Flexibility: It’s one of the characteristics that sets our community banks apart, enabling us to meet the needs of distinct communities in unique ways.
However, the converse of flexibility is rigidity, and unfortunately, regulation fits that definition and hampers the ability of community banks to meet the individual needs of our communities. The more than 7,000 pages of new regulations that have been thrust upon us over the past year enforce a one-size-fits-all approach to banking. Not only do community banks need to ingest and decipher new guidance and then apply it to their business operations; they also must consider halting certain actions or offerings for fear of running afoul of a new regulatory model or requirement. In the end, it is the consumer and small‑business owner who lose out because of it.
That’s why ICBA continues to fight for tiered regulation. It’s not about trying to buck guidance but rather seeking to ensure appropriate regulation that provides suitable safeguards while retaining flexibility. Proportionate regulation will allow community banks to continue their strong record of safety, soundness and adherence to compliance standards while enabling the nimbleness necessary to serve their communities.
Fortunately, opportunities exist for us to demonstrate the importance of tiered regulation. Consider the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) review process. This effort offers a way for bankers to identify where the regulatory burden is disproportionate to the cost of its management, and it opens the opportunity to say, “Here are areas that are impacting our ability to serve our customers.” Whether derived from a regulation’s implementation costs or adverse effects on customers, we must continue to serve up examples so policymakers understand the downstream implications of regulations. So, keep sharing your stories with us as we keep you informed about the EGRPRA process through NewsWatch Today and our social media channels.
As you read this issue, I also encourage you to think not just about the cost of compliance in your bank, but how one-size-fits-all constraints negatively affect your ability to serve your communities. Share that feedback with ICBA and your regulators because your voice matters. We continue to see examples of new rules that include exemptions for community banks to allow for greater flexibility, precisely because we have effectively demonstrated the negative impacts of excessive regulatory burden. As we look to the future, we intend to build upon that solid foundation and seek out tiered regulation, one nimble step at a time.
