Frank Keating, the president and CEO of the American Bankers Association, said this week that community bankers have significantly more pull with legislators and regulators than Wall Street firms.
“If you talk to the [Office of the Comptroller of the Currency], talk to the [Federal Deposit Insurance Corp.], talk to the [Federal Reserve], everyone inquires, ‘What’s the feeling out there among community and obviously rural bankers?’” Keating said, according to FarmWeekNow.com. “It’s not Wall Street; it’s not the coasts.”
Community banks have spoken out against more stringent regulation under Dodd-Frank and its potential impact on the institutions, saying that they were not responsible for the practices that contributed to the 2008 economic and housing crisis.
Keating said that the Obama administration and Congress are focusing more on “what’s best for Middle America,” adding that rural bankers are “on the side of the angels” in Washington, FarmWeekNow.com reports.
Keating also said that there will be reforms to Dodd-Frank next year, adding that if the law’s regulations limit credit availability for rural businesses and farmers, “communities blow away.”
The ABA has been vocal regarding its concerns about pending financial regulations, including Dodd-Frank and Basel III capital reforms.
John Blanchfield, the senior vice president of the ABA’s Center for Ag and Rural Banking, said that Basel III rules will require lenders to treat some loans differently, adding that the rules could force lenders to hold more capital against farm real estate mortgages, according to FarmWeekNow.com.
Blanchfield said that requiring lenders to hold more capital could affect earnings and, therefore, the willingness of lenders to issue loans.