Our friends at the nationwide Main Street Alliance have produced this fact sheet on financial reform and small business:

Weak public oversight allowed Wall Street’s risky and complex “financial innovations” to threaten the real economy the financial sector is supposed to support. Empty storefronts on Main Street reflect the consequences small businesses face as a result including the disappearance of customers and dried up lines of credit. Meanwhile, large financial institutions receive public bail-outs, yet remain unaccountable. Main Street’s small businesses need financial reform to restore the stable economic foundation we need to thrive.

How will financial reform benefit small business?

By keeping an eye on systemic risks

· Loopholes in the regulatory system should be closed to ensure soundness, fairness and transparency. Agencies should receive the resources they need and be held accountable for fulfilling their missions.

· A central authority should oversee the multiple, separate regulatory agencies and watch for systemic risks to the broader economy.

· The current practice where regulatory agencies compete with each other to attract financial institutions to watch over should be stopped. This creates a conflict of interest where institutions shop around for the agencies with the weakest oversight, creating a “race to the bottom” that threatens transparency and protections.

By protecting consumers and small businesses

· Strong consumer protections go hand-in-hand with ensuring a more solid foundation for our economy, yet no central authority devoted to protecting consumers and small businesses exists. One should be created and empowered to put a stop to unfair, deceptive or abusive products and practices that harm small businesses.

· Federal laws should create minimum, not maximum, consumer protections. States should supplement federal laws and be able to protect their residents and local businesses. Federal agencies and courts should not preemptively prohibit states from creating protections that meet local needs.

By supporting communities

· The foreclosure crisis has led to a broad depression of property values and has prolonged the larger financial crisis. Small businesses are impacted both by the steep decline in business activity as families struggle to make their mortgage payments and by the decline in the commercial real estate market. In order to promote economic recovery that benefits small businesses, public policies must address the foreclosure crisis and free up disposable income for spending in local economies.

· The Community Reinvestment Act (CRA) encourages banks to meet the needs of low- and moderate-income neighborhoods. However, the CRA overlooks neighborhoods where banks make loans but do not have physical branches. In addition, regulators are prohibited from collecting data related to gender, race and ethnicity, allowing discriminatory lending and residential segregation practices to continue. The CRA should be modernized so as to encourage loans and investments in neighborhoods where they are needed the most.