WASHINGTON – Harris Simmons, the Chairman and CEO of Utah-based Zions Bancorporation, told the House Financial Services Committee today that, despite a traditional approach to banking and low risk profile, Zions’ compliance with arbitrary regulations costs millions of dollars that could otherwise be spent on loans to consumers and small businesses.

“Since the financial crisis, Zions Bancorporation has added nearly 500 additional full-time equivalent staff in areas such as compliance, internal audit, credit administration and enterprise risk management,” Simmons said in written testimony submitted to the committee.

“We have also embarked on an ambitious program to replace core software systems, revamp our chart of accounts and establish a data governance framework and organization in order to ensure our ability to meet the substantial data requirements necessary to fully comply with the stress testing and liquidity management protocols applied to SIFIs,” Simmons said. “We expect to spend well over $200 million on these projects, making this the most substantial investment in systems in our history. While we will derive ancillary benefits from modernizing our systems, ensuring regulatory compliance has been a significant factor in our decision to make these investments.”

Simmons said that half of Zions’ total commercial loans are less than $5 million in size, underscoring the bank’s emphasis on small business lending. Echoing comments by Federal Reserve Governor Daniel Tarullo that enhanced prudential standards can inhibit lending, he said the bank has been forced to curtail those loans because of regulatory rules designed to limit systemic risk.

“We’ve in particular established limits on construction and term commercial real estate lending that are significantly more conservative than those incorporated in current interagency guidelines on commercial real estate risk management,” Simmons said.

Regional banks collectively spend billions of dollars complying with arbitrary systemic risk regulations, even though the Treasury Department has shown that no regional bank is systemically risky. The House Financial Services Committee is examining those regulations, after the Senate Banking Committee passed legislation to reform bank regulation in May.

Simmons’ full testimony is available here.

About the Regional Bank Coalition: The Regional Bank Coalition is a group of regional banks that support regulation based on risk and business model to ensure safety and soundness. For more information, visit www.regionalbanks.org or follow on Twitter @rgnlbanks.