Preserving the Community Banking Legacy

Many times over the years, I have written and spoken about my deep concern for the future of community banking. My concern is actually aimed more at the rural communities that so many of those banks serve. I fear that, without community banks, many rural communities will not survive. Clearly a certain portion of our population prefers to live in those communities, but will lose that option if their communities cease to exist.

Although I have addressed this topic many times, last Friday my good friend John Ryan, president and CEO of the Conference of State Bank Supervisors, stated it best when speaking before a community bank conference at the Federal Reserve. John simply said: “The future of community banking is not just about the future of community banks, but the ability of communities to define their future, the future of rural America, the future of small businesses across our country, and the future of individual choice.” Well said!

Considering the excessive regulatory burden that has been cast upon the banking industry within the past four years, particularly on the community banking industry, it is uncertain how many will survive. U.S. Senate leaders, for the past couple of years, have failed to consider any regulatory relief measures. Surely they do not think the Dodd-Frank Act (DFA) is so perfect that it requires no adjustments, yet that is exactly how they have acted.

I am hopeful that all of that changed last Tuesday, Election Day. The people spoke and replaced a significant number of Democrat senators, while not rejecting a single Republican senator, resulting in a Republican majority in the Senate for the first time in eight years. I assure you that the Republican majority members will make their share of mistakes, but I also believe they will be open to making needed tweaks to certain DFA provisions – those that are the most unfair, unnecessary and poorly drafted. With this revamped Senate working with the U.S. House of Representatives, which also remains significantly controlled by Republicans, I fully expect many regulatory relief bills to be passed and placed on President Obama’s desk. The question is, will the president sign them into law, or veto them?

This scenario surely inspired John Ryan’s remarks last Friday. He must feel encouraged that Congress will finally deal with some of the egregious Dodd-Frank Act rules that have been drafted in the past four years. John also has to be encouraged that community banking, as we know it, has a chance to survive. Consequently rural communities and small businesses, which are so dependent on community banks, likewise have a chance at survival. If all those factors play out, then the individual choice of where to raise a family will be preserved to include the option of a rural upbringing.

Thank you, John, for your leadership on behalf of community banks, small communities and freedom of choice. Thank you, voters, for creating an atmosphere that, we hope, will diminish partisan gridlock and move this country forward, at least regarding the current regulatory burden. As John so aptly closed his speech: “We have inherited an important legacy: a diverse banking system. I believe that by all of us working together, we can ensure its future.” May the legacy live on!

 – S. Joe DeHaven

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