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Executives tell symposium audience that Basel committee's surcharge on systemically important firms will impede economic growth.
September 19 -
Robert G. Wilmers, the head of M&T Bank, came to the nation's capital Monday with an unfavorable assessment of whether the Dodd-Frank Act will do what lawmakers intended.
September 19 -
Sen. Jack Reed, D-R.I., said Republicans were deliberately trying to prevent credible nominees from being confirmed to regulatory posts, and their legislative attempts to reform the new Consumer Financial Protection Bureau seem like moves meant to impede the bureau's progress.
September 19 -
OCC head tells American Banker regulatory symposium that banks could face restitution after complaint reviews. Gruenberg, meanwhile, announces FDIC community-bank initiatives.
September 19
Cookie cutter regulation just doesn't cut it.
A trio of panelists reached consensus on that conclusion during a discussion Monday as part of this year's American Banker Regulatory Symposium in Washington.
The panel, consisting of two community bank executives and a state regulator, agreed that new banking regulations and capital requirements must be molded to fit the characteristics of individual institutions.
"One size, and even two sizes, does not necessarily fit everybody at all," said Albert Kelly, the chief executive at SpiritBank in Tulsa, Okla. "What we've seen [from new regulation] is pretty much an assault on the profitability of banks."
North Carolina's chief deputy commissioner of banks, Ray Grace agreed, advising that regulators should consider the "complexity and nature of the institution as part of their business plan and who their target market is" when examining a bank and enforcing requirements. "I truly do agree that there is no way to just bifurcate it," he said.
William Loving, the president and chief executive of Pendleton Community Bank in Franklin. W. Va., advocated taking a bank's size into account when making key regulatory determinations. "The cleanest model there is, is based on asset size . . . then you can have a trigger potentially based on the Camel rating," said Loving, who is also the vice chairman of the Independent Community Bankers of America.
Kelly said the $10 billion-asset threshold for interchange fees was setting the stage for right-sizing regulation. Loving joined Kelly stating that regulations should be flexible to the varying risk profile of each bank, particularly when it comes to asset quality.
Recalling the oil crisis in the 1980s, Kelley said that Oklahoma lost 110 banks but the regulators allowed banks to fall below the 3% capital ratio requirement to prevent further failures. "Today, not only would you go out of business, but so would the regulator," said Kelly, who is also the chairman-elect of the American Bankers Association.
The panelists agreed that there must be more efficient communication between lawmakers and regulators in Washington, D.C. and the regulators, banks and consumers on Main Street.
Kelly, whose bank is undergoing its regular examination by the Federal Deposit Insurance Corp., said customers are "mad as hell at us" because they are told by people in Washington that banks are not lending when in reality banks are complying with tighter lending standards.
"You need to be careful what you're asking for," said Grace, who backs off-site examinations.
"Washington is very big on the blame game," Grace added. "The pendulum swung far enough so that the federal regulators are looking to ring all the risk out of system . . . if you take out the risk, you take out the reward."
