It’s About Community Banks

Do you all recall the now-iconic Bill Clinton 1992 campaign slogan—“It’s the economy, stupid!”? Well, at ICBA, it’s the nation’s community banks, and it always will be.

There is a lot of noise out there these days. It is an election year—funny how EVERY year seems to be an election year now. Sometimes election years are referred to as the “silly season.” Most days it seems that every member of Congress is at every other member’s throat. The partisanship in Congress is more paralyzing than even the old-timers can remember. Politicians are accusing each other of everything from “class warfare” to socialism to “elitism” and everything in between.

In this cacophony of noise and distractions, political agendas and passions, it can be hard for some to remember that ICBA is purely a community bank association—not an arm of one political party or the other or some individual’s pet advocacy platform. We have a singular mission—community banks! We are not Democrats or Republicans. We have no grand political platform. We are not advocating one party or the other or their historic political philosophies or issues. We have one platform, one issue, one focus—the well-being of community banks.

Our focus, our mission, our platform is to ensure that the community banking industry not only survives, but thrives. It is a mission that takes all our energy and 100 percent of our attention, because many in Washington don’t want us to succeed and will do or say anything to thwart our efforts. But ICBA will prevail. ICBA will work every single day for the well-being and future of community banks. We will not rest, we will not waiver, we will not give up. We will work with whoever is willing to help us advance our community bank agenda. And we never forget that our core purpose as an association is the welfare of community banks and their interests. That is the plain and simple truth. No spin.

Time for a Divorce?

In a recent edition of the American Banker “Bankthink” section, Mr. Robert H. Smith, former chairman and CEO of Security Pacific Corp., wrote an opinion piece titled “Community Banks Should Ask for a Divorce.” In keeping with that theme, let me comment on Mr. Smith’s article in this way.

This is exactly what ICBA has been doing—or trying to do—asking for a divorce! The problem is that our abusive spouse (Wall Street mega-banks) doesn’t want to let us go. And while we are at it, the small credit unions should ask for a divorce from the mega-credit unions too. Our grounds for divorce are “irreconcilable differences.”

For the record, ICBA has been campaigning loud and long to dissociate ourselves from the reckless greed and overreach that triggered the 2008 financial crisis (or train wreck). In fact, in many ways, community banks were the victims of the crisis. So yes, Mr. Smith, you have the right idea.

Fines, Penalties and Settlements—Oh My!

Or, How the Smalls Pay for the Sins of the Bigs

A quick check of the records reveals that since the financial crisis began in 2008, Bank of America has been assessed at least $23.4 BILLION in fines, penalties and settlements! Not to be outdone, JPMorgan Chase, Citi, Wells Fargo, and Morgan Stanley have been assessed a combined $13 BILLION during the same time frame.  

It is ironic, and a bitter footnote for community bankers, that BofA’s $23.4 billion in various financial punishments alone could have made every undercapitalized community bank in the nation WELL CAPITALIZED at the height of the financial crisis! And it would have knocked hundreds of banks off the FDIC problem list AND saved scores of banks from outright failure.

So while BofA and the other too-big-to-fail firms were paying relatively light (for their size) penalties and fees, community banks were paying for those megabank sins with their banks! And now the same folks that brought you the financial crisis want community bankers to just forget all about that and act like nothing happened. And, by the way, now that we are all one big kumbaya family, let’s get rid of all those pesky rules that bring the systemic-risk banks to account.

And that, ladies and gentlemen, is the destructive nature of allowing financial firms (or any firm for that matter) to become so big that the government can’t fail them. And it is something that ICBA will continue to speak out about until policymakers stop allowing a handful of firms to dictate the course of America’s economy to the detriment of all of the rest of us.

Why Not Get Behind “CFA”?

Why is ICBA the only national banking trade group to push, and push hard, for passage of the Communities First Act regulatory-relief legislation (S. 1600/H.R. 1697)? And why hasn’t every state community banking group signed on?

This common-sense regulatory-relief bill was developed by community bankers FOR community bankers. And it’s making good progress in Congress. Even House Financial Services Committee Chairman Spencer Bachus (R-Ala.) is cosponsoring the bill—along with more than 60 of his colleagues on both sides of the aisle.

That’s not the only good news. In addition, sections of the Communities First Act are making their way through the House and over to the Senate. Last month, the House voted 420-2 (what gridlock?) to pass an ICBA-advocated bill that includes SEC shareholder-relief provisions included in CFA. Similar legislation in the Senate was recently modified to promote passage in that chamber.

That’s the beauty of the CFA bill—it was written so that sections of it can be lifted out and advanced via other legislation moving through Congress. This is the same tactic we used very successfully with our first CFA bill in 2005, and it is working again. ICBA does not just complain about regulatory burden and unfair examination and regulatory treatment—we ACT!

Napoleon was once asked about his ability to exploit circumstances on the battlefield. “Circumstances—what are circumstances?” the bemused general responded. “I make circumstances.”

And that is exactly what ICBA is doing—making circumstances! ICBA is changing the dialogue in Congress with our Communities First Act. Please, as a community banker, get behind the Communities First Act. Urge your members of Congress to support it. You have everything to gain and nothing to lose by doing so.