Upsets during “March Madness” capture the attention of all of us, as the least expected teams surge in front of the top seeds.
The same seems to apply this March to smaller banks claiming back their standings, likely to be stripped away from cumbersome federal regulations plagued by Dodd-Frank Wall Street Reforms that arose from the financial crisis of 2008.
Earlier this month, the U. S. senate voted overwhelmingly to overturn capital reserve levels that would affect community and regional banks. The asset-level requirements caps would rise from $50 billion to $250 billion. As a result, banks with assets under $250 billion would be free of many regulations that have held back their business interests. They would soon be able to lend more freely and get back to a more aggressive strategy in collecting deposits. That would be good news for “Main Street,” and public entities.
These proposed changes will have little or no effect on the large banks, except they may have greater competing forces from regional banks.
As Congress looks to take this reform on in the coming months, I would ask that the following points be considered:
1.) As community and regional banks are freed up from several burdensome regulations, the ability to better compete in the marketplace will provide better opportunity and benefit to their customers.
2.) Community and regional banks should divert staff who had been fulfilling federal regulatory oversight duties to client-facing positions, thus focusing more on personal banking on a Main Street level.
3.) Cross-selling of bank products should be prohibited, and there should be a greater accountability of confidentiality within the walls of bank silos. This should apply to banks if all sizes. This will ensure the interests of the public take priority over those of the banking institution.
4.) Given the loosening of Dodd-Frank regulations, banks should not be allowed to leverage all the freed-up bank capital.
5.) Regional and community banks should have a reporting requirement to show that their savings—as a result of fewer regulations—are having a direct, positive impact on the clients they serve.
6.) A formal study should be conducted and released that would show that easing up on Dodd-Frank regulations will not lead or contribute to another disastrous financial crisis.
It should be noted that these proposed changes come on the heels of the 10th anniversary of the 2008 financial crisis. It is my hope that we do not allow past practices, that led up to the crisis, creep back into the way we all bank.
It is important that we urge members of Congress to be careful as they evaluate any rollback of federal regulations and that they serve the best interests of the public, while strengthening the fundamentals of our community and regional banks that complement our largest banks.
Our CEO Joe Rulison presenting at the NYS GFOA Annual Conference