One of the things many of you have heard me talk about over the last five years or so deals with the Alliance between and among the 51 state bankers associations across the country and the ABA.
The alliance is of immeasurable value to the commercial banking industry, but it wasn’t always so.
When I first arrived at the OBA more than 30 years ago, I discovered there was very little direct or meaningful communication between each of the states and the national banker trade groups. That lack of communication resulted in the passage of legislation that directly impacted banks, mostly in a negative way.
A couple of instances come readily to mind: passage of the FDIC Improvement Act of 1991, (FDICIA) and passage of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. Both acts included provisions that were particularly harmful, not just to community banks, but to the industry as a whole.
In the case of FDICIA, the deal was negotiated in large measure between Congress and the ABA. The state bankers associations had very little input into the final version that was passed. The phrase “trust us” comes readily to mind. When the bill ultimately passed in December 1991, a few of us actually read it. We were horrified.
It wasn’t just the ABA; all banker trade groups in Washington were involved in that discussion. The state bankers associations were not.
The next instance is the Riegle-Neal interstate branching act passed in 1994. Its original version on which most, but not all, of the national trades had signed off provided for virtually unlimited branching across state lines without regard to the provisions of an individual state’s law. Needless to say, in Oklahoma that was simply not acceptable.
We made a lot of noise and noted our objections to the “final” draft of this momentous legislation. Long story short, we inserted a provision in Riegle-Neal requiring a bank to recognize state law on the subject of branching.
In our case, the only way an out-of-state bank could enter our state was by acquiring an existing Oklahoma franchise. There was a lot of shouting going on at the time, but the states prevailed.
Out of this chaos rose a special meeting involving the states, the ABA and bank leaders at which the lack of meaningful communication was emphasized. As a result, the Alliance was born and now requires enhanced communication among the state bankers associations and the ABA at a minimum.
Gradually, we have refined the process for getting a bill passed, including much better coordination and communication with the state associations. As state associations, we work together and coordinate with each other on a number of legislative issues and proposed regulatory changes.
The beauty of it is together we have created something that’s unique to your profession. It gives us an opportunity to influence legislation and regulation in a way that’s most beneficial to you, our member banks. And making certain it functions as intended makes the Alliance critically important to bankers across the country.
Those of us on the front lines recognize both legislative and regulatory proposals can have a huge impact on the success of America’s banks. We also recognize we have to work in tandem with each other to get the desired results.
Moreover, bad ideas tend to move from state to state, which gives us (state associations) a “heads up” in case those same ideas pop up in Oklahoma. But the Alliance also serves as a sounding board for good ideas that will be helpful to member banks and on which we can coordinate a game plan to make it happen. The same is true with respect to legal issues.
So, what do we have? What is the “Alliance” and why should you care? The Alliance brings together the ABA and the 51 state bankers associations across the country, collectively serving as the voice of the banking industry. Its goal is to maintain and enhance the strength of America’s banks and the communities they serve.
Here’s another way to look at it: by monitoring local, state and federal issues and coordinating our efforts across the country, the Alliance plays a vital role in determining both state and federal policy objectives. We work together mobilizing bankers to engage policy makers and the general public in an effort to establish sound, basic banking policies. We also have one of the largest industry political action committees, plus millions in independent expenditures that will help us maintain a pro-banking, pro-business Congress and our respective state legislatures.
Most importantly, we represent all banks, no matter its size or charter. The reason is simple: Together, we are stronger. Together, we will be more successful than if we just go it alone. Not working together has been our Achilles’ heel for decades. The Alliance enhances our ability to work together for the benefit of our member banks.
We are also a “resource network” that works together for the benefit of each of our member banks. It’s a unique mechanism that delivers results and we need to make sure we keep all of its parts as strong as possible. Your bank is the primary beneficiary of those collective efforts.
One more thought. As consolidation of the industry continues, its impact on the OBA and other state bankers associations is a growing cancer on the current Association business model. Consolidation eats away at our income from dues, education events and products and services sales. Fewer and larger banks generally means less banker participation, in OBA leadership as well as our various boards and committees.
Consolidation is what keeps me up at night. It’s relentless, and the Alliance helps us deal with that issue, together. The Alliance is of immeasurable value to the industry. It works. And it makes your industry one of the most powerful in Washington. That’s a good thing.