Attempting to contradict repeated concerns over the cost of regulations, President Obama's Council of Economic Advisers said Wednesday that community banks remain healthy and are not collapsing under the burden of Dodd-Frank.
"Economic evidence finds that community banks remain strong across a range of measures, from lending growth to geographic reach, including in their performance since financial reform passed in 2010," the CEA said in the report.
Dodd-Frank changes helped neutralize some cost advantages that favored large banks, the CEA said.
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While the CEA report covered community banks, it never mentioned credit unions – an omission criticized by John McKechnie, senior partner at Total Spectrum.
"Credit unions deserve to know why their Dodd-Frank burdens weren't part of what is an otherwise important discussion by the White House regarding financial institution regulation," he said in disputing the report's findings.
Even as large banks have attempted to expand their reach, the CEA said, small banks have been able to remain competitive because of their close proximity to customers.
And about 99% of U.S. counties have access to a brick and mortar bank branch.
While the smallest community banks have faced structural problems, those issues date back to the decades before Dodd-Frank, the council said.
And while Dodd-Frank critics have said it has harmed community banks, the report painted a different picture of community banking.
Lending by all but the smallest community banks has increased since 2010 and is now in line with levels before the financial crisis, according to the report. Community banks have also maintained or increased their market share in many markets, the CEA said.
Access to banking services at the county level has remained strong and the average number of bank branches per community bank has increased, the report stated.
During the past two decades, the CEA said, the number and market share of the smallest community banks – those with less than $100 million in assets – has declined, according to the CEA.
That has been caused, in part, by growth in assets among those banks, the council said.
And the CEA said many community banks have seen a rebound in lending and a revival of the asset and lending growth they achieved before the economic crisis.
Credit unions remained unconvinced.
"Common sense is the largest piece of evidence demonstrating the Dodd-Frank Act's negative impact on credit unions," NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt said.
She added credit unions are being forced to comply with the same rules as large banks and that many large banks view the regulations as a competitive advantage.
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