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Thursday, September 18, 2014

Plagge: Community Banks Face ‘Avalanche of Regulation’


An avalanche of regulation is harming community banks, ABA Chairman Jeff Plagge told the Senate Banking Committee yesterday. Plagge, president and CEO of Northwest Financial Corp., Arnolds Park, Iowa, stressed that the imbalanced “one-size-fits-all” regulatory climate has directly hurt the operations of smaller banks and, by extension, raised the costs of credit for bank customers.

“The impact goes beyond just dealing with new compliance obligations -- it means fewer products are offered to customers,” he said. “This means less credit in our communities. Less credit means, fewer jobs, lower income for workers and less economic growth,” For example, he added, 58 percent of banks have canceled or delayed a new product because of regulatory burden, and 44 percent have ended an existing product or service.

Plagge urged senators to pass several relief bills that would reduce unnecessary notice requirements, mandate cost-benefit analysis for accounting rules, expand the safe harbor for mortgage lending, allow more banks to qualify as rural if appropriate. Meanwhile, he added, prudential regulators should adopt a customized examination approach that would give credit to well-run banks that know their customers.


---ABA Daily Newbytes

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