Last week I attended the annual convention of the American Bankers Association, held in San Diego, Calif. The majestic Pacific Ocean and sparkling California weather provided the perfect backdrop for an aura of optimism. Bankers were in a good mood and were seeking reasons to remain so.
The ABA staff and volunteer banker leadership were primed to promote this optimism. They did an admirable job, but the most convincing cues came from those who cannot be programmed to put forth positive vibes … namely the acting chairman of the board of the Federal Deposit Insurance Corp., Martin J. Gruenberg, and the Comptroller of the Currency, Thomas J. Curry.
Both Marty Gruenberg and Tom Curry said they recognize that the proposed Basel III capital guidelines require significant redrafting, especially for community banks. Apparently those thousands of comment letters from community bankers across the country are having an effect.
While it was encouraging news from those two key gentlemen, there also was an undertone in both of their speeches that they are beginning to see the potential destruction of the community banking system. That threat comes from the totality of the various rules and regulations continuing to plague the industry.
The industry has long felt this burden, but whenever community bankers ask regulators to indicate who has been monitoring the totality of the rules, the regulators typically give one of three responses. The first is a deer-in-the-headlights look, punctuated with a large question mark. The second response is a defensive “just following the law” tactic, and that we should have taken our grievances to the legislative branch. The third response is an admission that they know of no one who is overseeing the total process. This answer is refreshing in its honesty, but disturbing in its implication for struggling community bankers, who so often are punished for crimes they did not commit.
So, knowing that no one had been paying attention to the cumulative effect of so many rules and regulations, I was pleased to hear Mr. Gruenberg and Mr. Curry hint at their concern about the totality of the burden on community banks. Encouraging remarks like those — amid sunny skies and ocean views — made last week’s ABA convention a worthwhile event.