Last week two significant events occurred that potentially could affect every bank in the country. First, there was a meeting of a subcommittee of the U.S. House Financial Services Committee to take testimony on the importance of having bankers serve on the boards of the 12 regional Federal Reserve Banks. This issue surfaced recently from Sen. Elizabeth Warren, who contends that having bankers serve on these boards is a conflict of interest. Testifying for the banking industry and the Federal Reserve Boards were Jeffrey Lacker, president and CEO of the Federal Reserve of Richmond, Virginia; Esther George, president and CEO of the Federal Reserve of Kansas City; and Indiana’s own Bob Jones, chairman and CEO of Old National Bank, Evansville. I have heard Lacker and George speak before, and both are very intelligent and thoughtful people. Jones, of course, is well known in Indiana as the outstanding leader of Old National Bank, the largest bank headquartered in Indiana. He also is a former director of the Federal Reserve Bank of St. Louis, serving from 2008 to 2013.
Mr. Jones’ testimony included the following: “As representatives of our region, we serve a limited yet crucial role which entails providing fine-grained input on local economic conditions and contributing to the business side of the bank, including management, strategic planning and audit, which summon up unique expertise of bankers. Not only do bankers support a diverse range of individuals in our role as community catalysts, we’re on the front lines every day helping our clients manage and grow their businesses. Over time, this relationship provides us with vital insights about how Main Street Americans truly view the economy. We have a moral obligation to make sure all of our communities are heard and as we sit on Fed boards, we talk to our communities to make sure those voices are heard. We’re one of the few industries that see everything.” Ms. George added: “Through the regional reserve banks, private citizens from diverse backgrounds and from the largest to the smallest communities, have input into national economic policy. Altering this public-private structure in favor of a fully public construct … risks putting more distance between Main Street and the nation’s central bank.”
Bravo for these individuals for speaking up about the importance of having bankers serve on these regional boards. It would be highly illogical to eliminate the very individuals ‒ bankers ‒ who bring the most local knowledge to these regional boards. We appreciate Mr. Jones, Ms. George and Mr. Lacker for their leadership on this issue on behalf of the banking industry and the economy at large.
The second significant event that occurred last week was the filing of a lawsuit by the Independent Community Bankers of America against the National Credit Union Administration, in an effort to block a recent regulatory change enlarging the amount of commercial loans that a credit union may make. The suit, filed in The U.S. District Court for the Eastern District of Virginia, alleges that the NCUA overhaul of its member business lending rules violates both The Credit Union Membership Access Act of 1998, which limits member business lending to 12.25 percent of total assets, and The Federal Credit Union Act. While the suit will take months, if not years, to wind its way through the court system, it is encouraging to see action taken that may harness some of the overreach frequently displayed by the NCUA. Thank you, ICBA leaders, for taking action on this important issue.
Bankers and banking advocates throughout the nation continue to promote practices that best serve the economic needs of individuals and communities. The Indiana Bankers Association appreciates these efforts and continues to do our part to fulfill our mission: to advocate for and sustain an environment in which banks can succeed.
– S. Joe DeHaven