| Community bankers who met with President Donald Trump yesterday expressed optimism that the president would tackle the issue of regulatory relief for smaller financial institutions.
Nine community bankers representing the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA), plus the heads of those organizations, gathered in the Roosevelt Room with Trump, Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn.
ABA President and CEO Rob Nichols described the meeting in a statement as “an important step toward policy changes that will allow banks to go even further in helping communities and our economy thrive.”
“Today’s discussion is crucial to my jobs agenda and to the American people,” Trump said before the meeting, according to a pool report. “Community banks play a vital role in helping create jobs by providing approximately half of all loans to small businesses, and that’s been dwindling because the community banks have been in big trouble.”
In his remarks, he also touted his executive order signed on Feb. 3 aimed at reviewing regulation of the U.S. financial system as “taking a lot of the regulation away.”
Dorothy Savarese, the president, chairman and CEO of Cape Cod Five Cents Savings Bank and chairman of the ABA, said she was encouraged by the president’s acknowledgement of community banks’ role in their local markets. She described the president as inquisitive, meeting every issue raised by bankers with a question to one of his advisors, and then another follow-up question to the banker.
“I think the biggest issue is the one-size-fits-all nature of well-intended regulations,” she said. “They’re really designed with larger institutions in mind and that’s good, but when you try to apply them to a small community bank, that can stand in the way of letting them address local needs.”
Savarese said she brought up the qualified mortgage and ability-to-repay rules as an example of that. Those rules don’t necessarily make sense for community banks in markets heavy with seasonal employees, she said.
“These rules were really written for W-2 employees to get a mortgage, but on Cape Cod and the islands and Southeastern Massachusetts, we have so many small business owners and our season is short and you really have to understand the business here to be able to make residential mortgage loans,” she said.
According to reports in the Wall Street Journal and American Banker, the president at one point asked Cohn if he could eliminate the qualified mortgage rule with an executive order.
Regulatory relief has long been on the wishlist for smaller financial institutions, although recent FDIC data did also show that community banks have outpaced the industry as a whole in terms of loan growth and revenues. Recent years have seen the introduction of several congressional bills intended to reduce regulatory burden for smaller financial institutions.
After Thursday’s meeting with the president, bankers were hopeful that a tiered approach to regulatory compliance could finally gain some traction.
“They’re taking it to the next level,” Savarese said. “We were just really appreciative of the president and his senior team taking the time to meet with us to hear from us directly.”
The other bankers representing the ABA at that meeting included Kenneth L. Burgess, Jr., chairman of FirstCapital Bank of Texas and chairman-elect of the ABA; Jeffrey M. Szyperski, chairman, president and CEO of Chesapeake Bank in Kilmarnock, Virginia, and vice chairman of the ABA; Leslie R. Andersen, president and CEO of Bank of Bennington, Nebraska; Luanne Cundiff, president and CEO of First State Bank, St. Charles, Missouri; and Laurie Stewart, president and CEO of Sound Community Bank, Seattle.
Representing the ICBA were Rebeca Romero Rainey, CEO of Centinel Bank of Taos, New Mexico and chairman of the ICBA; R. Scott Heitkamp, CEO of ValueBank Texas, Corpus Christi, Texas and ICBA chairman-elect; and Timothy K. Zimmerman, CEO of Standard Bank, Monroeville, Pennsylvania and vice chairman of ICBA.
