Hoosier Banker 7 Clay W. Ewing Chairman Indiana Bankers Association President, Chief Banking Officer and Secretary to the Board of Directors German American Bancorp Inc., Jasper CHAIRMAN’S REPORT The winds of change have been blowing, and they’ve been blowing in the right direction. Think back to where we were, legislatively, just a couple of years ago, and look where we are now. Not so long ago, we were being stymied with excessive regulations enacted in response to the financial crisis of 2008. The “fix” of the Dodd-Frank Act placed undue regulatory restrictions on the depository, tax-paying banking industry, which had become the scapegoat for problems caused by non-depository institutions. The Dodd-Frank Act, 2,300 pages in length, resulted in 400 new rules and mandates, placing disproportionate regulatory burden on small-town community banks. As a result, from the time period of July 2010 to January 2017, the number of U.S. banks fell by nearly 2,000, according to the American Bankers Association. Within that same time span, only seven new banks were chartered in the entire United States. But times are changing. S. 2155 – the Economic Growth, Regulatory Relief, and Consumer Protection Act – passed the Senate in a stunning example of bipartisanship. The Indiana banking community thanks Senators Joe Donnelly and Todd Young for their support of this important legislation. At this writing, S. 2155 is poised for a House vote. While this legislation doesn’t erase all ills of the Dodd-Frank Act, the majority of its provisions are directed toward community banks by reducing cost-prohibitive rules that never were intended for them. This is critical, as the Independent Community Bankers of America estimates that 98 percent of banks nationwide are community banks, with assets under $10 billion. These institutions are critical to our economy, funding more than 60 percent of small-business loans and over 80 percent of agricultural loans. Another development on the Dodd-Frank front: House Speaker Paul Ryan made news on April 12, when he announced that he will not be seeking re-election. He made news again the next day, when he pledged to see through the repeal and replacement of the Dodd-Frank Act. It remains to be seen whether his intent becomes reality, but the talk alone is indicative of a changing political landscape. Another sign of shifting winds is that Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, has been calling on Congress to make changes to the Dodd-Frank Act that would establish accountability for the bureau. His recommendations include subjecting the CFPB to the congressional appropriations process, giving Congress the power to approve major rules, making the director position answerable to the president, and creating an independent inspector general for the bureau. On the state level, our IBA Government Relations Team experienced another successful year at the Statehouse. Though our short-session year was extended by Gov. Holcomb to include a special session, preceding the original March 14 deadline, the banking community saw the passage of several bills helpful to the industry. Your GR Team also was instrumental in helping to implement amendments to bills as needed, and in helping to prevent the passage of bills that would have been harmful to the economic wellbeing of Indiana. See Dax Denton’s column on page 17 for details, and be sure to attend at least one regional meeting this summer for updates. Finally, though times are good, let’s be sure to be ready to speak up when needed. As my fellow IBA board member Greg Inman notes on page 8, “Everything can be reversed in due time.” That’s why advocacy never stops. HB IBA-member bankers provided helpful testimony about the value of S. 2155. Below is a sampling of quotes provided: “Many houses in rural Indiana are modestly priced, and we have had to deny several loans because they fell below our minimum loan amount. Consumers who wanted to buy those houses were forced to buy the properties on contract or seek financing from unregulated entities, denying them the protections they would have had if they borrowed money from a community bank.” - Lucas White, president of The Fountain Trust Company, Covington “Our bank received a mortgage request from a client who recently sold his business on contract. Since the cash flow history from this contract sale was less than two years old, we could not count this as income. Because of the QM rules, approving this loan under these conditions would have exposed the bank. We had to decline the loan. Prior to the QM rules, this deal would have been approved, without question.” - Larry W. Myers, president and CEO of First Savings Bank, Clarksville “Presently we find ourselves spending more time in the office, reviewing regulations, than out in the field with customers. We are losing potential revenue, while adding to our costs to remain compliant. Worse, our agricultural community is missing out on potential growth opportunities, because our loan officers are spending more time in the office than out with potential new customers.” - George W. Ferriell, president and CEO of Bath State Bank NOTABLE QUOTES
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