A Different Perspective

I hold no animus toward anyone or any group that defends its members’ best interests. After all, that is the fundamental reason why associations are formed. That is why ICBA was formed. Therefore, it came as no surprise that five very prominent national financial trade groups wrote a 161-page letter to the Federal Reserve Board vigorously defending systemically important financial institutions (aka, SIFIs or too-big-to-fail firms). The five trade groups that signed the letter—the American Bankers Association, the Clearing House Association, the Financial Services Forum, the Financial Services Roundtable and the Securities Industry and Financial Markets Association—have the very largest financial firms in the world as members. Of course they are going to advocate for them. However, when the interests of the very largest banks and financial firms clash with the interests of our nation’s community banks, how is that reconciled? How can one defend and promote the best interests of both groups equally when the best interests of one will hurt the other?

ICBA also sent a letter to the Fed. Our letter was seven pages, and our position was clearly stated. We renounce the position taken by the megabanks, and we support the Fed’s proposals for bringing more rigorous financial discipline, higher capital standards and greater transparency to those institutions deemed most dangerous to our nation’s financial system and economy. So yes, we believe the Fed is on the right track, and financial sector luminaries, such as a two former Fed chairmen, several former Fed governors, at least two Fed district bank presidents, an FDIC director and some famous academics, apparently agree with ICBA.

If you read my previous blog post this week, you know already that community banks are still suffering from the fallout of the nation’s greatest financial calamity since the Great Depression—a calamity triggered in large part by the very financial firms the Fed now seeks to oversee more closely. You already know how unequal the treatment of a community bank and its staff is compared to a SIFI and its staff when stress occurs in those institutions. All one needs to do is watch the “60 Minutes” piece on Lehman Brothers to see it or read how several Wall Street moguls are doing today, even though their banks were given massive amounts of taxpayer dollars to keep them from collapsing.

Many books and scholarly articles set out in great detail the truth of what happened on Wall Street in this latest crisis. Every community banker has suffered to one extent or another by what happened over the past four years. ICBA understands that and is clear and straightforward in its vigorous defense of the community banking industry. No double standards, no obscure language. We know who we represent and in whose interest we act. Thus our letter to the Federal Reserve on their proposed regulations for controlling the SIFIs stands in stark contrast to those trade groups whose mission is to protect and defend the SIFIs. They do their mission. We do ours.

Strike Zones, 60 Votes and the Interchange Amendment

When I was young I was a baseball player—a southpaw pitcher. I learned early on that each umpire had a slightly different variation on the strike zone. As a player and pitcher, there was nothing I could do about that. You could not complain, you could not whine, you either adjusted to it or you lost. It’s that simple. The only thing I hoped was that regardless of where each umpire set his strike zone, he would be consistent.

No one can say that the Senate is not consistent when it comes to the 60-vote rule. Once used only on the highest-profile votes, a 60-vote threshold for winning legislative measures has been the norm for more than a decade now. We all know that—we all know where the “strike zone” is. In the case of the interchange issue, we were not able to get the 60 votes we needed to win.

So now is not the time to whine or complain that the strike zone changed. It was consistent with the Senate’s modern idea of a majority. We just were not able to get the “strike out.” We came close, but in baseball and politics, close does not get it done.

So rather than complain about strike zones and supermajorities, ICBA will move forward—not back. We will find other ways to win this issue for our community banks—and ultimately we will prevail. Just like a good pitcher, you learn from your setbacks and you keep your eyes focused on the next batter. Because the object is to win the game.

Interchange Legislation—A Reason to Dig Deep

The will of the nation’s community bankers to make their voices heard in Congress has never ceased to amaze me. Once again, it is time for community bankers to stand up, fight, scream and be heard on the terribly misguided and dangerous interchange rules that threaten our ability to continue to serve Main Street customers.

Bipartisan legislation is pending in both the House and Senate to delay the draconian Federal Reserve proposed rule on debit card interchange. The legislation also would require federal banking regulators to study the rule’s impact on community banks and their customers. I can tell you without a study that the impact will be severe indeed—and the consumer will be the biggest loser—and I am not talking about a TV reality show—I am talking real life!!

ICBA has fought tooth and nail against debit card interchange price fixing from the moment Sen. Durbin announced his intentions to offer his misguided amendment, and now we have legislation we can get behind to slow this lethal financial virus of a rule. That’s why I am asking every community banker in the nation to rattle your member of Congress’s cage—House and Senate—to co-sponsor these critical measures. MAKE YOUR VOICE HEARD ON THIS ISSUE! DO NOT WAIT FOR THE OTHER GUY—YOU ARE THE OTHER GUY—DO IT!

With a positive reputation among lawmakers, community bankers are effective advocates. This effort on interchange is as important as any in my memory to ensure that community banks and their customers are not harmed and that our nation’s Main Street communities continue to thrive. Dig deep and leave no doubt in any member of Congress of where we stand.

Stop Punishing Main Street Banks and Their Customers

Hey, here’s an idea. Let’s punish the thousands of small community banks that played by the rules and stuck by their customers during the financial crisis by making it impossible for them to issue debit cards to their customers!

The terribly flawed and misguided debit interchange rule proposed by the Federal Reserve to implement the Durbin interchange amendment to the Dodd-Frank Act will do just that. Millions of good Main Street customers of community banks will see their debit transaction costs rise. Or worse, they will not even be able to get a debit card from their local bank if this boneheaded rule, which will line the pockets of the big-box retail stores with billions in profits, is implemented. Write the Federal Reserve and your congressional delegation and tell them that Main Street community banks and their customers should not have to pay to pump up the profits of the big-box retailers. Make your voice heard—don’t subsidize the profits of the mega-retailers!

If Congress and the Fed thought they could get this harmful interchange plan through without a fight, they should think again.