Trump meets with U.S. community bankers,
pledges to scale back regulations
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[March 10, 2017]
By David Lawder and Amanda Becker
WASHINGTON (Reuters) - President Donald
Trump promised in a meeting with community bankers on Thursday to strip
away some Dodd-Frank financial regulations and ensure they can continue
giving small businesses access to capital.
Trump, joined by National Economic Council Director Gary Cohn and
Treasury Secretary Steve Mnuchin, said community banks play a "vital
role" in the U.S. economy.
"Nearly half of all private-sector workers are employed by small
businesses. We must ensure access to capital to small businesses and for
small businesses to grow. Community banks are the backbone of small
business in America," Trump said at the beginning of the meeting.
Representing the industry were chief executives of nine community banks
with assets of around $1 billion or less and the heads of the American
Bankers Association and the Independent Community Bankers of America
(ICBA).
Bankers who attended the 45-minute meeting said they discussed the role
community banks play in rural areas and provided real-world examples
about the difficulties smaller banking institutions face.
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The bankers emphasized the need for "tailoring regulations to fit the
size and complexity of banks," said Chesapeake Financial Shares Inc
Chairman and CEO Jeffrey Szyperski, one of the bankers in the meeting.
Chesapeake is a regional bank headquartered in Kilmarnock, Virginia,
that has 14 branches and a separate wealth management division.
"We were very focused our message on how do we create a tiered and
proportionate regulatory environment for community banks," said Rebeca
Romero Rainey, head of Centinel Bank of Taos, a community bank in New
Mexico.
The idea seemed to resonate with Trump, who asked questions and showed a
pre-existing understanding of the community banking landscape, according
to those in attendance.
ICBA, one of the industry groups at the meeting, has advocated a tiered
system of regulations that tailor regulations to a bank's size, business
model, complexity and risk.
"The type of regulation that you need for a $700 million bank and the
risks they present are very different than those for a $200 billion bank
or a $1 trillion bank," a White House official said before the meeting.
Larger banks are able to spread their higher compliance costs over much
bigger asset and employee bases, while smaller banks struggle with high
costs and workloads.
One of the institutions participating, Standard Financial Corp of
Monroeville, Pennsylvania, has just nine branches with $488 million in
assets and earnings of $559,000 in the quarter ended Dec. 31, 2016. It
plans to merge with a rival in southwestern Pennsylvania in a deal that
will roughly double its size.
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![](../images/031017pics/news_x41.jpg)
President Donald Trump attends a meeting with U.S. House Deputy Whip
team at the East room of the White House in Washington, U.S. March
7, 2017. REUTERS/Carlos Barria
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Trump officials cited a dearth of applications to form new community
banks and around a 30 percent drop in the number of small U.S. banks
since 2008 as the impetus for the meeting. A smaller bank has gone
out of business every day for the past seven years, Szyperski said,
citing the Dodd-Frank financial reform law enacted after the
2007-2008 financial crisis as a reason new banks had not formed in
their stead.
Trump promised the bankers that his February executive order on
reducing regulation was "very powerful" and would apply to the
community banking sector.
Mnuchin, the former CEO of OneWest bank, a regional lender in
Southern California, said at his confirmation hearing in January
that onerous regulations are "killing community banks." He pledged
to ease those burdens while maintaining "proper" regulation, "so
that we don't end up with a world where we only have four big banks
in this country."
Also discussed at the meeting were the compliance costs associated
with the Consumer Financial Protection Bureau (CFPB), a new
regulator created under Dodd-Frank.
The CFPB is a perennial target for Republicans, who want to shift
its funding from the Federal Reserve to annual appropriations by
Congress and shift its management, now concentrated in a powerful
chairman, to a multi-person commission structure.
Separately on Thursday, when asked during a briefing with reporters
whether Trump still backs his campaign pledge to restore the
Glass-Steagall Act, White House spokesman Sean Spicer said that he
did. The law, which separated commercial and investment banking
activities, was repealed in 1999 and, if reinstated, would mainly
apply to larger banks.
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The Trump administration has not made any moves thus far to break up
big banks. Investors have bid up bank stocks since Trump's election
on expectations they would get regulatory relief but not be forced
to divest. There is little indication such legislation is an
imminent priority that will be taken up by the administration or the
U.S. Congress.
(Additional reporting by Roberta Rampton and Emily Stephenson;
Editing by Chizu Nomiyama and Jonathan Oatis)
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