About 80 percent of the financial reform bill approved by Congress and awaiting the president’s signature doesn’t affect the state’s locally based banks, reckons Barbara Walker, executive director of Independent Bankers of Colorado.
But the remainder will have an enormous impact on the community lenders who support much of Main Street, she said.
Several provisions of the sprawling bill would separate chartered banks with less than $10 billion in assets from the larger national banks, giving them different exemptions and sometimes assigning them to different regulatory agencies.
If that distinction reduces the regulatory burden placed on smaller banks, Walker said they should consider that aspect of the law a win.
“We are concerned but we’re hopeful,” she said. “It’s hard to tell at this point because so much of the details of this new law have to be worked out in the implementation.”
There are 107 state-chartered and 35 nationally chartered banks based in Colorado, including 24 yet-to-be-consolidated charters owned by FirstBank Holding Co., according to the Colorado Bankers Association. FirstBank is the only one that exceeds the $10 billion threshold, association president Don Childears said.
Even with the separate options given to regulators, Congress moved too fast to enact ill-conceived rules, Childears said.
“Any way you slice it, the costs will increase,” Childears said. “This stuff won’t come cheaply, this kind of compliance, and that’s not really what this economy needs right now.”
Childears doubted many of the exceptions granted to protect small community banks will exempt them at all.
A provision on debit-card-transaction fees, for instance, sets the prices large banks can charge. Yet retailers will not likely do business with smaller banks unless the banks can compete with the lower, federally fixed price, rendering the exemption effectively meaningless, Childears said.
The new law is undoubtedly going to increase all banks’ costs as they devote more time to complying with a litany of new regulations, said Thomas Chesney, president of the commercial banking division at AMG National Trust Bank, a nationally chartered bank based in Boulder.
Community banks are overburdened already, Chesney said, and the law contains several faults like the “glaring omission” of fixes for mortgage lenders Fannie Mae and Freddie Mac.
Banks could not emerge from the financial crisis with no new rules, either, Chesney said.
“The part that I feel good about is that we appear to have made some differentiation between the small community banks like AMG and the large Wall Street banks that seemed too big to fail,” he said. “We fared pretty well overall.”
Drew FitzGerald: 303-954-1381 or dfitzgerald@denverpost.com
