From the notebook of business editor Tim Rausch

Regulations destroying small banks

Community banks are disappearing, and regulation might be the reason small Main Street Bank wants to be bought up by Big City Corporate Tower Bank.

 

That’s what an Augusta bank executive told Congress on Tuesday.

 

Dan Blanton, the chief executive for Georgia Bank and Trust, spoke to the U.S. House subcommittee on financial institutions and consumer credit on behalf of the American Bankers Association. He is the national group’s vice chairman.

 

“Community banks make up 95 percent of all U.S. banking organizations and have been the backbone of all the Main Streets across America,” he said. “The sad fact is that over the course of the last decade, 1,500 community banks have disappeared.”

 

Blanton said the regulatory burden for community banks has multiplied tenfold over the past 10 years. The Dodd-Frank banking bill is making things worse with 5,933 pages of proposed regulations and 8,002 pages of final regulations. Apparently, that’s only halfway through the new 398 rules from the banking law.

 

Blanton said the burden is a challenge for all banks, but is overwhelming for a small bank with only 40 employees.

 

The clincher statement to Congress from Blanton: “Today, it is not unusual to hear bankers from strong, healthy banks say they are ready to sell to larger banks because the regulatory burden has become too much to manage.

 

‘‘These are good banks that for decades have been contributing to the economic growth and vitality of their towns, cities, and counties but whose ability to serve their communities is being undermined by excessive regulation and government micro-management. Each bank that disappears from the community makes that community poorer.”

 

What’s it matter to you? Well, there’s a lot of people out there who don’t want to be a customer of the Big City Corporate Tower Bank, which coughs up $400 million every other month to the Justice Department and can be reached only by calling a computer and hitting option 1 a dozen times – and still you don’t speak to a human about the new fees that are being levied to boost the bottom line.

 

Blanton is asking Congress to back off with the regulatory burden that is forcing a sell-off and support some bills that could do that.

 

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