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Monday, February 2, 2015

Keating Highlights Costs of 'Trickle-Down Regulation'

ABA President and CEO Frank Keating highlighted the real-life implications of "trickle-down regulation" in an op-ed published in The Hill newspaper. "I constantly hear from hometown bankers that their examiners are recommending actions suited for banks many times their size," he said. For example, one bank had its examiner recommend the bank conduct a stress test — even though it was nowhere near the threshold at which such a test would be required.

The result of trickle-down regulation is hiring more staff or contractors than the bank needs to serve its community, reducing profits by double-digit margins. He said:

Those shrinking profits have real-world consequences for the bank’s town and the people who live there: less lending for small businesses and entrepreneurs, fewer mortgage loans and fewer investments in the financial technologies of the future.

Read the op-ed.

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