WASHINGTON – Congress must move from good intentions to action that creates tangible results for our nation’s community banks, according to testimony from the American Bankers Association before the House Subcommittee on Financial Institutions and Consumer Credit.
Daniel Blanton, ABA vice chairman and CEO of Georgia Bank & Trust, testified today on behalf of ABA. Georgia Bank & Trust is a community bank headquartered in Augusta, Ga.
In his testimony, Blanton noted that while there is a widespread appreciation for the benefits community banks provide across the country, many actions taken by bank regulators have hurt -- not helped -- smaller institutions.
“During the last decade, the regulatory burden on community banks has multiplied tenfold,” Blanton said. “Today, it’s not unusual to hear bankers from strong healthy banks say they are ready to sell to larger banks because the regulatory burden has become too much to manage. Each bank that disappears from the community makes that community poorer.”
Blanton offered ABA’s perspective on several bills designed to relieve the burden felt by community banks and ensure they can continue to drive community growth. He expressed ABA’s support for H.R. 4986, legislation introduced by Rep. Luetkemeyer (R-Mo.) that directly solves the problem created by the Justice Department’s Operation Choke Point program. Blanton noted that Operation Choke Point “requires banks to operate as policemen and judges, holding them responsible for the actions of their customers.” As part of the program, the DOJ pressures banks to shut down accounts of targeted merchants without formal enforcement action or even charges having been brought against these merchants.
“Banks are committed to combatting the financing of financial crimes, and already report suspicious activities to law enforcement,” Blanton said. “The policy is for banks to serve, observe and report, not to police. Banks should not be judge and jury on whether their customers are operating legally.”
Blanton also expressed ABA’s support for H.R. 4042, a bill introduced by Reps. Luetkemeyer and Perlmutter (D-Colo.) that would delay the implementation of Basel III rules on mortgage servicing assets until their impact can be studied and better alternatives explored.
“Many community banks sell a portion of their mortgage loans, but retain the servicing rights to these loans to maintain a relationship with their local customers,” Blanton said. “Harsh treatment of MSRs under Basel III will force many community banks to sell these rights to non-banks. This is a loss for the bank and its customers, as it can break the long-term relationship to servicing loans and meeting customer financial needs."
ABA also supports H.R. 4626, introduced by Chairman Capito (R-W.Va.) to protect the confidentiality of information shared with state regulators, and H.R. 3913, legislation introduced by Rep. Duffy (R-Wisc.) that requires regulators to conduct a cost-benefit analysis of new regulations.
“We stand ready to work with Congress to make changes that will secure the future of one of this nation’s most important aspects: its community banks,” Blanton said.
For a copy of Blanton’s full testimony, please click here.
The American Bankers Association is the voice of the nation’s $14 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $11 trillion in deposits and extend nearly $8 trillion in loans.