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The Year of Regulatory Relief?

Bankers are encouraged by news from Washington.

By Bill Poquette

This could be an exciting year for all who long for regulatory relief for community banks. Hopes are high and certainly the stars are aligned as well as they ever will be. Following the Republican sweep in the November elections, several developments during President Trump’s transition to office and since the inauguration may serve to heighten the anticipation.

Encouragement came early from the White House with presidential chief of staff Reince Priebus issuing a freeze on regulations. Agencies were ordered to withdraw approved regulations submitted for publication in the Federal Register, and to delay for 60 days implementation of those already published. This presumably affects rules promulgated by federal bank regulatory agencies.

Over at the Capitol, where Republicans eked out a narrow 52-48 Senate margin in November, Sen. Mike Crapo, R-Idaho, takes over as chairman of the Banking Committee, succeeding Sen. Richard Shelby, R-Ala. Crapo has listed reducing regulations for community banks as a priority. Sen. Sherrod Brown, D-Ohio, remains the ranking Democrat on the committee and has indicated support for regulatory relief — although he opposes tampering with the Consumer Financial Protection Bureau.

Rep. Jeb Hensarling, R-Texas, continues to lead the House Financial Services Committee. One of community banking’s staunchest supporters in the Congress, Rep. Blaine Leutkemeyer, R-Mo., has succeeded the retiring Rep. Randy Neugebauer, R-Texas, as chairman of the Subcommittee on Financial Institutions and Consumer Credit.

And community banks have another ally in the new Secretary of the Treasury, Steven Mnuchin. In a written response to the Senate Finance Committee following his confirmation hearing he said, “It is important that we have a regulatory environment that supports credit flows to all aspects of our economy, particularly in rural and less-populated areas, and that small and mid-sized institutions are not suffering from an inappropriate regulatory burden.”

Another element in the unfolding political-regulatory drama is the terms of federal agency chiefs. Expiration dates loom this year for Comptroller of the Currency Thomas Curry and FDIC Chairman Martin Gruenberg, and next year for Federal Reserve Board Chair Janet Yellen, FDIC Vice Chairman Thomas Hoenig and Consumer Financial Protection Bureau Director Richard Cordray – if he is not removed sooner, as Sen. Ben Sasse, R-Neb., among others has urged. There are two vacancies on the Federal Reserve Board and Hoenig has been mentioned as a possible candidate.

A compelling case is building for real progress, but euphoria may be a stretch. Washington, D.C., partners in the financial services group at Morrison & Foerster, a leading global law firm, believe that key changes, while significant, may not be sweeping, with more incremental moves coming at key agencies, including the Fed and the CFPB, among others.

Max Cook, president and CEO of the Missouri Bankers Association, describes the situation this way in the January edition of The Missouri Banker newspaper: “If ever there was a time that bankers needed to get energized for change, the time is now. Once 2018 arrives, attention in D.C. turns to congressional elections and it is quite difficult to pass legislation during an election campaign. We can’t afford to wait another year. ”

I’m betting community bankers will rise to the occasion.


Bill Poquette is editor-in-chief of BankNews.

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