Top Advocate

By Lobdell, Kelly | Independent Banker, September 2003 | Go to article overview

Top Advocate


Lobdell, Kelly, Independent Banker


Karen Thomas champions community banks as ICBA's chief regulatory activist

Her words are polished and precise. Her demeanor is warm but professional. She exudes efficiency and a mastery of the topic at hand.

Poised behind a glossy hardwood table before a recent congressional subcommittee hearing, Karen Thomas is confident in the testimony she has just delivered. And for good reason-few in Washington can match her expertise, both deep and wide, on bank regulatory matters.

Thomas has done her homework preparing for the hearing on U.S. application of "Basel II," the regulatory capital accord developed by the Basel Committee on Banking Supervision to replace the 1988 accord, and the impact it will have on community banks. She knows the positions of the U.S. bank regulators negotiating the accord who don't always see eye to eye. On the invitation of the Basel Committee, Thomas and Joanne Shephard, a community banker serving as chairman of ICBA's Regulation Review Committee, had traveled to a key meeting in Basel, Switzerland to represent smalland mid-sized U.S. banks. Their words had an effect. The U.S. position, which is hotly contested by the Europeans, is that community banks should not be subject to the highly complex Basel II.

"ICBA was concerned that Basel II was 'overkill' for community banks and would present a huge burden for them," says Thomas. "The meeting in Basel was the first time U.S. regulators signaled their intention not to apply the revised capital rules to community banks."

Such victories are precious to Thomas, a founding partner of law firm Dann & Thomas in Washington, D.C., before joining ICBA in 1992, but the constant appearance of new issues leaves little time for celebration. During Thomas's Capitol Hill testimony, she warned legislators of a potential competitive disadvantage for Basel I banks.

"We are concerned that Basel II may place community banks at a competitive disadvantage," Thomas told the Subcommittee on Financial Institutions and Consumer Credit of the House Financial Services Committee. "Basel II will yield lower capital requirements for retail credits including mortgages and other loans to individuals and small businesses - the very credits where community banks compete with large banks. This may result in a cost advantage, and correspondingly a price advantage, for large banks that are subject to Basel II."

Just another issue for the ICBA's director of regulatory affairs and senior regulatory counsel and one of the many regulatory issues that she and her four-member regulatory affairs team face each day. Thomas has been a key watchdog for community banks over such wide-ranging issues as regulatory relief, federal deposit insurance reform, corporate governance, consumer privacy, homeland security and identity theft.

"Karen Thomas has pulled together a regula- tory team which is the envy of Washington," says ICBA President and CEO Ken Guenther. "Their work product is read and has a measur- able impact. Karen is at nearly every key meeting the ICBA holds with top regulators and, since new laws breed new regulations, she has substantive oversight of legislative developments.

"She is highly regarded and the master of a tough and crucial game for community bankers," Guenther notes with admiration.

Bridging the Gap

"Our mission is to bridge Main Street and inside the Beltway as we advocate for community banks," says Thomas, of ICBA's regulatory affairs department. "The most important thing we can do is act as a two-way communication link between Washington and bankers."

With the number of regulatory issues skyrocketing, subjects like privacy, regulatory burden reduction and compliance emerge daily in interaction with bankers. Often ICBA's Regulation Review Committee, which Thomas oversaw as secretary until this year, provides the impetus for action.

"We are a sounding board," says Thomas, who holds a law degree from George Washington University. …

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