Academic journal article ABA Banking Journal

The Fight's Not over Yet

Academic journal article ABA Banking Journal

The Fight's Not over Yet

Article excerpt

There have been many positive sounds emanating from Washington about the need to lift burdensome regulations from hanks. Most of the messages relate to the need to stimulate the economy, and most of the messages have come from sources within the new Administration, although there are a number of friendly voices in Congress as well.

It would be easy to begin to think that the world has come to its senses and recognized how thoroughly it had gummed up the economic engine called banking.

Don't celebrate just yet, however. Here's one reason why the industry needs to keep pressing the point and press it as effectively as possible. The fact is, as an issue, the regulatory burden is not the equal of the 10% withholding-at-source issue of several years ago. That proposal unleashed a wave of public resentment that banks were able to effectively harness. The issue of overregulation doesn't tap the same well of public self-interest as deeply.

Many people in fact like the idea of bank regulation--at least so long as it doesn't affect them adversely.

But of course it does affect them adversely. It affects job creation and small business growth significantly. You know that and we know that but the public, the media, and many in Congress still don't.

ABA's "Cut the Red Tape Week" campaign this month will help raise awareness of the issue among bank employees and customers we're sure. But bankers shouldn't count on that alone to carry the day. Needed: examples. More needs to be done if real progress is to be made. One approach is to cite specific examples of how red tape restricts lending whenever the issue is raised. Several such examples follow. The first two relate to overzealous examiners; the second two to other factors.

* A Massachusetts community bank reports being down $17 million in loans when it could be up $27 million. The bank is well capitalized, but decided to become even more well capitalized rather than lend and be criticized for doing so. …

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