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Dodd-Frank Finger Pointing: Street Whispers

"Sure a lobbyist from a big bank is going to attack me because they hate ICBA--because we try to point out that there is a disparate treatment between a $2 trillion bank and a $200 million bank," Fine says.

Dodd-Frank accomplishments Fine says he is proud of include raising deposit insurance from $100,000 to $250,000 per account, and decreasing the relative contribution of small banks to the Federal Deposit Insurance Corp.'s insurance fund. Most important, he believes, has been his success in communicating to Congress that his members should not be treated the same as larger banks when it comes to designing regulations.

These victories are lost on Clyde White, Chairman, President and CEO of Ouachita Independent Bank, a $567 million asset institution in Monroe, La.

Ouachita belongs to the American Bankers Association, not ICBA, but White's impression is that the two lobbying organizations were fairly similar in their positioning on Dodd Frank.

Though angry about the law, he doesn't appear to fault the lobbyists.

"We got what we got," he said.

White faults Dodd-Frank for trying to "cover all the ills of the world with one piece of legislation that's designed to deal with some issues that community banks aren't even involved in and to punish banks for things community banks never did."

The debate over the effects of Dodd Frank is likely to continue for some time, as many of the rules are still being written, and it may be some years before their impact can be accurately assessed. What seems clearer is that the shrinking pool of community banks will grow ever smaller. Fine expects the number to shrink to roughly 5000 from its current level of 7000 over the next eight years. Other industry watchers make even more drastic assessments.

The banking industry is hardly unique in this regard. For better or worse, the world is every day less hospitable to small businesses. Dodd Frank undoubtedly has its flaws, but it seems excessive to hold it primarily responsible for the disappearance of small banks.

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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