Bankers are pushing back on the Obama White House's conclusion that financial regulations are not hurting community banks.
Trade association representatives for banks disagreed Wednesday with the report released by Obama's Council of Economic Advisers concluding that community banks are healthy, stating that firsthand reports from bankers suggest a much different reality.
"There is a serious disconnect between this report and the daily reality for America's hometown banks and the communities they serve," American Bankers Association President Rob Nichols said. "The 1,708 community banks that have disappeared since July 2010 would be best equipped to speak on this topic — except they can't."
Nichols pointed to banker complaints that they have been forced to hire more compliance officers than loan officers and the extent of regulations imposed on all banks in the wake of the crisis.
Camden Fine, head of the Independent Community Bankers of America, argued that community banks are struggling because of overregulation, regardless of whether those rules are part of Obama's 2010 financial reform law or other legislation.
"The excessive regulatory burdens that limit the ability of community banks to serve their communities are not due to any one law, but to numerous laws across decades of increasingly complex and onerous regulations," Fine said, arguing that a "comprehensive approach" to regulatory reform is necessary.
Community bank regulatory relief has proven a controversial topic in recent years as legislation to ease the rules for small banks has been stalled because of the fears of some members of Congress that legislation meant to aid community banks would be used to roll back the new rules on megabanks. Unlike the large Wall Street banks, which are geographically concentrated, community banks are represented in most congressional districts, giving them sway over lawmakers.