DODD-FRANK FINANCIAL REFORM BILL
Updated July 15, 2010 -- Scroll down to read all stories.
IMPACT OF THIS LEGISLATION
The new legislation
is now known as "Dodd-Frank Wall Street Reform and Consumer
Protection Act" and it will bring
about sweeping changes for us
in many ways -- most that are unknown at the moment. It has the potential of reshaping how (and if) we do business. Many of you may know, we had
a lengthy meeting with Senator Shelby last November. One thing that
came from that meeting was crystal clear. Senator Shelby's message
was that this legislation would be the most far reaching and
open-ended piece of legislation he has ever seen in his time in the
U. S. Congress. That time spans over 25 years. Now that most of us have
seen the legislation, we can now agree with Senator Shelby 100%!
After reading many
reviews and scanning the legislation, here is our assessment of a
few points that come across quite succinctly about this legislation:
1) Payday lending
is on the target list. It is the only consumer lending product,
other than mortgages and those that are excluded, that gets
honorable mention in the bill. In fact, it is listed in a section
all of its own.
2) States may have enforcement rights as it relates to non bank
entities (us), but the CFPB will make the
rules. And, the CFPB will have almost unfettered rights to write
the rules as they decide with virtually no oversight, other than
themselves. No outside entity will have veto rights over their
regulations and rulemaking.
3) Most of the
financial products and services many of us provide will likely
remain viable for a time, but the outlook and the regulation
oversight is very murky for the longer term.
4) The time frame
for us to expect changes seems to be
further out than some of us may have first thought. See
this article from the American Banker that one of our good
friends passed along. The article does offer some encouragement. The
job is almost overwhelming and it will take time.
bottom line is we believe there will be massive changes in our industry if this
legislation occurs as it is now written (the most likely case).
Some wise person once said, "out of chaos comes opportunity." We
hope they are right. If the opportunity is only half as great as the
chaos seems to be in the text of this bill this will be one of the greatest opportunities
most of us see in our lifetime. There will be changes for us and we
will need to adapt, but the good news is we should have time to make
the adjustment. But, adapt we will need to do if we wish to remain
in this business.