"Compliance Is All I Do Now": Community Banks Press Congress for Regulatory Relief

By Wack, Kevin | American Banker, May 10, 2012 | Go to article overview

"Compliance Is All I Do Now": Community Banks Press Congress for Regulatory Relief


Wack, Kevin, American Banker


Byline: Kevin Wack

WASHINGTON a Community bankers asked lawmakers to grant some regulatory relief on Wednesday, arguing the Dodd-Frank Act and other supervisory actions are pushing them to the brink of extinction.

Testifying before the House financial institutions subcommittee, bankers and credit unions said their compliance burden was simply too high.

aCompliance is almost all I do now,a testified Samuel Vallandingham, senior vice president of First State Bank in West Virginia, on behalf of the Independent Community Bankers of America. aMany days I feel like I'm not a banker anymore.a

He was seconded by William Grant, chairman of First United Bank & Trust in West Virginia.

aWhile community banks pride themselves in being flexible in meeting any challenge, there is a tipping point beyond which community banks will find it impossible to compete,a said Grant, who testified on behalf of the American Bankers Association. aOver the last decade, the regulatory burden has multiplied tenfold. And not surprisingly, more than 1,500 community banks have disappeared.a

Bankers received a largely sympathetic hearing from lawmakers on both sides of the aisle. While Republicans need no urging to blast Dodd-Frank, even Democratic supporters of the law acknowledged that small banks are facing a challenging environment.

aI'm a strong supporter of Dodd-Frank. I'm also a strong supporter of small financial institutions because in so many communities that's all they have,a said Democratic Rep. David Scott. aAnd so as we move forward we have to, I think, dance with sort of a delicate balance here.a

But the industryas arguments were challenged by Adam Levitin, a Georgetown law professor who studies financial regulation. He said that while there are regulations that could be eliminated, most of the Dodd-Frank Act does not apply to small banks.

He also argued that forces larger than over-regulation a including the advantages large banks get from their geographic reach and lower cost of funding a are driving the consolidation in the industry.

aFocusing on community banksa regulatory burdens is nibbling around the edges,a Levitin said.

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