Remember how infuriating it was when the entire class was punished for the sins of a few? Despite pleas of "it's not fair," the teacher insisted that all class members would suffer equally.

That's pretty much the analogy we can make about the Dodd-Frank banking act which Congress passed and former President Obama signed in 2010 to limit abuses in the financial system. These abuses were in part responsible for the Great Recession of 2008-2009.Incredibly, despite all of the pain inflicted on individuals and on the overall economy, just one major player went to jail - Kareen Serageldin, an executive with Credit Suisse who lives in Philipsburg, Pennsylvania.There were lots of fines of major financial institutions - Goldman Sachs, for example, paid $5 billion - but, in the end, shareholders wound up paying the penalties.The Dodd-Frank Act imposed onerous reporting requirements and a sea of paperwork on small community banks, which have raised their costs. Ninety-nine percent of these banks were not responsible for the financial meltdown that occurred nearly a decade ago, but they must pay for the sins of their much larger brethren.The frustration felt by executives of these banks was underscored at a recent economic forum attended by local bankers and several Republican members of Congress, including Charlie Dent, whose district includes the Lehigh Valley.Craig A. Zurn, president and CEO of Jim Thorpe Neighborhood Bank, said his bank's compliance costs have ballooned by 30 percent in the last 18 months because of Dodd-Frank.Complying with this act requires increased time and resources with no payback to the bottom line, so these small banks with minimal assets have taken a significant hit. Many banks have been driven out of existence or have been forced to merge with larger banks. The result is that consumers have fewer choices than they did years ago.Today, there are fewer than a dozen community banks remaining in the five-county Times News area of Carbon, Schuylkill, Monroe, Lehigh and Northampton counties.The Federal Deposit Insurance Corporation reports that the number of federally insured banks has fallen from 7,357 in 2011 to 5,980 last year. FDIC also said there were 929 startups in the seven years before 2010 but just 17 in the seven years since then.The median-sized bank in the United States has just 42 employees. To expect these small banks to comply with the wave of regulations that have been imposed on them is a big factor in why smaller banks throw in the towel and allow themselves to be absorbed by much bigger financial institutions or just go out of business.President Donald Trump promised to undo regulations passed during the Obama presidency, including Dodd-Frank. After his election last November, bank stocks skyrocketed by between 20 and 40 percent in anticipation of the scuttling of Dodd-Frank.The House passed a bill curtailing many of the provisions of Dodd-Frank, but the Senate so far has failed to go along with the proposals. Despite the Trump administration's efforts to dismantle the act, it's unlikely that all of Dodd-Frank will be scuttled. The financial industry needs regulation to prevent another meltdown as we saw less than a decade ago when the federal government had to step in to prevent some big banks from failing.The financial industry needs stability, regulation and security. Coming up with the right balance for banks of enormously varying sizes is the trick.JTNB's Zurn told the recent economic forum that the increase in compliance costs gets passed along to customers. Community banks such as JTNB had no complicity in the financial meltdown that contributed to the Great Recession, yet they must pay the price right along with those banks which did.We subscribe to some common-sense recommendations proposed by Frank Sorrentino, CEO of ConnectOne Bank in New Jersey:Tailor regulations based on the complexity and risk profile of each bank. Most community banks pose fewer risks than some of their bigger counterparts, especially in a financial crisis.Cut the red tape for smaller banks, which cannot afford to adhere to the 2,300 pages of regulations found in the Dodd-Frank Act.Give back decision-making powers to community banks, which have the pulse of their communities and understand the business and local market dynamics. This will make it easier to get loans and encourage business and industry to invest in their communities.By BRUCE FRASSINELLI |

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