ABA testified before the House Financial Services Committee, offering the banking industry’s perspective on the unintended consequences of the Volcker Rule – particularly for our nation’s community banks. Charles Funk, president and CEO of Midwest One Financial Group, testified on behalf of ABA.
In his testimony, Funk thanked Congress members for their recent engagement with regulators on the unnecessary and potentially significant losses on collateralized debt obligations secured primarily by trust-preferred securities. He also applauded the regulatory agencies for moving quickly to find a resolution to the problem.
Funk noted that had regulators not acted, the immediate cost to his bank would have been over $1 million, and at least $600 million for the entire industry, with the impact on communities many multiples of that. And while this particular issue appears to be resolved, concerns with the Volcker Rule remain.
“The Volcker Rule should not impair traditional banking services that allow banks to meet the needs of their customers, nor impose unnecessary costs on any bank, particularly regional and community banks, where no argument of systemic risk can be justified,” Funk said. “Congress should be vigilant in assuring rules are focused on the original intent to reduce systemic risk and are not used to hinder the traditional business of banking: providing credit to customers.”
Read ABA’s full press release.
Read Funk’s full prepared testimony.