Five Ideas to Improve Dodd-Frank

Many banks deeply believe that the Dodd-Frank Act has harmed financial institutions, blocked potential pro-consumer innovations and must be repealed. In contrast, many experienced consumer groups believe that Dodd-Frank, if only it had been fully and effectively implemented, would have produced millions more affordable home loans, eliminated payday lending while providing affordable, effective alternatives, and that the fault lies largely with the banking industry and often with the regulators.

Key congressional leaders from across the political spectrum tend to ascribe to either of these views. Rep. Jeb Hensarling, R-Texas, chairman of the Financial Services Committee, endorses the industry opinion and has introduced legislation to repeal much of Dodd-Frank. At the other extreme, Sen. Elizabeth Warren, D-Mass., endorses the consumer group view.

We, as members of the National Diversity Coalition, stake out a more nuanced view. Our members include the largest black and Latino churches and a broad range of minority chambers of commerce and nonprofits. We have an alternative perspective that does not focus on blaming banks, regulators or anyone else.

Our focus — one that we hope the new Congress will at least partially embrace after this year's election — is that blaming the government or the industry or some other target mentioned in the rhetorical debate over the economy is unlikely to benefit the 70% of Americans who live paycheck to paycheck. Nor will blame assist the 68 million Americans who are unbanked or underbanked or the estimated one in five Americans who cannot effectively participate in the digital economy.

As a first step, we are convening a meeting at a prominent Latino evangelical church on July 15 to discuss with our members and affiliates, including a large group of pastors, viable alternatives no matter who wins the upcoming election. We have also scheduled a follow-up post-election meeting for Nov. 10 to develop our D.C. regulatory and legislative agenda.

Once a tentative agenda is developed, we will meet with a broad range of community, medium-sized, large, and "too big to fail" banks to secure both their input and possible support. We're driven in strong part to come up with new ideas based on congressional inaction on all issues, not limited to the economy and financial services. Last week's stalemate on even modest gun control reforms is a strong stimulus for our efforts.

Banks should be profitable, but consumers must also be protected and be able to benefit from economic growth. Some of the ideas and potential legislative proposals that will be discussed include:

• A near-blanket exemption from onerous and costly regulatory burdens for banks that are not "systemically important."
• A reduction in regulatory burdens for banks that commit to and achieve "Outstanding" Community Reinvestment Act ratings.
• Revisions in the CRA rating system to address a 21st-century digital banking industry that can secure the support of millennials and the new "Generation Z" beginning to graduate high school.
• Strategies to create at least 10 to 20 competitive large in each U.S. region, without necessarily breaking up "too big to fail" banks.
• Special incentives to banks that successfully develop services and products that substantially diminish the number of unbanked and underbanked, and warmly welcome the 70% of Americans who live from paycheck to paycheck into a modern 21st-century banking system.

Once the draft of our plan is fleshed out at our July 15 meeting, we will arrange meetings with the regulators and the more than three dozen banks with which we partner.
One day soon, we hope Congress, the regulators and the bankers will be able to achieve common legislative objectives to improve on the Dodd-Frank Act of 2010 and create reforms that work for both the banking industry and the consumers. We are starting the task to find a common way forward.

Faith Bautista is the president and CEO of National Asian American Coalition. Gil Vasquez is managing partner of the certified public accounting firm Vasquez & Co. LLP and chairman of the Los Angeles Latino Chamber of Commerce. Mark Whitlock is pastor of Christ Our Redeemer A.M.E. Church in Orange County, Calif. All are members of the National Diversity Coalition.