POMEROY — Congressman Bill Johnson chose Farmers Bank in Pomeroy to meet Friday with the Ohio Bankers League to discuss issues concerning community banks.
Johnson discussed the Dodd-Frank legislation and the impact it has had on the community banking industry. A representative of the 6th District, he is aware his constituents depend heavily on community banks, perhaps more so than other districts in Ohio. Johnson said there is a need for regulation reform in the community banking industry.
“Small community banks are the starting point of small businesses,” he said. “We need start-ups for the economy to grow. Sixty percent of jobs come from small businesses. Over-regulation has impoverished the industry and we are being strangled by federal regulations.”
Community bankers shared concerns, including the advantage unregulated financial groups have over their institutions. Community banks are required to involve the consumer in a lengthy and time-consuming process that requires more paperwork and personal information than ever before.
The unregulated groups make getting a loan quick and easy. Even though it may not be the best financial decision, many customers not willing to spend time on what they view as unnecessary effort will go with the unregulated groups.
The event was organized by Farmers Bank of Pomeroy President Paul Reed and Ohio Bankers League Senior Vice President and General Counsel Jeffrey Quayle.
Bankers from around Ohio recognized the benefits of cooperation and formed the Ohio Bankers Association and the Ohio League of Financial Institutions. This group, now known as the Ohio Bankers League (OBL), is the trade association for the Ohio banking industry. OBL is a non-profit organization and is made up of 210 FDIC-insured financial institutions, including commercial banks, savings banks, and savings and loan associations.
Quayle and Reed said they organized the meeting so bankers could speak with the congressman concerning community banks’ ability to grow the community and serve its customers.
“We wanted to speak with the congressman and address the issues we are facing as a result of over-regulation,” Reed said. “Regulation is needed, over-regulation is not.”
He said that five years ago, they could look at all ways to help their customers get a loan, but the new regulations have limited their ability to do so. Farmers Bank has been serving Meigs County for more than 100 years, and Reed said he feels they know their customers.
“We are a community bank,” Reed said. “The regulations have made our knowledge of the customer irrelevant. Instead of finding the right loan for the individual, we have to find the one the regulations say they fit into. It took away our ability to customize loans to fit our customers’ needs.”
Quayle said that the impact of over-regulation is felt more deeply by community banks because these banks do not have assets to spend on the numerous compliance regulations. He said larger banks can spread the cost across the company, but with community banks, each one is responsible for employing their own compliance officers.
“Economic development doesn’t happen without community banks.” he said. “It is becoming increasingly difficult for young borrowers to get a loan and it isn’t just over-regulation that is the issue; it is our inability to treat all parties equally.”
He went on to say that it was unregulated financial services that created the economic crash, and those entities are still without regulation. Community banks did not cause the problem, but they are the ones most impacted by the new regulations.
According to Tina Wood Richards, a compliance officer at Farmers Bank, the Consumer Finance Protection Bureau has a massive amount of regulations, making it almost impossible for community banks to manage.
While the Consumer Finance Protection Bureau was established to protect consumers after the 2008 economic crash, many community bankers feel that it has had the opposite effect for their customers, making it more difficult to get a loan to start a new business or purchase needed farm equipment.
“Five years ago, this bank had one compliance officer. Today, we have three,” Richards said. “The impact the new regulations have had on our bank has affected the products we can offer our customers.”
The consensus of the group was that banking regulations are necessary, but that federal regulations have imposed over-regulation on community banks and the impact of new compliance rules will continue to be an issue for their small banks.
After the meeting, Johnson sat on a loan closing to view firsthand the process the customer goes through to secure a loan since Dodd-Frank was enacted.
Contact Lorna Hart at 740-992-2155 Ext. 2551.