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Tuesday, May 30, 2017

In L.A. Times, Nichols Emphasizes Urgency of Regulatory Reform

Banks of all sizes need regulatory reform, and the need is especially pressing for community banks, ABA President and CEO Rob Nichols wrote in a Los Angeles Times op-ed. With the House expected to vote on a regulatory relief bill as early as next week, the op-ed drives home the message that excessive regulatory burdens negatively affect bank customers.

Nichols recounted a story from a southern California community bank that had to end mortgage lending because the software required to stay compliant would have meant the bank lost money on every loan. He wrote:
Nearly a decade after the crisis, we’ve ended up with too many duplicative and sometimes contradictory rules that don’t always promote safety and soundness, and may actually hinder banks from serving their customers and growing local economies.

Nichols also rebutted the argument that strong bank profitability figures reported by the FDIC means that banks do not need regulatory relief. "The topline profit figure doesn’t tell the whole story," he said. "Tunnel vision on bank profits ignores macro-level trends" on bank consolidation and the lack of de novo activity, with just four new banks formed since Dodd-Frank passed.

Nichols concluded:
Our economy performs best with a healthy and diverse mix of banks to meet customers’ needs – large, small and everywhere in between. Without reasonable reform in Washington, California’s banking sector will continue to shrink and become less diverse.

Read the op-ed.

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