The calendar has flipped to 2018 — a new year filled with great expectations. I can’t help but feel optimistic as I look to the months ahead. Will this be the year that comprehensive Congressional regulatory relief for community banks finally happens?
Many communities throughout Texas have seen their local banks shutter or be absorbed by larger institutions over the last several years because laws and rules, intended to curb the abuses of the nation’s largest “too-big-to-fail” banks, have instead trickled down to negatively impact the smallest.
Urban and rural communities alike have seen a consistent wave of mergers and acquisitions in community banking. According to federal data on the nation’s 1,980 rural counties, approximately one-third don’t have a local bank and many have no bank at all. Here in Texas, we’ve lost nearly one-third of our banks since 2009.
Without local banks, communities are starved of the capital they need for business growth and economic development. Community banks with less than $10 billion in assets provide more than 60 percent of all small business loans under $1 million and more than 80 percent of all agricultural loans.
Only Congress holds the key to unchain community banks from the burden pushing them toward consolidation. Late last year, the Senate Banking Committee passed the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) — legislation focused on community banks and the customers they serve. It was introduced with 20 bipartisan co-sponsors, a very promising sign in today’s divisive political climate.
Texans and consumers nationwide will be the big winners as the benefits of the legislation extend to community bank customers, not just the banks themselves. Overall, the bill provides reporting and other relief, which frees up resources so community banks can lend more and continue to offer competitive products and services.
Most notably, the bill will help thaw mortgage availability for community bank customers. Mortgage rules established after the financial crisis have made it difficult for community banks to loan to customers who do not qualify for a traditional 15- or 30-year mortgage. This bill will allow flexibility so long as the bank keeps that loan on their books, which is common among community banks.
Among the favorable consumer provisions contained in the bill, it calls for a free annual credit report freeze for consumers, especially helpful with the seemingly endless news of data breaches, including last year’s massive Equifax breach.
On behalf of Texas’ more than 2,000 community banks and branches — and the bankers who are committed to seeing their towns prosper and customers’ dreams come true — I ask you to take a stand with me. Support your local bank by bringing your business there, where your money will be reinvested in your community. It’s that simple.
We need your help preserving locally owned and controlled independent community banks to sustain and bolster economies across Texas. Here’s to a great 2018, the passage of much-needed regulatory relief and the strength of every Texas community we call home.