WASHINGTON (3/17/16)--The negative effects of regulatory burden under the Dodd-Frank Act were addressed several times during a Wednesday hearing on the U.S. Treasury’s fiscal year 2017 budget. The hearing was conducted by the House Appropriations subcommittee on financial services and general government, and Treasury Secretary Jack Lew was the sole witness.
Rep. Mark Amodei (R-Nev.) asked Lew about consolidation of small financial institutions, and cited a February 2015 report from the Harvard Kennedy School that largely blames Dodd-Frank and the Consumer Financial Protection Bureau for creating costly and unnecessary compliance burdens on credit unions and community banks.
Rep. Jose Serrano (D-N.Y.), the subcommittee’s ranking member, discussed with Lew the Treasury’s funding of a short-term, small-dollar loan program for certified Community Development Financial Institutions (CDFIs). CDFIs generally serve low-income areas and are eligible for grants and other awards through the Treasury’s CDFI Fund.
The short-term, small-dollar program, which is allocated $10 million in the president's proposed budget, is authorized by Dodd-Frank and is designed to "support broader access to safe and affordable financial products and provide an alternative to predatory lending by encouraging CDFIs to establish and maintain small-dollar loan programs," according to the budget.
As of Jan. 31, there are 991 certified CDFIs nationwide, 267 of which are credit unions.