Will Dodd-Frank jeopardize small community banks in New Mexico?

By | November 21st, 2012

The state’s top regulator for financial institutions, Cynthia Richards, is worried that small community banks in rural areas of New Mexico could go out of business if the strictest measures of the federal government’s Dodd-Frank legislation and the international banking standard known as Basel III go into effect.

“As the community banks go in New Mexico, so goes our economy,” Richards — Financial Institutions Division director for the state Regulation and Licensing Department — told members of the Senate Finance Committee on Nov. 15.

After the meeting, Richards told Capitol Report New Mexico she believes ”there have been parts of Dodd-Frank that have been helpful” for community banks, such as requiring financial stress tests, and she said the legislation has helped keep in line large, national banks and financial institutions that handle multi-billions of dollars.

But Richards says some aspects of Dodd-Frank as well as the capital requirements set forth in Basel III — designed for banks with assets of $10 billion or more —put too much burden on small, community banks that dot the landscape in New Mexico.

Read more at Capitol Report New Mexico.

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“I believe that the community banks drive the economy of New Mexico, because community banks are the only ones making loans,” Richards said in the video above. “The large national banks have backed off and said, ‘No, we’re going to wait and see.’”