Burgess: Regulatory Overload Hinders New Bank Startups March 22, 2017
Excessive regulation discourages investors from launching de novo banks, thus reducing capacity for economic growth and financial choices for consumers and businesses across the country, ABA Chairman-Elect Ken Burgess said in congressional testimony yesterday. Burgess -- chairman and co-founder of FirstCapital Bank of Texas in Midland -- was the only banking industry representative to speak before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit.
While the interest rate environment and post-financial crisis economic conditions have played a partial role in the drought of de novo charters, Burgess laid out evidence that “excessive regulation” is the driving factor. Since the Dodd-Frank Act passed in 2010, only six new banks have been chartered, while nearly 2,000 banks have closed, sold or failed.
When Burgess co-founded FirstCapital Bank in 1998, the new bank raised $6.5 million in capital, a small fraction of amounts raised for the handful of de novos today. Were he to start a bank today with such high levels of capital -- as much as $30 million -- “I would have to grow the bank so quickly to put the capital to work that it would pose undue risk on our shareholders,” Burgess explained. “Starting a new bank in a small community would be extremely difficult.”
Meanwhile, regulatory requirements have put pressure on earning assets and sources of deposits, as well as on directors, artificially limiting interest in new banks. “It’s time to think differently to encourage new banks -- by requiring less capital, reducing regulatory burden, permitting greater flexibility in business plans, and lifting funding restrictions,” Burgess said. Read the testimony.
Nichols Op-Ed: Let Community Banks Drive the Economy Forward March 22, 2017
In an op-ed in The Hill newspaper yesterday, ABA President and CEO Rob Nichols fought back at the notion that “everything’s just fine” in the banking sector and that no regulatory relief is needed.
Although “some on Capitol Hill have attempted to use community banks’ continued resilience…as an excuse to leave the regulatory environment untouched,” Nichols said that ongoing community bank consolidation and sluggish economic growth show that banks could do so much more if regulations were streamlined.
“That’s what bankers are telling policymakers,” Nichols explained. “Without reasonable and rational reform, we will never realize the thousands of businesses that could be started or scaled, the hundreds of thousands of homes that could be built and purchased and the millions of financial dreams that could come true but won’t because they don’t fit into the unnecessarily restrictive boxes our policymakers have contrived.” Read the op-ed.
Hundreds of Bankers to Congress: Repeal Durbin March 17, 2017
In a joint letter to House leadership yesterday, ABA, along nearly 850 banks and state associations, urged Congress to include a repeal of the Durbin Amendment in financial reform legislation this year. A repeal would eliminate government-imposed price controls on debit card interchange. The groups pointed out that the Durbin Amendment -- an eleventh hour insertion into the Dodd-Frank legislation -- has failed to deliver on its promise of lower costs for consumers at the cash register.
“Six years later, there is no evidence that retailers lowered prices as they promised -- the Durbin Amendment was simply a windfall for the nation’s largest merchants. And the price for that windfall is being paid by consumers, many of whom can no longer enjoy free checking accounts, free debit rewards, and other add-on benefits that used to be offered by their bank,” the letter said. “Rather than helping consumers, the Durbin Amendment has shifted higher profits to big-box stores and away from small businesses and consumers.” Read the letter. Learn more at aba.com.RepealDurbin.
ABA Applauds Postal Reform Legislation March 17, 2017
ABA and the Financial Services Roundtable wrote to leaders of the House Committee on Oversight and Government Reform yesterday to express support for the Postal Service Reform Act of 2016, a bipartisan bill introduced by Committee Chairman Jason Chaffetz (R-Utah) and Ranking Member Elijah Cummings (D-Md.). With so many financial services companies using the postal service to deliver customer communications, the associations expressed their commitment to identifying long-term, workable solutions to ensure an efficient, self-sustaining and affordable postal system.
The groups supported many of the provisions of the bill, including those that would help stabilize the Postal Service’s finances, and emphasized the importance of maintaining predictable, stable postal rates going forward. The groups also reiterated concerns about allowing the Postal Service to offer non-postal products, such as banking services, which they noted could lead to increased competitive pressures for private sector businesses.
However, they added that the bill strikes a reasonable balance by allowing the Postal Service to assist in providing limited government services on behalf of other federal agencies or state or local governments, which would not interfere with the private sector. Read the letter.
ABA Seeks Real-Life Stories of Regulatory Burden Impact March 13, 2017
To help lawmakers understand the negative effects of excessive or ill-tailored regulation, they need to hear specific, real-life stories about how these rules are interfering with banks’ ability to serve their customers, clients and communities.
ABA is urging bankers to share true, specific stories that illustrate how laws and regulations have hindered banks from serving their customers. ABA will compile the results and share them anonymously with members of Congress as they work on legislative proposals for regulatory relief. Take the survey now.
ABA to FCC: Preserve Banks’ Ability to Contact Customers March 13, 2017
In a comment letter to the Federal Communications Commission on Friday, ABA urged the FCC to preserve banks’ ability to advise their customers of data breaches, suspicious account activity, low account balances and other important information in a timely and efficient manner. The letter came in response to a recent petition that seeks to upend the FCC’s existing interpretation of the “prior express consent” requirement of the Telephone Consumer Protection Act.
Under the TCPA, banks must obtain prior express consent from consumers before calling or texting them with informational, non-telemarketing messages using an automated system. Under the FCC’s current interpretation, banks must receive oral consent from the customer in order to make these calls, and this requirement can be satisfied when a customer voluntarily provides the bank with a telephone number. The petition, however, urges the FCC to require written consent from the customer prior to contacting them.
ABA noted that if the FCC were to change its interpretation, it would prevent banks from making potentially millions of calls each month, “mak[ing] it more difficult for consumers to consent to receive important information from their financial institutions, and potentially leav[ing] customers confused and frustrated.” The association added that changes to the current interpretation would violate Congress’ intent to give the FCC flexibility to design rules appropriate for different types of calls, and to provide consumers with choice of contact, rather than isolation from contact. The proposal would also increase regulatory burden and costs to banks making these types of calls, ABA noted. Read the letter. For more information, contact ABA's Jonathan Thessin.
Curry Addresses Fintech Charter Questions in Speech March 7, 2017
The OCC’s plan to issue limited-purpose national bank charters to fintech companies is not a path to “light-touch” regulation, nor will it mix banking and commerce, Comptroller of the Currency Thomas Curry said at an industry conference in New York yesterday. In addition to addressing several questions raised in public debate over the OCC’s plans, he announced that the OCC is currently working on a supplement to its Licensing Manual that will clarify its approach.
Curry emphasized that “the notion that receiving a national bank charter is a ticket to light-touch supervision...is not the case.” Fintech companies that receive national bank charters would be subject to all national bank laws and regulations, including “appropriate capital and liquidity standards,” he said. He added that the limited purpose charter would not be a path to evading state financial regulations and laws, as representatives of state banking regulators have argued.
As for objections based on risks of intermingling of banking and commerce, Curry said that doing so could “interfere with the allocation of credit and foster anti-competitive effects and undesirable concentrations of economic power. Proposals that would mix banking and commerce are inconsistent with the OCC’s chartering standards and would not be approved.” ABA has supported the OCC’s plans thus far, provided existing rules are applied evenly and fairly and with effective oversight. Read the speech.
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