A Glimmer of Hope

March 30, 2011

In last week’s blog, I focused on a speech that FDIC Chairman Sheila Bair delivered at the American Bankers Association Government Relations Summit, at which she was not warmly received. What a difference a week makes!

Since then, I have attended the Independent Community Bankers of America Annual Convention, where again Sheila Bair was a speaker. This time her reception was improved, for several reasons: She was guarded in her remarks; she was speaking mostly to community bankers, who do not bristle at “big bank” criticism; and she did not open herself to a question-and-answer session … and thus did not go off script and off track.

Other speakers provided additional insight. One speaker was a subject of an earlier blog: Professor Elizabeth Warren, who is tasked with establishing the Consumer Financial Protection Bureau. Professor Warren reiterated in public what she previously said to me in private—that she intends to (1) do no harm to community banks, (2) focus on nonbank financial service providers’ compliance, and (3) simplify consumer disclosure to benefit both consumers and lenders—all welcomed news.

Federal Reserve Bank board chairman Ben Bernanke, another presenter, stated he would ensure that rules drafted to implement Dodd-Frank Act debit card interchange fee levels not harm community banks. Could it be that the 11,000 comment letters flooding the FRB have sent the agency back to the drawing board to scrap the preliminary draft? Better yet, could banking interests have bought enough time to get a delay and study bill through Congress that will clarify that all costs of the debit card interchange system need to be included in setting these fees?

Rounding out the convention, acting Comptroller of the Currently John Walsh expressed concern about community banks and their ability to absorb the myriad regulations to be promulgated as a result of the Dodd-Frank Act. Overall it appears that key people involved in the rule-writing process are starting to see the light—the most encouraging message to come from the ABA and ICBA meetings that I recently attended.

– S. Joe DeHaven

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