Small Business Credit Bill Gains Approval in the House

The House of Representatives approved a bill last week that should make it easier for farmers and businesses to gain access to competitive, low-rate fixed loans, USAgNet reports. The measure, H.R. 3336, or the Small Business Credit Availability Act, was approved by a vote of 312-111.

It was proposed by Rep. Vicky Hartzler (R-MO) and is cosponsored by Rep. Tim Holden (D-PN) and Rep. Mike McIntyre (D-NC). It will give small banks, credit unions and farmer credit institutions an exemption from several of the rules in the Dodd-Frank Act that were meant to regulate large banking institutions.

The Dodd-Frank Act, which was originally intended to provide financial regulatory reform through stricter guidelines regarding transparency and accountability throughout the financial system, has been criticized by experts on both sides of the political spectrum. Some say the reforms are insufficient in their ability to stop another financial crisis, while others claim the regulations are too extreme and will stifle businesses and job creation.

Hartzler argued that the rules in Dodd-Frank were meant to protect the public from systemic risk caused by a large bank’s failure, but these same rules should not apply to small or local credit institutions that could be put out of business due to red tape.

Under the legislation, small banks and credit unions would not be considered swap dealers and, therefore, would not be subject to reviews by a Commodity Futures Trading Commission (CFTC) clearinghouse as long as the credit they offer is being used by an individual to mitigate risk. This means that it will be far easier for small financial institutions to offer fair loans unburdened by CFTC regulations. Although the bill had some bipartisan support in the House, it is unlikely to gain support in the Democratic-controlled Senate.