“Regulatory burdens on community banks and local businesses are creating a burden that is stopping communities from growing,” said Scott Cocanougher, chief executive officer of First Community Bank of Bedford County, who participated in the congressional field hearing held at Middle Tennessee State University.
He said requiring community banks to adhere to the same regulations as larger financial institutions under the recently passed Dodd Frank Act has reduced lending in rural areas throughout the country.
“Community banks had no part in the subprime mortgage and derivative markets,” Cocanougher said, in reference to the 2008 financial crisis, which played a significant role in causing the economic recession.
The only part community banks played in the financial crisis was that “we had the word ‘bank’ on our building,” he said, noting Congress should not use a one-size-fits-all approach for financial regulations.
“Congress has caused rural community banks to comply with laws intended for multinational financial institutions, and that is stifling the credit market,” Republican U.S. Sen. Bob Corker said. “I think people are beginning to understand the Dodd Frank Act missed the mark, especially in terms of the small, rural community banks.”
Democrats criticize partisan approach
Conducted by members of the House Oversight and Government Reform Committee, the hearing, which was organized by Republican U.S. Rep. Scott DesJarlais of Jasper, focused on the impact of federal regulations on job creation in Tennessee.
Gov. Bill Haslam and Bill Hagerty, commissioner of Tennessee Economic and Community Development, also participated in the hearing, as well as Republican U.S. Reps. Diane Black of Gallatin and Marsha Blackburn of Brentwood.
Despite previous claims that the event would feature a bipartisan panel, the hearing failed to include testimony from any member of the Democratic Party, prompting harsh criticism from fellow Tennessee lawmakers and political leaders.
“This pathetic political theater is just a shameless attempt to campaign on the job,” said Chip Forrester, chairman of the Tennessee Democratic Party.
Democratic state Sen. Eric Stewart accused DesJarlais of using taxpayer dollars for a coordinated partisan attack, contending the business owners who testified were actually representatives of special interest groups, which have historically supported the Republican Party.
In addition, the panel did not include a single person who actually lives or owns a small business in Rutherford County, Stewart said.
“I do not think the people of Rutherford County need Washington, D.C., politicians and special interest groups coming down here and telling them how things should be,” said Stewart, who is a primary candidate vying for Congress.
If he wins the primary, Stewart will face off against DesJarlais in the 4th Congressional District race during the November general elections.
“The people I heard from today all agreed that their business succeeds when their customers have money to spend,” Stewart said, referring an informal meeting that took place soon after the congressional hearing concluded. “To me, this means tax breaks should go to working families, not corporations that so often invest in jobs overseas.”
Legislators discuss role of government
The hearing comes on the heels of a recent study showing the total cost of federal regulations on the American economy averages $1.75 trillion a year, based on data collected by researchers with the U.S. Small Business Administration Office.
As part of the study, researchers concluded small businesses bear a disproportionate amount of regulatory burden, an average of 36 percent more per employee on compliance costs than larger corporations.
“Our responsibility is to deliver facts to people and bring genuine reform to government,” said Chairman U.S. Rep. Darrell Issa, a Republican from California, who presided over the hearing. “We understand that good laws have to be protected. At the same time, we cannot regulate ourselves into unemployment.”
Haslam agreed, noting he does not believe any government – federal, state or local – is solely capable of spurring economic growth.
“But, I do think the government has a role in creating a business-friendly environment that encourages investment,” Haslam said. “There is certainly a necessary balance of holding businesses accountable and supporting their success, but too often, government is not responsive, customer-focused, efficient or effective.”
Businesses air grievances to Republicans
Throughout the two hours of testimony, participants assailed against what they described as an unfair assault on American companies by President Barack Obama and various federal agencies.
“During the last three years, the Obama administration has produced an avalanche of regulations that have made it more difficult to create jobs,” Republican U.S. Sen. Lamar Alexander said.
When asked whether they believed the economy is in recovery, several business owners took the opportunity to rebut claims the private-sector job market is improving.
“No, the private sector – strapped with regulations – is not doing fine,” said H. Grady Payne, chief executive officer of Connor Industries Inc., a Texas-based lumber manufacturing company that employs nearly 50 people in Tennessee.
“None of these regulations add one penny of productivity or revenue to our business,” he said. “Jobs require capital. Capital comes from profits.”
Payne said staggering costs associated with newly passed laws – primarily the Patient Protection and Affordable Act – are “choking” American-based firms out of the global marketplace.
“Our goals have turned from hiring and growing to just trying to survive under the health care law,” Payne said. “We may have to close plants in one of the eight states where we operate because no new efficiency or technological improvement can offset the costs of the health care bill. Many of our great employees could lose their job.”
Participants also spent much of the time criticizing how the National Labor Relations Board and Environmental Protection Agency oversee regulation compliance.
“Overzealous regulation is a perennial cause of concern for small-business owners, and it is particularly burdensome in times like these when the nation’s economy remains sluggish,” said Mark Faulkner, the owner of Vireo Systems, who spoke on behalf of the National Federation of Independent Business.
Some expressed the need for changing the culture of regulatory agencies, saying more emphasis should be placed on streamlining laws into understandable jargon and implementing educational programs, instead of relying only on heavy-handed enforcement tactics.
Often times, dealing with federal agencies, especially the Occupational Safety and Health Administration and U.S. Department of Transportation, feels more like a “government shakedown,” Faulkner said.
“Small-business owners are treated as guilty until proven innocent,” he said. “Although some regulations may be necessary or well-intended, American companies suffer from regulations that are illogically applied, especially to small business.”