Op-Ed: Right-sizing Regulations Benefits Financial Consumers

By John Sorensen, President and CEO, Iowa Bankers Association

On behalf of Iowa’s 321 banks and the 687 Iowa communities we serve, the Iowa Bankers Association would like to thank members of our Congressional delegation who supported the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155). This bill is a modest attempt to right-size regulation for smaller community financial institutions to help them better serve Iowans.

Too often in this country, laws and regulations are reactionary and result in burdening entire industries rather than focusing on a few bad actors. As a result, consumers suffer from fewer or more expensive choices. S. 2155 is a bi-partisan attempt to make financial regulation work for the consumer of financial products.

In survey after survey Iowa is rated as one of the best states in which to bank. It is no coincidence that Iowa also has more banks per capita than any other state in the union. Competition drives attractive pricing and enhanced customer service. Yet, this favorable environment is being threatened by a number of factors, the most significant of which is the scale required to adapt to a growing regulatory burden.

Industry surveys have repeatedly shown that rising compliance costs are a factor in determining whether a bank chooses to close its doors, merge or consider an acquisition. Iowa is losing approximately one community bank per month as a result of this trend. That’s one more community without a locally owned bank to help drive economic growth and job opportunities for more Iowans.

Iowa is served by banks ranging from $1.7 trillion to $14 million in assets. Clearly, this requires tailoring of regulations to the business model and risk posed by each institution. The Dodd-Frank financial reform law, passed in 2010, placed 390 new rulemaking requirements and 26,000 pages of implementing regulations on the banking industry. S. 2155 provides refinement to a few dozen of these rules. It is not cause for alarm. It is thoughtful regulation. And, frankly, we could use more of it.