Seize the Month: April is Go Time for Community Banks

Community bankers know we can’t rest on our laurels. We have to strike while the iron is hot—whether it is a loan to a local small business or grassroots outreach on important legislation.

That is why ICBA is giving community bankers a unique opportunity this month to build on our industry’s recent successes by participating in both Community Banking Month and the ICBA Washington Policy Summit.

ICBA is offering community bankers a Marketing and Communications Toolkit throughout April to help our industry build awareness and support nationwide. We are encouraging community bankers to use the turnkey custom resources all month long while also tweeting with the #BankLocally hashtag and sharing their photos with ICBA on Facebook.

Also in recognition of Community Banking Month and in preparation for the upcoming ICBA Washington Policy Summit, ICBA launched a promotional blitz in the nation’s capital. Ads running on Washington-areas buses, trains and a key Capitol Hill Metro station will spread the community bank message in Washington through the policy summit, slated for April 29-May 2.

The ad campaign is designed to raise our industry’s profile ahead of the summit, which will feature face-to-face meetings with policymakers and remarks from Federal Reserve Chair Janet Yellen, FDIC Chairman Martin Gruenberg and Senate Banking Committee members Bob Corker (R-Tenn.) and Heidi Heitkamp (D-N.D.).

Now is the time for community bankers to build on recent advocacy successes on the Volcker Rule, flood insurance and debit card interchange by making their voices heard both in Washington and back home in their communities.

We cannot rest on these recent victories. We have to keep pushing if we want to ensure a sound future for community banking.

ICBA “Going Postal”

Postal

I’m all for outside-the-box thinking. Fresh ideas and brainstorming are as important in community banking as they are in any other business. But sometimes an idea comes along that is so bad—so half-baked and ill-considered—that it should be politely heard…and then squashed outright before it has a chance to gain any traction.

In case you missed it, we got just such an idea the other day with a proposal that the U.S. Postal Service get into the banking industry. The money-hemorrhaging agency’s Office of the Inspector General recently recommended that the Postal Service offer financial services, such as prepaid debit cards, loans and remittance services. Consumers would be able to load cash or their paychecks onto a Postal Service payment card that would be covered by an FDIC-insured partner bank (presumably a very large one).

Well, I guess if the Postal Service’s primary business and expertise of selling postage stamps and delivering junk mail can’t balance the books, why not financial services? I mean, banking is a piece of cake, and there’s hardly any risk involved, right?

The truth is that this proposal is a dead letter. It raises a pile of problems and appears to be a last-ditch effort to save the struggling government agency from bankruptcy and taxpayer-funded bailouts.

First of all, consider the motivation. The Postal Service has rung up seven consecutive years of net losses and is defaulting on required payments to its retiree health-care plan. It has lost $25 billion in the past three years, reached its $15 billion debt limit a year and a half ago, can’t borrow another dime from the U.S. Treasury, and is coasting on fumes. For some reason I don’t think this is a good jumping-off point for a foray into retail banking.

Second, consider the expertise, or lack thereof. The Postal Service is failing at doing the one thing it knows how to do—delivering mail. What makes it think it could add financial services to its bag of tricks in the first place? I enjoy football, but I don’t expect to get a shot in the NFL if this community banking thing doesn’t work out.

Finally, let’s see this proposal for what it is—an attempted government intrusion into the financial services sector. The last thing we need is more government intervention in Americans’ personal finances. The postmaster general himself has said the Postal Service operates a “broken business model.” If government conducted its operations efficiently and apolitically, we wouldn’t need UPS and FedEx.

So, please, let’s move on. The Postal Service’s entry into the banking world is no more desirable than me suiting up for the Seattle Seahawks. I understand that the Postal Service is running low on options, but surely there’s a better plan out there somewhere. Anyone got any ideas?

The Dangers of Regulatory Overreach and Those Who Exploit It

In case you missed it, American Banker this week launched a series that sheds some light on the unintended consequences that can result from the aggressive application of regulations. The series explores National Fair Housing Alliance allegations that several large banks have failed to adequately maintain foreclosed properties in predominately minority neighborhoods, which they say is dragging down surrounding communities.

If true, the allegations are truly shameful. But the article raises questions about the NFHA’s claims. It notes that the organization has disclosed addresses for only a fraction of the properties it alleges have been neglected, has regularly misidentified the institutions responsible for maintaining certain homes, and is financially dependent on the Department of Housing and Urban Development and legal settlements with the banks it targets. These settlements include a $42 million agreement with Wells Fargo, not a penny of which will go to individual homeowners. So the only thing shameful here is NFHA’s dubious allegations and HUD’s blatant misuse of government authority.

Make no mistake, I understand and support the principle of fair lending. Everyone who applies for credit should be treated equally and fairly. And banks in the unfortunate position of having to maintain foreclosed properties should not discriminate based on where those properties are located. But we must not forget that regulations have costs, and those costs are very often borne by the very individuals the regulations are meant to help.

In the case of the American Banker article on the NFHA, it is difficult for me to see how underserved communities benefit from the organization’s questionable claims and self-serving legal settlements. Instead of forcing financial penalties, we should reduce regulatory burdens to free up the flow of credit to support the economic recovery for all citizens in all our communities.

Gridlock? Congress Getting Along on Community Bank Reg Relief

20131122 Gridlock

What gridlock? While bipartisanship can be hard to come by here in Washington, members of Congress from both sides of the aisle have found common ground on an issue near and dear to my heart: regulatory relief for community banks.

The latest example is this week’s House Financial Services Committee markup. The committee approved two bills that advance long-sought provisions in ICBA’s Plan for Prosperity regulatory relief platform.

One (H.R. 2446) would change the structure of the Consumer Financial Protection Bureau so that it is governed by a five-member commission rather than a single director. The other (H.R. 3193) would strengthen the Financial Services Oversight Council’s review standard for CFPB rules. Together, these bills would provide for a greater variety of views and expertise on CFPB rulemaking, more input from the prudential banking regulators and, ultimately, balanced rules.

ICBA has long advocated these bills and looks forward to working with the rest of the House to advance them. But these aren’t the only bills that will be keeping us busy—and that’s a good thing.

Just last week the same committee passed a separate Plan for Prosperity measure that would allow more community banks and thrifts to benefit from the Small Bank Holding Company Policy Statement. Meanwhile, ICBA is working with the Senate to advance legislation to eliminate redundant mailings of annual privacy notices (H.R. 749), a Plan for Prosperity bill that’s a hair’s breadth from reaching the president’s desk.

With so many controversial issues swirling around the leaf-strewn streets of Washington these days, regulatory relief for community banks and their customers is a no-brainer. But that doesn’t mean community bankers can be complacent—nothing’s a cakewalk on Capitol Hill. That’s why ICBA recently conducted a grassroots blitz to maximize support for the CLEAR Relief Act (H.R. 1750/S. 1349), which incorporates a number of Plan for Prosperity provisions in one easy-to-swallow legislative package. Nearly 20 cosponsors have signed on to the bills in both chambers of Congress just this week, bringing the total number of cosponsors for the legislation to more than 100.

So rest assured, community bankers, our voice is being heard in Congress. There is momentum for our policies supporting economic growth and opposing regulatory red tape. But let’s keep up the hard work and carry meaningful relief from overregulation all the way through to the end. I know all of us share common ground on that—let’s leave no doubt that Congress does as well.