Sen. Elizabeth Warren continues to be in the news a lot.
Trust is the very foundation of the banking profession. I know that firsthand as an immigrant to the United States because I saw how bankers helped and guided my Spanish-speaking parents in this new land. My immigrant parents eventually became homeowners because of their trusted advisor at an FDIC-insured bank. That happens each and every day in our country.
We are experiencing significantly weak economic recovery and growth by historical standards. Community banks play a pivotal role in their state and national economies. They make 50% of the small-business loans made in America. While the small-business sector is the heart and soul of our economy, small businesses are down by 25% over the last six years and many community banks have merged or been acquired. Fewer community banks may mean fewer small businesses. Is there perhaps correlation? Could it all be related to the avalanche of Dodd-Frank rules?
During Warren's tenure in the Senate, she has questioned our nation's larger banks, but what has she done to help our community banks? Between 1995 and 2007, our country averaged 125 startup community banks per year, a period that included both good times and bad. That was before President Obama and the 2010 Congress enacted the Dodd-Frank Act. Since the law's passage, we have had only three new community banks chartered in the U.S.
The banking industry has been advocating for a tailored regulatory banking system for more than five years. Community and regional banks have been calling for Dodd-Frank regulatory relief on Capitol Hill. However, Congress and President Obama have failed to act on those requests. Larger banks have also pushed for relief for community and regional banks. How do I know this? As president of the Florida Bankers Association, an association that represents institutions of all sizes, I have seen our larger bank members walk the hallways of Congress advocating for our community and regional banks.
With community banks playing such a pivotal role in business startups, why hasn't Warren pushed to achieve regulatory relief for our community banks? Why hasn't she pushed for a tailored banking regulatory system that creates tiers based on a bank's activity?
It is easy to bash our systemic-risk bigger banks that have a global presence. But it is important to remember that in our country we need all banks — large, regional and community banks. If you review the list of the top 50 banks in the world, there are only four FDIC-chartered American banks on it. There are 13 banks from China, including four of the top five. Just as the larger U.S. banks provide important services for our nation's largest companies, community and regional banks play a critical role for startups and small businesses.
And so why hasn't Warren expressed more support for legislation to ease the regulatory burden on community banks? For example, why has she not joined other Democrats in co-sponsoring the Community Lending Enhancement and Regulatory Relief Act of 2015? The bill, authored by Sen. Jerry Moran, R-Kan., would ease Sarbanes-Oxley requirements on smaller banks, exempt banks with under $10 billion in assets from certain escrow requirements and provide "qualified mortgage" status to more loans community banks keep on their balance sheet. A less robust version, authored by Sen. Sherrod Brown, D-Ohio, which Warren has co-sponsored, would have very little real impact on the problems faced by community banks.
Warren and her Democratic colleagues have also failed to co-sponsor the TAILOR Act, which would require the federal agencies to tailor regulatory action based on numerous factors about an institution, including risk profile and the impact that such regulatory action has on the institution's ability to serve customer needs.
Members of Congress like Sen. Warren have worked so much to further regulate Wall Street, how about if they spend more time helping our community banks, small businesses and our customers on Main Street instead? If Congress decreased unnecessary regulation, community banks could hire more lenders and less compliance and legal staff in order to better serve their customers and communities which would, in turn, strengthen our economy and create jobs.
Alejandro M. Sanchez is president and CEO of the Florida Bankers Association.
