More people are expected to apply for loans after President Trump announced that he will make some regulatory changes that will make it easier for banks and financial institutions to extend loans. With loans getting easier to obtain, it will give people opportunities to start businesses which plays an important role in boosting the economy. President Trump is asking for the feedback from the banker executives on the regulations that restrict them from extending loans to consumers. He has vowed to make the necessary changes to amend the Dodd-Frank Act which he claimed is a disaster.
The Dodd-Frank Act was established following the economy crisis in 2008. President Trump has signed an executive order that tasks the treasury secretary, Steve Mnuchin, the treasury secretary, to go through the entire financial regulation and report back to him on any finding of flaws together with suggestions on what need to be changed within 120 days.
The Dodd-Frank Act is no good for small community banks as it creates rules that prevent them from charging certain fees on loans that are part of their main income. It has forced community banks to offer low interest rates for consumers so that extending loans is no longer as profitable as before. This has caused many small banks to join together in effort to make it affordable to extend loans to consumers.
It has been a long time since community banks complain about the restrictions that is imposed on them through the Dodd-Frank Act. Many people who have nice businesses also complained about not being able to get a loan nowadays because the bank won’t allow them. All this happens because of the recent regulations introduced through the Dodd-Frank Act. It will take some time for the Dodd-Frank Act to be demolished since the government also have other things like tax laws to handle.
All banks need to be regulated but the current regulation is too strict and has hurt the growth of many small businesses that are supported by small community banks. The small community banks provide the majority of the funding for small businesses. If these small businesses don’t have access to funds, they won’t be able to grow and this will lead to the downfall of the economy.
It is possible to eliminate the Dodd-Frank Act since President Trump and the Republicans are in charge of the Congress. Under President Obama, regulators have been stricter to the banks. Banks are asked to increase the capital requirement so that they can approve lesser loans. The Republicans have come up with an act called Financial Choice Act that will completely eliminate the Dodd-Frank-Act. The Choice Acts gives bankers the option to choose whether they want to remain or break free from the Dodd-Frank Act.