The fight over the new US financial reform law has increasingly become a battle to win the hearts and minds of small bankers. At hearings, congressional Republicans have portrayed the Dodd-Frank law as a crippling weight on small banks. But US regulators defending the law say it gives small banks more than just a stone with which to fight banking Goliaths.
The wooing of the financial sector's little guys represents the prevalent view that a good way to weaken or strengthen an aspect of the law is to make small banks your allies. "It would be difficult to overstate the influence of community bankers," said Dennis Kelleher, a former Senate Democratic leadership aide and president of the Wall Street watchdog Better Markets, Inc. "They're almost all deeply connected to their community and that's why they get listened to by members of Congress, who last time I checked had this inordinate desire to be reelected."
Whose pitch is the most persuasive remains an open question, but early results show supporters of the law have their work cut out for them. In interviews with several bankers at the Independent Community Bankers of America convention this week, most acknowledged the law directly benefits them in specific ways. They will pay less into the fund that covers the cost of bank failures, as supporters have argued.
They are skeptical, however, that new restrictions aimed only at big banks will not also cost them time and money through more staff training and compliance work. This skepticism is a frustration for the law's supporters, who argue it ignores the facts, but many bankers said Dodd-Frank is so big and complex it is hard for them not to have a jaundiced view about its impact.