It has been five years since the Dodd-Frank Act has been put in place and the discussion of this legislation’s effect on small banks has continued since. New Orleans City Business recently asked Kyle Waters, Loan Evaluations co-owner, to weigh in on the state of community banks.
Are community banks too small to survive the effects of stricter federal regulations? That question lingers as the Dodd-Frank Act marks its fifth anniversary this year.
The concern of the legislation’s effect on community banks is part of a wider discussion about whether they can be a legitimate competitor against megabanks. But the role that the law is playing on the shrinking industry is debatable.
Local analysts say community banks are not being pushed out of business because of the 2010 legislation.
“Community banks are doing just fine even in this low-rate environment,” said Kyle Waters, owner of Metairie-based Loan Evaluation Services LLC. Interest rates have lingered near zero the last few years.
“That’s not to say it’s a tough slog, but community banks are like most small businesses – they find a way to get it done,” he added.
That sentiment is shared among many in the banking industry. Smaller banks have been quick to speak out against the reform that was meant to regulate the banking industry as a whole. Community bankers say the cost of compliance has been a heavy burden, but they are surviving nonetheless.