protracted period of high interest rates and ongoing geopolitical tensions. These policies will also have devastating effects for consumers. Banking is, after all, a business. For banks to offer the full range of financial products and services to meet the needs of communities, they need to be profitable and have an operating environment that supports growth. The current regulatory landscape will do the opposite. Banks that are already considered well-capitalized by regulators’ own admission will be forced to hold even more capital in reserve, which means less capital will be available to lend to the local small business looking to expand or to the young family looking to buy their first home. Simultaneously, W F E ATUR E Whenever a new election cycle comes along, it’s not uncommon to hear pundits make mention of “red waves” or “blue waves,” denoting potential power swings in Congress. But as bankers contemplate the future of our country and the policy environment that will shape the future of our industry, there’s another wave that we need to talk about: a tsunami of complex regulation that’s hitting the banking sector as we speak. To be sure, the tide turned quickly: Last year’s turbulent spring ignited a rulemaking frenzy at the banking agencies. Suddenly, new proposals sprang up to increase bank capital levels, impose a new long-term debt requirement and make the resolution planning process more complex. Simultaneously, the Consumer Financial Protection Bureau imposed long-awaited small business reporting requirements under Section 1071 of the Dodd-Frank Act that went far above what was outlined in the statute. The Federal Reserve issued a proposal to cap interchange fees under Regulation II, and the Federal Deposit Insurance Corporation is now pursuing significant changes to its corporate governance guidelines. Against all that, the agencies finalized a long-awaited update to the Community Reinvestment Act framework — a staggeringly complex, 1,500-page final rule that creates significant new requirements that have the potential to fundamentally alter banks’ business strategies. Meanwhile in Congress, banks face the resurgent threat of the so-called “Credit Card Competition Act,” which would apply Durbin Amendment-like provisions to credit cards — the equivalent of lawmakers taking money from banks and putting it into the cash registers of mega-retailers. Taken together, these policies place a tremendous cost and compliance burden on banks of all sizes at a time when they already face a tough operating environment due to a Against a Rising Tide of Regulation, BANKS MUST ROW TOGETHER BY ROBERT S. NICHOLS, AMERICAN BANKERS ASSOCIATION The sobering reality for banks right now is that rougher seas are likely ahead, but our best hope is to row together. “ 12 HOOSIERBANKER
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