By Jeremy Cowen
In what was a major win for the banking industry, as well as for banking customers across the country, the U.S. House of Representatives passed a regulatory relief package on May 22, which was signed into law by President Trump two days later.
The bill, S. 2155 — Economic Growth, Regulatory Relief and Consumer Protection Act, was a long-gestating piece of legislature supported and pushed mightily by all state bankers associations, including the Oklahoma Bankers Association, and both major national trade groups.
The new law will be fully implemented over the next couple of years and provide much-needed relief for community banks from regulatory red tape – not their Wall Street brethren the Dodd-Frank Act supposedly was meant to corral – and help get those community banks back into the business of making needed and necessary loans to their customers instead of worrying about unnecessary rules and regulations.
“I think, symbolically, it was really important for the industry,” said Guy Sims, president/CEO/chairman of Shamrock Bank in Coalgate and also OBA chairman during most of the months S.2155 was winding its way through the halls of Congress.
“We fought so hard with little success for so long and then we finally get a victory here. Like I’ve said in the past, it’s not everything we want, but it’s certainly a good start for regulatory reform and it shows how we, as an industry, can make positive changes when we all work together.
S. 2155 was the first bipartisan banking law to be enacted in more than a decade and was authored by Sen. Mike Crapo (R-Idaho), who is the chairman of the Senate Banking Committee. Importantly, it was supported by several Democratic senators, including Jon Tester (D-Mont.), Heidi Heitkamp (D-N.D.), Mark Warner (D-Va.) and Joe Donnelly (D-Ind.)
These senators set partisan politics aside to help their constituents succeed by having access to loans from banks – loans that had slowed to a trickle because of the damaging effects of the Dodd-Frank Act passed in 2008.
“The legislation I’m signing today rolls back the crippling Dodd-Frank regulations that are crushing community banks and credit unions nationwide,” President Donald Trump said, via a White House transcript during the signing ceremony for the bill on May 24, alongside Crapo and many of the other legislators who supported the bill’s passage. “They were in such trouble. One-size-fits-all – those rules just don’t work. And community banks and credit unions should be regulated the same way. And you have to really look at this. They should be regulated the same way with proviso for safety, as in the past, when they were vibrant and strong. But they shouldn’t be regulated the same way as the large, complex financial institutions. And that’s what happened. And they were being put out of business one by one. And they weren’t lending.
“Since its passage in 2010, Dodd-Frank has dealt a huge blow to community banking. As a candidate, I pledged that we would rescue these community banks from Dodd-Frank – the disaster of Dodd-Frank – and now we are keeping that commitment, and all of the people with me are keeping that commitment.”
The new law includes several provisions to help community banks. These include sections on improving consumer access to mortgage credit; regulatory relief and enhanced consumer protections. It also includes added protection for veterans and homeowners.
Importantly it begins the process of tailoring regulations for banks under $10 billion. It helps small banks avoid the complexities of Basel III implementation, provides call report relief for banks under $5 billion and additional protection for student borrowers.
“What Sen. (Elizabeth) Warren (D-Mass.) and her followers failed to recognize at all points during the debate is that this bill will help millions of Americans gain access to credit for which they are not now qualified,” said OBA President Roger Beverage. “I’m so disappointed that Senator Warren chose politics over supporting community banks and their consumer customers. She always promised she would be the ‘champion’ for community banks, but when she had the chance she ignored her earlier promises.
“Regardless of the specifics, bankers across Oklahoma – and across the nation – should be encouraged by the passage of this legislation. It will help them do their jobs for their customers more effectively than they can now.”
And it should be viewed as such – a PART of the process – as OBA leaders applaud S. 2155 but also continue to look forward in helping our bankers with needed and meaningful regulatory relief.
“It’s an exciting first step in getting regulatory reform, and I believe its passage will help consumers get more access to credit,” said current OBA Chairman Sandy Werner, who is CEO of First National Bank & Trust in Elk City. “We have to remain vigilant in our legislative efforts and I do think this has to be the FIRST step, and it was a GREAT first step to go forward with.”