Reforms under the Dodd-Frank Act will go further to benefit smaller community banks than the ineffective rules established just before the crisis, Federal Deposit Insurance Corp. Chairman Sheila Bair said before the Independent Community Bankers Association Tuesday. Two weeks into her tenure in 2006, Bair finalized a rule that allowed the FDIC to build a reserve during stretches of growth and possibly keep the regulator from having to charge banks during a downturn. The brunt of the initial assessment fell on newer banks, and the executives expectedly complained. "I remember well the strongly worded comment letters and tense meetings with newer banks, many of whom followed nontraditional strategies through Internet deposits or affiliations with investment banks," Bair said. "They were not happy with us, and I recall many saying we had no need to build the fund because of the health of the industry and lack of bank failures." Then, the crisis hit. The Deposit Insurance Fund dropped to a negative $20.8 billion balance in the fourth quarter of 2009. Bank failures mounted to an 18-year high of 157 in 2010. "Yes, they assumed, the good times would go on forever, so why in the world did we need more money? The rest, as they say, is history. We went ahead with the new assessment rate schedule, which was my first major rulemaking just two weeks into my tenure," Bair said. "But as it turned out, it was too little, too late." But going forward, Bair said the 2,000-plus page Dodd-Frank Act would go toward helping these smaller companies that have taken the brunt of the failures. Had the bill not been enacted, the deposit insurance limit would have reverted back to $100,000, and the "too big to fail" stigma would have lasted. Though some market commentators maintain "too big to fail" is alive and well, regulators stress they have the tools in place to liquidate such a giant corporation in the next crisis. Bair said Dodd-Frank required large financial institutions to have the same capital cushions as community banks. Echoing what Elizabeth Warren, the architect of the pending Consumer Financial Protection Bureau said at the same meeting Tuesday, Bair said the crisis cannot be blamed on community banks, and thusly neither should the reforms from that crisis be aimed at them. "Dodd-Frank is not a perfect law. There are many things in it that I would like to change. But, on balance, it is a good law and one which I think will strengthen, not weaken, community banks," Bair said. Write to Jon Prior. Follow him on Twitter @JonAPrior.