On Thursday, June 23, the Senate Banking Committee held a hearing titled “Bank Capital and Liquidity Regulation Part II: Industry Perspectives.” The hearing focused on the regulatory regime that has sprung up post-recession for banks and lenders to safeguard against another crisis, and how the unintended consequences that they may have on lending availability. Witnesses were provided by the American Bankers Association, the Independent Community Bankers of America, the Clearinghouse Association, and Vermont Law School.
Senators focused their questions on specifics regulations– including rules passed under Dodd-Frank and the Basel III capital rules – and how they are helping or harming banks. A common theme was heard among the witnesses from the lending industry – that redundant or one-size-fits-all regulations result in a disproportionately heavy compliance burden on small and community lenders. They focused on the impact that high liquidity requirements in conjunction with an increasing need to allocate resources for compliance (instead of servicing clients) has on their ability to provide financing to their communities. This was countered by testimony from Professor Jennifer Taub of Vermont Law School, who posited that higher liquidity requirements are crucial to preventing another financial crisis and that the regulations in place have not had the dramatic detrimental effect banks claim on their bottom lines, as evidenced by the record profits ($164 billion) posted in 2015, with loan growths in community banks at 8.9% - higher than the national average of 6.9% for all banks overall.
For more information on the Senate hearing, go here.
For more information on commercial real estate lending, go here.