The House Financial Services Committee last week advanced five ICBA-advocated bills to provide regulatory relief to community banks. The bills, which are inspired by ICBA’s Plan for Prosperity platform, would rein in community bank overregulation on several fronts.
The package of bills—the first in what we expect to be a series of volleys against regulatory burden—would exempt community bank portfolio loans from CFPB escrow requirements, delay and study Basel III rules on mortgage-servicing assets and eliminate redundant privacy notice requirements. Other ICBA-backed measures would allow individuals to challenge the CFPB’s rural designations and would write into statute the CFPB’s community bank and small business advisory boards.
Clearly, Congress is listening to community bankers, who have repeatedly warned about the damaging impact of excessive regulation. Centennial Bank Chairman David Williams recently testified to the committee that community bank regulations have reached the level of overkill because they are harming the consumers they’re supposed to protect.
This is something every community banker knows firsthand. The regulatory environment that is supposed to protect consumers is actually hurting them by cutting off their access to credit. Thanks to community bankers, Congress is getting the message.
But this committee markup is just one small step in a very long legislative process. That is why community bankers must remain vigilant in pursuit of regulatory relief. And let me tell you, there’s no better way to do it than coming to Washington and beating the bushes on Capitol Hill. That’s why I’m calling on community bankers from coast to coast to register for next month’s ICBA Washington Policy Summit. This grassroots advocacy summit, which kicks off in less than 30 days, allows community bankers to meet firsthand with members of Congress and federal banking regulators to push for relief.
As community bankers know, we have a long road to reining in excessive regulation to help our local communities thrive. But even the longest journeys begin with a single step. Let’s keep this journey going and see it all the way to the end, because our customers and communities are counting on us.
ICBA’s national convention is always an incredible experience. If you haven’t witnessed nearly 3,000 members of the community banking industry in the same place at the same time, you should make a point to do so at least once in your career.
But there was something special about this year’s convention. There was a feeling, despite all the regulatory and policy hardships facing community banks, that we are on the cusp of some truly positive breakthroughs.
You could hear it on the floor of the Expo, and at the educational workshops, and at the general session speeches. I could very well feel it from the stage—that community bankers are energized and ready to make real and positive change in Washington.
As I said to the audience from the podium, the community banking industry has made important strides in recent months, from ensuring community bank representation on the Federal Reserve Board to singlehandedly getting the administrator of the Libor index to waive new fees. What was special this year was the supreme confidence I felt from our members that we can continue to build on these successes to more fully establish tiered regulations that will preserve our nation’s community banking tradition.
In my general session speech, I said we cannot rest upon these successes, because our communities and our country depend on us to continue promoting local economic growth and opportunity. The community bank message to Washington is simple: let us do our jobs, so we can continue to help our communities thrive. We owe it not just to ourselves to keep up the fight, but to our friends and neighbors and families back home.
That is why ICBA’s upcoming Washington Policy Summit is so important. It will allow community bankers from across the country to harness the energy we felt in Orlando and take our regulatory relief message to the people who make the policies we live by.
I encourage every community banker to come to the nation’s capital for ICBA’s April 28-30 summit. Because if there’s anything as powerful as an ICBA convention, it’s watching a legion of community bankers gather on Capitol Hill to make positive change on behalf of hometowns and local communities across America.
I read the other day that the six largest U.S. bank holding companies have paid more than $150 billion in fines since 2009. Yet, at the same time, not a single senior executive or director of these banks has been identified as culpable for their banks’ egregious legal and regulatory violations, much less pursued by the Justice Department or the financial regulatory agencies.
Meanwhile, scores of community bank officers have been and are being sued by their regulators or pursued by the DOJ or local prosecutors for violations that are often much less serious than those perpetrated by executives at the nation’s largest financial firms.
I mean, certainly some human being somewhere within these megabanks had to have violated financial laws or regulations, or why would their institutions write billions of dollars in checks to cover their wrongdoing? In cases such as HSBC, management even admitted that it knowingly violated laws and regulations, but did so anyway because the profit was so good.
This is what is so insidious about too-big-to-fail institutions: the managements and boards begin to believe they are above the law. Unfortunately, recent history has proved them right—even to the point where Attorney General Holder, in open testimony before the U.S. Senate, hedged when asked if executives at certain too-big-to-fail banks were immune from prosecution.
In sworn testimony before the Senate Judiciary Committee, Holder said law-enforcement officials have hesitated to pursue financial wrongdoing at the largest banks because of the potential economic impact. Seriously? Is the law not the law? Are we not a country of laws that in our American tradition are to be equally applied to one and all no matter a person’s circumstance or station?
This Orwellian reality of money and power taking precedent over equal justice under the law gives us a modern take on the old Animal Farm commandment: some banks are just more equal than others.
While Main Street community bankers and their boards are personally prosecuted and pursued by government agencies for restitution, Wall Street and global bankers can rest easy and just write another check. After all, the checks are funded from the ill-gotten gains of their violations, and there is plenty more where that came from.
Happy 2015. I am humbled and grateful for the opportunity to kick off another year representing the nation’s community banks, an industry that has made its mark through honest dealing, community involvement and personalized customer service.
Over the holidays, I read an article that reminded me just how good all of us have it who work in our community-minded industry. According to this report, the Dutch Banking Association is requiring its 90,000 members to recite an oath pledging to act honorably and lawfully. Those who fail to live up to the oath could face fines, blacklisting or suspensions.
While I appreciate the Dutch Banking Association’s commitment to principle, requiring members to pledge to do the right thing is completely alien to ICBA and community banks. And the reason for that is simple: community banks don’t have to take an oath to do what’s right. They live the oath every day. As a community banker myself for 20 years, I can tell you that honesty, integrity and good conduct are part of the job—the DNA—of community banking.
It’s simple. Community bankers have to do right by their customers because they answer to them every day inside and outside the bank—at Little League games, PTA meetings and church breakfasts. As members of their local communities, community bankers are in the business of putting their customers first, of doing the right thing.
There’s an old saying: “There’s no right way to do the wrong thing.” Community bankers know the difference between right and wrong because doing the right thing is part of what makes them community bankers. In the community banking industry, your word is your bond.
So happy New Year, community bankers. Thank you for continuing to maintain our industry’s high standards and for allowing me to continue working for the good guys. It’s going to be another tough and busy year in Washington, but ICBA will continue doing everything it can to support this great industry. That is my pledge to you.