Warner, Toomey lead bipartisan effort to protect community banks
U.S. Sens. Mark Warner (D-Va.) and Pat Toomey (R-Pa.) on Thursday led a bipartisan letter to Federal Reserve Chairman Ben Bernanke, Federal Deposit Insurance Corp. Acting Chairman Marty Gruenberg and Comptroller of the Currency Tom Curry urging financial regulators to consider the impact new Basel III capital standards would have on community banks. The letter is signed by 53 U.S. senators.
In the letter, the senators expressed their support for efforts to enhance capital standards for banks but urged regulators to consider the important differences between large, complex financial institutions and community banks. Community banks have little or no access to capital markets, and raising funds is often challenging. The proposed capital rules are so complex and expensive to comply with they may significantly diminish the ability of community banks to continue lending in their respective communities.
“We all know after the recent crisis that banks need more and better capital,” Sen. Warner said. “One of the strengths of the U.S. banking system is its diversity, and that means we can’t impose a one-size-fits-all approach. Smaller financial institutions offer unique services to their communities with much less institutional complexity. As regulators implement Basel III, we hope they will acknowledge these inherent differences.”
“Community banks play a vital role in the economic development of our cities and towns,” Sen. Toomey said. “In Pennsylvania, many families and small businesses rely on local community banks to access the loans they need. I hope our regulators will consider the important role community banks play and the crucial differences between community banks and larger institutions.”
“On behalf of Virginia’s community banks, we greatly appreciate Sen. Warner’s leadership in sending this letter from 53 Senators to banking regulators,” said Bruce Whitehurst, president & CEO of the Virginia Bankers Association. “As banks lend and invest in communities all over the Commonwealth, it is vitally important they be well capitalized, but the proposed Basel rules go beyond the current, reasonable standards and would actually reduce a bank’s ability to lend and spark our economic recovery. ”
“As a member of the Senate Banking Committee, Sen. Mark Warner is uniquely qualified to address potential flaws in the current BASEL III proposal,” said Pat Satterfield, president & CEO, Virginia Association of Community Banks. “Community bankers across the Commonwealth appreciate his leadership on this issue and his recognition of the vital role community bankers play in lending to their communities.”