2024: The fight must continue

Basic safety and soundness should be the priority, rather than new and expanded compliance programs.”

Federal regulators dropped approximately 2,500 pages of banking regulation in just nine months, from March to December of 2023.

The CFPB Section 1071 Final rule is 888 pages, Section 1033 data regs are nearly 300 pages and the Joint Regulators’ new CRA regime is almost 1,500 pages — all on top of the reams of regs that already exist.

“Don’t worry, community banks won’t have to comply with all of it,” we hear.

Are community bank leaders supposed to take solace from that? Does it mean their stretched compliance staff can gloss over volumes of government text with the potential of Justice Department referrals hanging over their heads?

Of course, they cannot. Staffing adjustments, additional training and new technologies are among the costs that will rob valuable time and resources from lending and shift even more to compliance.

Either federal supervisors are unable to understand the particular and cumulative implications of their layered regulation, or they do. Is it that progressive ideologues have a plan to ultimately drive Americans out of private-sector banking and into government accounts? Is it simply the detachment of Washington bureaucrats from the real world? Regardless, the result of hyper-regulation is the same. They are bleeding the community bank business model one cut at a time.

Last year’s bank failures demonstrated that there needs to be more accountability for regulators. Economic uncertainty remains. Basic safety and soundness should be the priority, rather than new and expanded compliance programs. Yet federal regulators — most of whom have never worked for a community bank — are obsessed with telling bankers how to bank, what to bank and where to bank.

Unfortunately, we expect the trend to continue this year. As of press time, interchange intervention and an approach to overdraft fees (without regard to bank size) are on tap for 2024. They say they want banks to serve all communities, but their policies say they should serve Washington.

Whether through the courts or at the ballot box, 2024 must be a year that we continue to fight for policies and leaders that will enable Texas banks to serve their customers rather than bureaucrats. TBA will do it.