The U.S. House voted yesterday to exempt small lenders from regulations adopted in the 2010 financial reform bill commonly known as Dodd-Frank. All Republicans present and 73 Democrats supported the Small Business Credit Availability Act. The roll call shows that Democrat Leonard Boswell (IA-03) was one of the yes votes, along with Republicans Tom Latham (IA-04) and Steve King (IA-05). Democrat Bruce Braley (IA-01) voted against the bill, while Dave Loebsack (IA-02) was absent, attending President Barack Obama’s event in Iowa City.
Proponents assert that this bill would help farmers, manufacturers, and small and rural businesses secure loans. I’ve posted the official bill summary after the jump. It sounds like a leap of faith to assume that loosening regulations on small banks, savings associations, and credit unions will free up credit for small businesses.
Official summary of H.R. 3336, the Small Business Credit Availability Act:
2/8/2012—Reported to House amended. Small Business Credit Availability Act – Amends the Commodity Exchange Act (as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act [Dodd-Frank]) with respect to the exclusion of an insured depository institution from regulation as a “swap dealer.” Eliminates the criterion for such exclusion as to the extent to which the institution offers to enter into a swap with a customer in connection with originating a loan with that customer. Adds as new criteria for such exclusion the extent to which the institution enters into a swap: (I) with a customer that is seeking to manage risk in connection with an extension of credit by the institution to, on behalf of, or for the benefit of, the customer; or (2) to offset the risks arising from a swap that meets such requirement. Excludes from regulation as a swap dealer, under the same criteria, an institution chartered and operating under the Farm Credit Act of 1971. Revises the criteria for exemption of a swap from the requirement that it be submitted for clearing to a derivatives clearing organization either registered under this Act or exempt from registration. Revises in particular the exemption from this requirement of a swap one of whose counterparties is not a financial institution. Modifies the definition of “financial entity” with respect to a small bank, savings association, farm credit system institution, non-profit cooperative lender controlled by electric cooperatives, or credit union which the Commodity Futures Trading Commission (CFTC) may consider whether to exempt from such definition. Repeals the CFTC’s discretion to make such an exemption. Excludes outright from the meaning of financial entity any small bank, savings association, farm credit system institution, non-profit cooperative lender controlled by electric cooperatives, or credit union if its aggregate uncollateralized outward exposure plus aggregate potential outward exposure with respect to its swaps does not exceed $1 billion. (Thus exempts such a small bank, savings association, farm credit system institution, non-profit cooperative lender controlled by electric cooperatives, or credit union from the clearing requirement.) Declares such amendments effective as of the enactment of the Wall Street Transparency and Accountability Act of 2010 (title VII of Dodd-Frank). Requires the amendments made by this Act to be implemented through promulgation of an interim final rule, without regard to: (1) specified federal law on coordination of federal information policy, and (2) administrative notice and comment requirements.