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Open to Discussion: Expect Lively Debates From the ABA’s Incoming Chairman

By: Kari English

A self-proclaimed policy wonk, Jeff Plagge does not shy away from a difficult discussion — whether it is with fellow community bankers or members of Congress. He does admit, however, that he will never get used to testifying before Congress.

“I have done it six or seven times in the past,” Plagge said. “You want to understand your message and make sure you are comfortable with your message and that you can talk clearly and concisely to the message — and then just be prepared for anything on the question side. I don’t think you ever get used to it, but I don’t run away from it when the opportunities come,” he said.

The president and CEO of the $1.6 billion asset Northwest Financial in Arnolds Park, Iowa, and soon-to-be chairman of the American Bankers Association has been actively participating in discussions on behalf of the ABA for about 23 years.

“I had my first introduction to the ABA when I had just completed my service as chairman of the Iowa Bankers Association’s ag committee,” said Plagge. “That was in the times of the ag crisis or shortly thereafter, and I really found out that you can individually and collectively have impacts. I was in the middle of a lot of the Farm Service Agency guarantee discussions when they were trying to revamp that and figure out better programs to help keep family farmers on the farm. I testified a couple of times during those years to House and Senate committees and, again, was kind of intrigued that individual voices can matter and you can have some impacts on building policies and so forth. So it kind of spurred my interest.”

Now, years later, it may be kismet that brought Plagge to the chairmanship at such an important juncture in the industry’s history. Calling himself a strange bird because he does not golf or fish, Plagge said his hobbies have always been volunteering and serving instead. And he is excited to have a front-row seat as chairman during a lot of the debates and discussions about the Dodd-Frank Act.
“I actually like the debate on some of these rules and regs and the opportunity to try to influence outcomes,” said Plagge. “Some people don’t like that part of the process. I happen to enjoy being part of that debate.”

So what topics of discussion does Plagge want to facilitate and potentially influence during his chairmanship? With colleagues in the financial services industry, discussions will focus on creating a unified voice within the industry.

“The example we use right now is Basell III,” said Plagge. “It’s a great example of what can happen when the industry is unified. The industry was unified on Basel III and wrote lots and lots of letters and had lots of input, and the end result of Basel III was a dramatic shift from the first round of discussions of what Basel III would look like. Dodd-Frank is an example of what happens to us when we aren’t unified. The industry split and now we have to deal with the ramifications of that.

“On 80 percent of the issues where we do agree — and I really do think it’s that high — we need to have a strong and a unified voice,” Plagge continued. “I think we are learning that as an industry and working harder at that collectively. That’s a positive trend that I want to continue.”

Although he enjoys a lively debate, Plagge does concede that finding common ground during his interactions with fellow bankers may not always be easy.

“You have to help facilitate the debate and there are differing opinions — not only within associations but also among banks. They are independent business people in many cases and so they have their own opinions and to me that’s a healthy situation. But it’s not always easy to come to a total consensus on everything, so you have to understand that going into some of the discussions. But encouraging people to voice their opinions is part of a good debate.”

Plagge’s discussions with regulators will focus on improving the working relationship between financial institutions and the examiners. He enjoys discussing things such as “this is the intent of the law, now let me tell you how it is actually coming down the pipe and how it actually impacts us and our customers at the end of the channel” because sometimes that gets lost in the discussion.

And Plagge finds that, with very few exceptions, regulators, and even members of Congress, want to know how the rules are affecting the industry once implemented. “Unless they hear that it may not be actually coming out the back side of the channel the way they intended it to, they just assume it has and that it is all working and that it met its key objective,” said Plagge.

Plagge used the new mortgage rules as an example. “I hear stories of community banks and actually know of some that have basically said ‘we don’t make enough mortgages to stay in the game.’ That’s sad because at the end of the day, that’s not the intent of the mortgage rules,” he said.

“I hope at the end of all this — or in the process of all this — that at some point Congress and the regulators and the banking industry will stand back and ask the questions: ‘What was the intent of this rule? Are we anywhere close in the ending result?’”

Plagge understands that reaching compromises with regulators and policymakers may be one of the most difficult aspects of his chairmanship. That is why he is advocating for the industry and the regulators to approach the upcoming regulatory challenges with an attitude of working together to reach an end result that is fair as opposed to an attitude of one strike and you are out.

“As we go through the reg exams following the implementation of some of these rules and as regulators look at enforcing the rules or implementing the rules, let’s not forget the training aspect of it for both the examiners and the bankers. Let’s try to go at it in a way that we can actually get to an end result that’s positive for consumers and customers as opposed to getting so buried into the bureaucracy of the regs that we forget what the intent was. Having those discussions at both the national and state-by-state level is going to be a challenge. But that’s not a new challenge for the industry. That one has been around a long time,” Plagge said.

The overarching theme of all his discussions will be getting back to the business of banking. “We have been so bogged down with the regulatory burdens and rules that have been coming at us that sometimes I think people have lost their focus,” said Plagge. “You can’t ignore those, they are still going to be there, but finding a better balance to the business of banking and the regulatory side of banking is hopefully what we can achieve going forward.”

One point that Plagge will not argue is that the financial industry has its fair share of challenges to deal with right now.

“The banking sector and community banks as a whole have always been resilient and they will continue to be resilient,” Plagge said. “I’m just going to try to enjoy the process and try to have as much of an impact as I can.”

Kari English is senior editor of BankNews.

Copyright (c) October 2013 by BankNews Media