Kerry Backers Contend Bush Vulnerable on Bank Support
Garver, Rob, American Banker
Conventional wisdom would tell John Kerry not to waste his time seeking votes from community bankers, who often vote predominantly Republican.
But well-known Democratic voices in financial services have recently raised questions about how Bush administration policies on such issues as taxation and Small Business Administration funding might affect small banks, and they are urging community bankers to take a careful second look at the President - and Sen. Kerry.
For these bankers, said Eugene Ludwig, who was the comptroller of the currency under President Clinton and is now managing partner of Promontory Financial Group in Washington, "I think it is dramatically in their interest - much more so than they have historically perceived - to look at what the candidates are doing, ask of the candidates that they pursue policies coincident with their economic interests, and use their pocketbook and their vote in a way that is beneficial to those interests."
To be sure, the President's political backers are not without ammunition in financial-policy debates. The Health Savings Accounts established under last year's Medicare reform legislation have been popular with many small banks, which see them as a deposit-generating tool, and so have proposals currently under consideration by regulators to increase the asset-size cutoff for the less-stringent small-bank Community Reinvestment Act examination. Many community bankers also like the Bush administration's unwavering support for the permanent elimination of the estate tax.
J. French Hill, the chairman and chief executive of the $200 million-asset Delta Trust and Bank in Little Rock, said the incumbent is the better choice for community bankers.
"I base that on my belief that the President's focus on keeping America safe and keeping the tax burden and regulatory burden lower than would be felt and established in a Kerry administration is the right way to go for America," said Mr. Hill, who was President George H.W. Bush's Treasury deputy assistant secretary for corporate finance and his special assistant for economic policy.
"Banking is a reflection of our economy in all of our towns," Mr. Hill continued, "and there is no question that the regulatory costs and the tax costs of meeting federal and state obligations is high, and anything the President can do to ameliorate that is good for banking. My judgment is that President Bush would have a better record on that than Sen. Kerry."
Bush supporters are also quick to assert that a Kerry administration would be more inclined to implement new consumer protections that bankers say are a hassle. (In the past he has supported banning surcharges for use of automated teller machines.)
At the same time, they worry that efforts to reform the class-action lawsuit system and bankruptcy laws would lose momentum under a Kerry presidency.
In an informal American Banker Online survey, 58% of community bankers said a second Bush term would be better for community banks than electing Sen. Kerry. Thirty-one percent said that a Kerry White House would be better for them, and the remainder said there would be no difference.
Still, Democrats say the Bush administration has given them plenty of material they can use to construct a pro-Kerry platform for community bankers.
Kerry supporters' arguments are more against Mr. Bush than in favor of Mr. Kerry, who has not made financial services regulation a major campaign theme.
Kerry backers say the large federal deficits built up over the past four years could harm the credit markets.
"Huge deficits are not good for the financial industry in the long term," said Massachusetts Rep. Barney Frank, the ranking Democrat on the House Financial Services Committee.
Princeton University economist Alan Blinder, a former Federal Reserve Board vice chairman who is advising the Kerry campaign, said: "I think every American business, bank or nonbank ought to be concerned about the fiscal future of the country. …