The Independent Community Bankers of America urged lawmakers on Monday to exempt community banks from new regulations, saying that the regulatory burden facing community banks has increased significantly in recent years.
“Community banks face an alphabet soup of regulations, each of which contains hundreds of pages of burdensome rules,” ICBA Chairman Jeffrey L. Gerhart said. “From A to Z and beyond, these regulations impose direct costs on community banks, inhibiting them from serving their customers and communities. To help community banks restore our nation’s economic growth, policymakers should build on the tiered approach to financial regulations that distinguishes between community banks and the nation’s largest financial institutions.”
A Federal Reserve study conducted in 1998, before the controversial Dodd-Frank Act took effect and mandated even more regulation, revealed that a sampling of the most burdensome regulations comprised more than 14 percent of community bank operating expenses. Dodd-Frank added more regulation and its reforms are expected to create 20,000 pages of new rules. Additionally, the increasing regulatory burden is expected to increase lending rates, lead to the loss of 7.5 million jobs and reduce GDP by 0.7 every year over the next five years.
“To alleviate the burden of excessive regulation on the nation’s community banks, ICBA is calling on policymakers to carve out community banks from new regulations while continuing to pursue tiered regulation that distinguishes between community banks and larger and riskier institutions,” ICBA President and CEO Camden R. Fine said. “Community banks have little in common with Wall Street firms, megabanks or shadow banking institutions and did not cause the financial crisis or perpetrate abusive consumer practices.”