The direction of the nation's bank reform plan taking shape in Washington, D.C., looks less damaging for Oklahoma's financial industry than many originally feared, state Banking Commissioner Mick Thompson said Monday.
But Oklahoma Bankers Association President Roger Beverage said he still sees potential problems with a disproportionate amount of oversight and unnecessary overlap.
"Today's laws, rules and regulations, as they relate to traditional community banks, are already on the books and are working fairly well," Beverage said. "But at the end of the day, consumers have to understand this is going to change banking as you know it. ... It means more costly credit to consumers and fewer opportunities to borrow."
President Barack Obama last week unveiled his plan for regulatory reform that calls for consolidating bank oversight and the creation of a new Consumer Financial Protection Agency. His major proposals outlined in the Treasury Department document, Financial Regulatory Reform: A New Foundation, answer five problems outlined earlier by Treasury Secretary Timothy Geithner.
"The lead-in all says the right stuff, about addressing the 'shadow banking industry,' the unregulated brokers and originators. And those are good things," Beverage said. He cited as an example the requirement that an originator of a loan must retain a minimum interest in that financial product, the proverbial "skin in the game."
But the creation of new regulations to keep track of the big players largely at fault for causing a worldwide financial meltdown could unfairly burden smaller banks, Beverage said. Obama's proposal calls for the creation of a new Consumer Financial Protection Agency in order to protect consumers and investors from financial abuse. That agency would have broad rule-making and enforcement powers, and Beverage is concerned that community banks would be forced to help shoulder those costs.
"There is no earthly reason to create a new regulatory system to protect consumers' rights, which are already preserved under the existing system, for traditional, heavily regulated, community banks like the ones we have in Oklahoma," Beverage said. …