6/9/17 Erik Paulsen Correspondence Corner : Financial CHOICE Winners and Losers

Erik Paulsen regularly issues a video Correspondence Corner in which he responds to constituent questions.
It is a great ploy — Congressman Paulsen determines what question is to be answered … thus, providing him an opportunity to portray himself as effectively responding to issues that he wishes to address as if they are the most critical issues that voters want addressed.
The MN Political Roundtable will be evaluating Congressman Paulsen’s responses and encouraging readers to offer their own assessments.
Today’s topic, H.R. 10 The Financial CHOICE Act.

In this week’s Correspondence Corner, Congressman Erik Paulsen responded to a letter from a Plymouth resident who wanted him to work on financial reforms so that “banks could serve customers better and create jobs.”

Congressman Paulsen said he knew about the problem adding that “we lose one community bank or credit union a day”. Particularly suggesting that the Dodd-Frank legislation had “hurt Credit Unions and small banks.” (FYI : Dodd-Frank was the bipartisanly approved Wall Street Reform and Consumer Protection Act of 2009 which Congressman Paulsen voted NO.)

WOW … Congressman Paulsen’s words sure express doom and gloom !

Yet, I gotta ask, has your community seen an up tick in banks like mine ?

Back thirty years ago, there were probably five banks and a couple of credit unions in my community … today that has more than doubled if not tripled … many in newly constructed energy-efficient buildings.

My eyes don’t see it … but maybe your community is different.

For the record, the FDIC report that there have been six “failed” banks this year … five in 2016 … eight in 2015 … and 18 in 2014. The last Minnesota bank to close was North Star Bank in Mankato and St. Cloud on December 19, 2014.

Northern Star, a small bank with just $18.8 million in assets and $18.2 million in deposits, was started in 1999 and quickly had problems connected with one of its directors, the late Frank Gazzola. (Gazzola, an accountant, was eventually mired in a series of lawsuits and investigations for an alleged Ponzi scheme.)

North Star Bank was acquired by Bank Vista … and fun fact, join Bank Vista on June 20th for “door prizes, food and beverages” at their “new, state-of-the-art facility in Mankato.”

So, I am not a Math Guy, but that doesn’t sound like one-a-day … yet it is a fact that the total number of banks in the United States has been dropping for decades … because of competition and consolidation — not because of bank failures.
Heck, according to the Federal Deposit Insurance Corp community banks made about 8 percent more loans in 2016 and revenue and loan growth outpaced the industry. Further analysis, reveals “community banks can, and do, still thrive.”

That aside, Congressman Paulsen reported with the “good news” that the House had just approved H.R. 10 the Financial CHOICE Act of 2017.

Just a small little piece of legislation … if you consider 589 pages small … and surely one that Congressman Paulsen has read thoroughly.

Admittedly, I have not read all 589 pages, so a quick Internet search, provides this reaction to the proposed legislation has revealed some interesting assessments :

From the Credit Union Times

CHOICE Act Could Boost Fees Paid by Credit Unions

fees on both federal and state-chartered credit unions insured by the Share Insurance Fund would total about $200 million annually.

Ryan Donovan, CUNA’s chief advocacy officer said, “Such a measure would impose additional and unnecessary costs on credit unions”

Others are weighing in … Retailers Object to Financial Choice Act

According to the Arlington, Va.-based National Grocers Association, the act, if passed, would nearly double the rates that food retailers pay every time a consumer uses a debit card.

Representatives of 53 organizations through the Council of Institutional Investors wrote the legislation would

shackle the Securities and Exchange Commission (SEC), including with excessive cost-benefit analysis requirements, unwise limits on enforcement and Congressional review requirements that appear designed to foster the ability of special interests to block needed rules.

Hmmm … so there appears to be some warnings … but in the end, the House approved HR10 by a vote of 233-188 … with Congressman Paulsen voting yes … in fact, all the yes votes were from Republicans while the no votes were bipartisan.

Thus, ya gotta ask … if this was such a great bill, why wasn’t there universal support ?

Yeah, Congressman Paulsen calls it the “Financial CHOICE Act”, while others call it the “Wall Street’s Choice Act” or the “Wrong Choice Act” and, even the “Cruel Choice Act”, because simply stated, it is cruel to consumers who had been protected in the financial marketplace by the current legislation.

So, if there is cause for concerns, what is in the bill ?

Not improvements for consumers … as the bill strips the powers of the Consumer Financial Protection Bureau (CFPB) to stop unfair, deceptive, and abusive practices in consumer markets or to regularly examine banks and financial companies to determine whether they are breaking the law. The CFPB, which in just fewer than six years of service has returned nearly $12 billion to 29 million victims of financial chicanery, by firms ranging from Wall Street banks to usurious payday lenders and fly-by-night debt collector.
Further, the legislation makes the CFPB’s statutory Offices of Financial Empowerment, Older Americans, Service Member Affairs and its Office of the Student Loan Ombudsman all “optional,” so a future director could simply eliminate them. The bill, also, eliminates the CFPB’s Congressionally-granted authority to ban or regulate arbitration in consumer contracts, which serves corporate wrongdoer Wells Fargo well, as it has been using an arbitration shield to defend itself against its fake-account scandal.

Surprised that Congressman Paulsen would support this … nah … let’s remember that “Representative” Paulsen accepted over $100,000 in campaign contributions from banks last cycle … and they expect “their Representative” to vote in their best interests.

So who are the winners … well, that’s easy … “Representative” Paulsen’s donors … and the losers … well, everybody else.

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