to make sure that there are a range of services and options available -- now and in the future.
Elizabeth Warren is an assistant to the president and a special advisor to the Treasury secretary for the Consumer Financial Protection Bureau.

Photo by Tony Rinaldo