Pinning hopes on Trump’s ‘pro-growth’ agenda
More than 1,600 community banks, or a quarter of the industry, have disappeared since the enactment of the Dodd- Frank financial reform law in 2010, data from the Federal Deposit Insurance Corporation ( FDIC) showed.
Bipartisan support to arrest that trend is unsurprising. While community banks may not have the lobbying firepower of Wall Street, they are a powerful political force given their presence in every congressional district across the country. “Democrats and Republicans have long agreed that small, well- managed banks should not be bogged down with needless red tape,” said Sen. Sherrod Brown, the top Democrat on the Senate Banking Committee (SBC) in a statement to Reuters.
“Democrats are ready and able to continue working with Republicans to tailor the rules where it makes sense, but not if it means hurting consumers or resurrecting risky Wall Street behavior.”
A bill to neutralize much of the post- crisis legislation designed to rein in Wall Street that community bankers say saddled them with outsized regulations is expected to fail amid opposition from Democrats.
That measure, from Republican Representative Jeb Hensarling, is expected to pass the House sometime this summer but is unlikely to gain momentum in the Senate where Democrats’ votes are necessary to pass.
But more modest proposals to ease the regulatory burden on community banks could be successful. Senate Banking Chairman Mike Crapo, a Republican who will play a key role in shepherding any changes to financial rules through Congress, has said he would like to focus on community banks as a key part of his panel’s agenda.
“They are looking for a system that’s just proportionate,” said Romero- Rainey, who will take over as head of the Independent Community Bankers of America (ICBA) trade group in May 2018.
Community banks, typically privately owned institutions with less than $ 10 billion in assets and often with fewer than 100 employees, are a world away from Wall Street banks.
The community banks often lack large compliance departments and have technology budgets a fraction of those at big banks and have struggled to keep up with reporting requirements and regulatory scrutiny under post- crisis rules, even with some exemptions created by Congress.
To be sure, even without legislative change, the big banks are also expecting regulatory relief as Trump appointees in the Federal Reserve, Treasury and other agencies are able to influence how existing rules are interpreted.
Meanwhile, for the first time, the community bankers are expecting to have an advocate at the Fed. The Trump administration is looking for candidates to fill a seat on the Federal Reserve Board designated for someone with experience in community banking.
That spot, created by law in 2014, has sat vacant and former President Obama’s selection stalled out in the Senate.