Happy New Year! My first blog last year was a top 10 wish list, along the lines of David Letterman, for the banking industry. I clarified that it was a list of wishes, not resolutions, since we had little if any control over the outcome. Nevertheless, it seems appropriate to revisit the list to see how many wishes came true, and the results follow:
No. 10: FASB simplifies the rules for financial accounting by banks and recognizes that the banking industry is already heavily regulated and examined. Result: FASB seems to have gone the opposite direction, with proclamations that it will cast its current expected credit loss mandated calculation upon banks.
No. 9: The federal government balances its budget, bringing stability to the economy and creating an environment in which our children and grandchildren can succeed. Result: Did not even come close.
No. 8: Banks once again become authorized to make credit risk decisions, instead of tying up time and talent trying to evaluate regulatory risk. Result: There was some minor success in the highway bill, but much work remains to be done.
No. 7: Banking takes back the payments system. Result: Not yet!
No. 6: The Federal Reserve Board moves up interest rate levels to be more in line with historical norms, allowing banks to once again enjoy interest rate spreads. Result: The Fed moved up levels by 25 basis points; it is a start.
No. 5: Loan demand, particularly commercial loan demand, returns to normal levels, as business owners and managers detect more certainty in the future. Result: Some improvement noted, but far short of normal levels or future certainty.
No. 4: Government and businesses, including banking, align to combat cybersecurity threats, eventually eliminating cybercrime altogether. Result: No progress, as retailers continue to duck responsibility for their inadequate security systems.
No. 3: A regulatory relief bill passes that: simplifies the overly complicated and burdensome mortgage compliance process; reigns in, eliminates, or at least places a governance board and congressional budgetary constraints on the Consumer Financial Protection Bureau; and provides relief from additional overkill in the Dodd-Frank Act. Result: Most disappointingly, we failed to move the needle on this one.
No. 2: Reign in the Farm Credit System banks from predatory pricing by making them pay state and federal taxes at the same rates as banks and thrifts, and subjecting them to the same regulatory compliance as banks and thrifts. Result: Did not succeed in these areas specifically, but did get an oversight hearing before the House Agriculture Committee at which the FCS had to defend its predatory actions and failure to meet its mission. This hearing was a huge victory for banking advocates, since it had been over a decade since FCS went before Congress to report its activities.
No. 1: Credit unions, regardless of charter, pay state and federal taxes at the same rates as banks and thrifts, and are subject to the same regulatory compliance as banks and thrifts. Result: We had no success in getting a level playing field with credit unions. In fact the credit union regulator, the National Credit Union Administration, is even attempting to widen the gap through regulatory processes.
While 2015 was not a successful year regarding these important issues, we must continue the fight. The banking business is essential to every business and consumer in this great country, and we have to make sure that we sustain an environment in which banks can provide those needed products and services. Thus the fight goes on into 2016 and beyond ‒ and your Indiana Bankers Association will be leading the charge.
– S. Joe DeHaven