Regional Banks Power Community Economic Growth

With deep ties to community leaders and employers, we use customer deposits to fund lending to local consumers and small- and medium-sized businesses. We have strong ties to the communities we serve and deliver economic development to regional economies. As a consequence of serving the heart of community economic growth, we welcome appropriate government regulation, based on risk and business model, to assure our safety and soundness.

The current one-size-fits-all regulations treat Wall Street banks the same as regional banks, despite large differences in their asset sizes and type business models. When the Dodd-Frank Act was enacted, it imposed significant systemic risk regulations on regional banks based on an arbitrary asset number of $50 billion, rather than taking into account a bank’s risk profile or business model. Since then, regulators at the Financial Stability Board and the Basel Committee for Bank Supervision have developed a more precise test to measure systemic risk by examining five factors: size, interconnectedness, complexity, global activity, and dominance in certain customer services, also known as substitutability.

Regulation Based on Risk

Regional banks stand for a tailored, balanced regulatory structure that acknowledges that risk is not measured by asset size alone, but instead accounts for the diversity and resilience of different banking sectors.

I would have to say also it’s not just size…I think it has to do with opacity, complexity, interconnectedness, and a variety of other things.

– Ben Bernanke, Former Federal Reserve Chairman

Instead of the current one-size-fits-all regulatory method, a more thoughtful, analytical approach would make for a safer and sounder financial system while freeing billions of capital for investment in good-paying American jobs. Congress needs to reexamine the definition of systemic in order to focus regulators on preventing a repetition of the 2008 financial crisis, and to assure that traditional regional banks are able to more efficiently help local communities grow their economies.

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