President Donald Trump promised in a meeting with community bankers on Thursday to strip away some Dodd-Frank financial regulations and ensure they can continue giving small businesses access to capital.
Trump, joined by National Economic Council Director Gary Cohn and Treasury Secretary Steve Mnuchin, said community banks play a "vital role" in the U.S. economy.
"Nearly half of all private sector workers are employed by small businesses. We must ensure access to capital to small businesses and for small businesses to grow. Community banks are the backbone of small business in America," Trump said at the beginning of the meeting.
The session was set up to help the Trump administration craft a legislative plan to ease the regulatory burdens on small banks to try to unlock more small business lending and fuel economic growth, a senior White House official told Reuters.
Representing the industry were chief executives of nine community banks with assets of around $1 billion or less and the heads of the American Bankers Association, and the Independent Community Bankers of America.
Bankers who attended the 45-minute meeting said they discussed the role community banks play in rural areas and provided real-world examples about the difficulties smaller banking institutions face. "They were very receptive to our concepts; they were listening to the details," Dorothy Savarese, head of Cape Cod Five Mutual Company, told reporters after the meeting.
ICBA, one of the industry groups in attendance, has advocated for a tiered system of regulations that tailor regulations to a bank's size, business model, complexity and risk.
Trump promised his February executive order on reducing regulation was "very powerful" and would apply to the community-banking sector.
The Trump White House largely shares the view that current "one-size-fits-all" regulations make it "very hard to remain competitive" for small banks, the White House official said.
"The type of regulation that you need for a $700 million bank and the risks they present are very different than those for a $200 billion bank or a $1 trillion bank," the White House official said.
Larger banks are able to spread their higher compliance costs over much bigger asset and employee bases, while smaller banks struggle with high costs and workloads.
One of the institutions represented in the meeting, Standard Financial Corp of Monroeville, Pennsylvania, has just nine branches with $488 million in assets and earnings of $559,000 in the quarter ended December 31, 2016. It plans to merge with a rival in southwestern Pennsylvania in a deal that will roughly double its size.
Trump officials cited a dearth of applications to form new community banks and around a 30 percent drop in the number of small U.S. banks since 2008.
Mnuchin, the former CEO of OneWest bank, a regional lender in Southern California, said at his confirmation hearing in January that onerous regulations are "killing community banks." He pledged to ease those burdens while maintaining "proper" regulation, "so that we don't end up with a world where we only have four big banks in this country."
The bankers were expected to highlight compliance costs associated with the Consumer Financial Protection Bureau (CFPB), a new regulator created under the Dodd-Frank law enacted after the 2007-2009 financial crisis.
The CFPB is a perennial target for Republicans, who want to shift its funding from the Federal Reserve to annual appropriations by Congress and shift its management, now concentrated in a powerful chairman, to a multi-person commission structure.
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