President Donald Trump will meet with Main Street community bankers on Thursday to learn more about their difficulties in complying with the tougher Dodd-Frank financial regulations enacted after the 2007-2009 financial crisis.
The listening session is aimed at helping the Trump administration craft a legislative plan to ease the regulatory burdens on small banks to try to unlock more small business lending and fuel economic growth, a senior White House official told Reuters.
The meeting will include chief executives of nine community banks with assets of around $1 billion or less, along with the heads of the American Bankers Association and the Independent Community Bankers of America.
ICBA has advocated for a tiered system of regulations that treat smaller banks differently than global financial behemoths, tailoring regulations to a bank’s size, business model, complexity and risk.
The Trump White House largely shares that view.
“The type of regulation that you need for a $700 million bank and the risks they present are very different than those for a $200 billion bank or a $1 trillion bank,” the White House official said.
“Right now we have a lot of these rules that apply one-size-fits-all. And if you’re the small community bank trying to comply with rules that are also applied to much larger institutions, it’s very hard to remain competitive.”
Larger banks are able to spread their higher compliance costs over much bigger asset and employee bases, while smaller banks struggle with high costs and workloads.
One of the institutions represented in the meeting, Standard Financial Corp of Monroeville, Pennsylvania, has just nine branches with $488 million in assets and earnings of $559,000 in the quarter ended December 31, 2016. It plans to merge with a rival in southwestern Pennsylvania in a deal that will roughly double its size.
Trump officials cited a dearth of applications to form new community banks and around a 30 percent drop in the number of small U. S. banks since 2008.
U.S. Treasury Secretary Steven Mnuchin, who is expected to attend the meeting with Trump, along with National Economic Council Director Gary Cohn, said at his confirmation hearing in January that onerous regulations are “killing community banks.”
Mnuchin, the former CEO of OneWest bank, a regional lender in Southern California, pledged to ease those burdens while maintaining “proper” regulation, “so that we don’t end up with a world where we only have four big banks in this country.”
The bankers are expected to highlight compliance costs associated with the Consumer Financial Protection Bureau (CFPB), a new regulator created under the Dodd-Frank law.
The CFPB is a perennial target for Republicans, who want to shift its funding from the Federal Reserve to annual appropriations by Congress and shift its management, now concentrated in a powerful chairman, to a multi-person commission structure.
Another problem to be aired by the bankers, the White House official said, will be post-crisis mortgage regulations that hamper home loans to small business owners who may have irregular income streams.
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