Think Tanks Slam Dodd-Frank for 'Crushing Impact'
Most Georgia banks were already struggling to recover from "souring" mortgage loans, the report states, and Georgia consumers were especially hard hit by the Great Recession. According to the foundation, the average unemployment rate in Georgia is 9%. In addition, the Federal Deposit Insurance Corp. has closed 80 Georgia banks since 2008.
The critical downside to Dodd-Frank, and especially the Durbin Rule, is that banks are facing a cash crunch and can't afford to extend credit to customers. That sets off a chain of events where the regional economy doesn't have the capital to grow.
"Without healthy banks with money to lend, it will be much harder for local entrepreneurs to find the funding they need to grow their business," writes Berlau. "Georgia's banks were already weakened by the recent, harsh recession. New regulations coming out of Washington, like the Durbin Amendment, are making it even harder for the banks to recover and do their part to kick-start the state's economy."
The report also notes that, contrary to merchant industry data, the Durbin Amendment costs banks $15 billion ($8 billion in reduced revenues and $7 billion in compliance costs), and any savings on debit card fees have not been passed on to consumers.
"This is a bad time for Washington to burden businesses with more regulations," notes Kelly McCutchen, president of the Georgia Public Policy Foundation, in a statement. "The Durbin Amendment has already hurt small and large banks, and it isn't helping consumers. It should be repealed before it does any more harm to the businesses that rely on them for loans and lines of credit to make payroll, open new locations and hire more employees."
--By Brian O'Connell