This content is from the New Orleans CityBusiness article written on May 24, 2018. The section in bold is a quote given by Metairie Bank’s President and CEO, Ron Samford.
Local community bankers agree that recent federal legislation is a major step toward regulatory relief for community banks, which have been harmed by what they call overreaching banking reform.
This week, the U.S. House of Representatives passed a bipartisan bill by a 258 to 159 vote, which solidified the U.S. Senate’s regulatory reform bill. Today, President Donald Trump signed the bill – the Economic Growth, Regulatory Relief and Consumer Protection Act – into law.
American Bankers Association President and CEO Rob Nichols said the legislation marks a turning point in the banking policy debate. “For the first time in nearly a decade, lawmakers from both parties have chosen to right-size financial rules that were not working as intended and holding the economy back,” Nichols said.
The bill includes several measures including applying principles of tailored supervision for larger banks, as well as ending mandated stress tests for banks with under $100 billion in assets. The bill also simplifies capital calculations for community banks and institutes longer exam cycles for smaller banks.
The bill is meant to address some of the unintended consequences of the Wall Street Reform and Consumer Protection Act, also referred to as Dodd-Frank.
Robert Taylor, CEO of the Louisiana Bankers Association, said since Dodd-Frank passed in 2010 Louisiana has 39 fewer community banks. Louisiana currently has 119 domiciled banks, with the regulatory burden being a significant factor in the decline, he pointed out. “There are other factors as well, such as cybersecurity mandates that are not part of Dodd-Frank that require a great deal of time and expense,” Taylor said.
The results of the bill will be beneficial in redirecting resources from regulatory paperwork to customer service, Taylor said. He noted that it’s important to recognize that the new legislation does not touch the two hallmarks to the original Dodd-Frank law: Wall Street reform and creation of the Bureau of Consumer Protection. “Bankers want to serve their customers and help the community grow and prosper,” Taylor said. “This legislation will help move the pendulum in that direction.”
Brian North, president, and CEO of Fifth District Savings Bank in New Orleans, said Dodd-Frank heaped an enormous amount of regulatory burden on the smaller banks. “With the passage of this bill, we will see some commonsense reforms that tailor regulations to the size and complexity of banks,” North said. “As a community banker, I am happy to see bipartisan compromise. This is a good start, but there is still tremendous opportunity to reduce regulatory burden further and to prevent more moving forward.”
Ron Samford Jr., president and CEO of Metairie Bank, pointed out that community banks were not responsible for the mortgage meltdown that led to the financial crisis in 2008, yet have paid a heavy price in terms of compliance with rules and regulations directed at the big banks that were. “Our customers, and small businesses that we provide most of the financing for around the country, will be favorably affected in terms of access to credit and more efficient services when the president signs this bill into law,” Samford said. “It’s been a long time coming.”