Great Expectations Pared Down

I recall vividly as a child the overwhelming excitement of Christmas. Although it did not resonate with me at the time, I also recall my parents trying to trim down my expectations to what Santa Claus realistically could deliver. They did a pretty good job of aligning my expectations to reality.

One month ago, and again last week, I felt that same tug between expectations and reality while visiting Washington, D.C., on advocacy trips sponsored by the American Bankers Association and the Independent Community Bankers of America. Last fall, high expectations arose following the elections, when most of us believed that having a business-friendly U.S. Senate working with the U.S. House of Representatives would portend gifts of regulatory relief, tax restructuring, data breach/cybersecurity solutions ‒ and even some leveling of the financial services playing field. The reality became clear on these two recent DC trips, when the national association representatives and many members of Congress repeatedly cautioned against expecting too much. The likely end result is that our gifts will be limited to some regulatory relief and a little movement of the needle forward on cybersecurity issues.

Reality may have been spelled out on these trips, but DC-style reality seldom makes sense to the rest of us. Nevertheless, it is reality. That reality is twofold as it relates to us and many other business interests. First, 2016 is an election year ‒ a presidential election year. Typically that means that political posturing trumps the legislative agenda. In other words, little will be accomplished between Oct. 1, 2015, and the election in November 2016.

The second issue, resulting from the first one, is that the calendar is too crowded to get much through this Congress besides emergency and budgetary issues. Every industry has a lengthy list of items it wants to have addressed. My sense is that this Congress will want to deal with some of these issues, but no industry will get close to what it wants. Many will not even get what they need. Of some encouragement is that the Republicans in the Senate have stated publicly, on many occasions, that they will work with the Democrats to pass what they can agree on.

If you were expecting to see Obamacare and the Dodd-Frank Act eliminated, you will be disappointed. Though I never expected to see such major change, I do hold out hope that some important regulatory relief may occur. There has been much more talk about tiered regulation, as determined by the complexity of bank product offerings and structure. I doubt that this change will be enacted in this Congress. It is difficult to determine how to accomplish this goal; one idea is to leave it up to the regulators. I tend to think that bankers will determine that this approach is not desirable. It’s hard enough to get regulatory consistency among the different agencies operating in different regions of the country. Can you imagine the difficulties if the examiner in charge is left to determine how complex your bank is, and then determine how you should be examined?

Overall I remain confident that some of the important bills already moving will be included in a relief package during this Congress. However, just as Santa Claus could not give us all we wanted as children, Congress will not give us all that we want. We will need to work hard to help lawmakers understand which of the issues are the most pressing and realistic to address, and help them find a way to provide solutions. Those of us who advocate for the industry are doing just that, with grassroots support from member bankers, as we grapple with these realities.

– S. Joe DeHaven

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