Pub. 14 2017 Issue 1

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S 12 Give America’s Banks Room to Grow By Rob Nichols, President and CEO, American BankersAssociation R ecently, I had the honor of accompanying nine out- standing community bank leaders to a meeting with the president of the United States. For a full hour, President Trump engaged these bank CEOs with questions, demonstrating an understanding of their businessmod- els, a deep interest in the regulatory challenges they face, and an instinct toward addressing those challenges as quickly as possible. The meeting couldn’t have come at a better time. This week, nearly 1,500 banking industry leaders — a record number — are descending on D.C. for the American Bankers Association’s Government Relations Summit. They will share the same mes- sage on Capitol Hill and with regulatory agencies that President Trump heard: Remove regulatory impediments and let us accel- erate the American economy again. That’s not to say there shouldn’t be strong regulation. But that regulation shouldn’t get in the way of banks extending loans to creditworthy customers and otherwise serving their clients and communities. Yet in an environment where the Dodd-Frank Act and other recent regulations have cumulatively added 25,000 pages of new and proposed rules, and where banks are selling or merging at a pace of more than one each business day, it is clear that ill-tailored regulation is doing just that. Some on Capitol Hill have attempted to use community banks’ continued resilience in the face of this onslaught as an excuse to leave the regulatory environment untouched. Indeed, many banks are profitable and loans are growing. But that’s what we should expect in a growing economy. Banks are lending because that is what banks do. But what about the banks that have disappeared? Since theDodd- Frank Act was enacted nearly seven years ago, more than 1,900 banks — or 24 percent of the industry — have disappeared. We now have fewer than 6,000 banks for the first time since the 1890s. Such rapid consolidation, combined with the lack of new entrants, is a troubling trend with negative consequences for customers and communities alike. According to a 2012 FDIC report, there are more than 600 coun- ties where a community bank is the only financial institution. If that bank disappears, there is no incentive for investors to start a new bank to serve that community. This leaves consumers and businesses with fewer choices of competitive products and services, which translates into less economic activity and slower growth in local communities. The “everything’s just fine” point of view also loses perspec- tive on potential. Banks could be lending more, and the econ- omy could be growing faster, if regulations were rationalized. That’s what bankers are telling policymakers — that without reasonable and rational reform, we will never realize the thou- sands of businesses that could be started or scaled, the hun- dreds 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.