Neal Wolin, deputy secretary of the Treasury Department, went to bat Wednesday for the Dodd-Frank Act for the second time this week.
After defending the pace of the bill's implementation Tuesday, Wolin wrote in a Treasury blog post that the law protects and strengthens community banks, despite claims to the contrary.
"Opponents of financial reform have been trying to argue that the Dodd-Frank Act is bad for consumers and bad for small businesses because it hurts small banks," Wolin wrote. "In fact, the lawmakers who drafted the Dodd-Frank Act took great care to protect and strengthen the country's rich network of community banks, helping to ensure that we avoid the concentration that exists in the banking sectors of so many other countries which are dominated by just a handful of very large institutions."
Wolin said the law focuses on constraining risk at the largest banks and helps level the playing field for community banks. Several provisions in particular strengthen the role of small banks, including higher deposit insurance protection and lower assessment costs, he said. It also subjects big banks to higher prudential standards, allows greater oversight of nonbank firms and reduces the "unfair funding advantages" for the largest institutions by creating a process for winding them down when they face failure, Wolin said.
