WASHINGTON — The growing volume of bank regulation is making it harder for America’s hometown banks to meet the needs of their customers, particularly in rural communities, according to testimony from the American Bankers Association before the House Small Business Subcommittee on Economic Growth, Tax and Capital Access.

Roger Beverage, president and chief executive officer of the Oklahoma Bankers Association, testified on behalf of ABA. Beverage emphasized that regulation shapes the way banks do business and can help or hinder the smooth functioning of the credit cycle.

“Bank regulatory changes —through each and every law and regulation, court case and legal settlement —directly affect the cost of providing banking products and services to customers,” Beverage said. “Even small changes can have a big impact on bank customers by reducing credit availability, raising costs and driving consolidation in the industry that limits consumer choice.”

Beverage testified that the new regulatory atmosphere – not the local economic conditions – is often the tipping point that drives small banks to merge, noting that there are nearly 1,500 fewer banks than there were five years ago. Highlighting his state, Beverage noted that today there are 211 banks chartered in the Oklahoma, down from over 400 banks 20 years ago.

“It is imperative that Congress take steps to ensure and enhance the banking industry’s ability to facilitate job creation and economic growth through the credit cycle,” Beverage said. “The time to address these issues is now before it becomes impossible to reverse the negative impacts.  We urge Congress to work together – Senate and House – to pass legislation that will enhance the ability of community banks to serve their customers.”

Shan Hanes, president and CEO of First National Bank in Elkhart, Kansas, also testified at the hearing on the effect of overregulation in rural America. Hanes’ testimony focused on the daily impact of new bank regulations, impediments to growth for rural communities and the challenges rural banks face competing against the Farm Credit System on an unlevel playing field.

“Rural banks will compete with anyone on a level playing field, and they have not backed down from such competition in the past,” Hanes said.“But when there is a combination of an unfair playing field and over-burdensome regulations, all banks have great difficulty in surviving, not just competing.”

SOURCE: ABA: Click here for a copy of Beverage’s full testimony.

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