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Financial Reform Viewpoints: ... From the community bank

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The federal legislation regarding Wall Street reform currently in the final stages of congressional approval is missing the mark.

What was supposed to reorganize the way Wall Street conducts business and protect taxpayers from future crises is, in fact, imposing new burdens and restrictions on traditional banks like those found here in Springfield, which had nothing to do with causing the crisis in the first place.

The banks here in Springfield and southwest Missouri are vital in the support of economic growth and job creation. However, legislation undermines the efforts of these community banks. The bill passed by the Senate contains 30 new or expanded regulations that apply to community banks, and many of these regulations are not even remotely connected to the financial crisis.

For example, the Senate bill contains an amendment that mandates government controls on the price retailers pay for accepting debit cards from their customers. This has absolutely no connection to the financial crisis.

Another example is the proposed new consumer financial regulator. The authority granted to this new federal bureau is so broad and ill-defined that it essentially puts government in the business of deciding what services are right for bank customers. Most local banks reasonably could conclude that it is not worth offering some banking services that are specifically designed for customers because the services don’t have the bureau’s stamp of approval.

This kind of invasive oversight undermines the essence and strength of community banks – namely, the relationships we have with our customers. How can we serve our communities if we can’t tailor products to meet the specific needs of our customers?

Then, there is the fact that even though the new consumer rules would apply both to banks and other lenders, enforcement against non-banks would be weak or nonexistent in many cases. There is not a strong system for examination and enforcement of rules for non-banks like the ones state and federal regulators use to examine banks. How will this legislation protect consumers from entities outside the traditional banking industry? Even more astonishing is the fact that this new consumer bureau is given no authority over securities transactions.

Bankers support financial reform, including some of the key provisions in this legislation. But, this bill goes way beyond these needed reforms and heaps even more red tape and restrictions on banks that always have put customers first.

Congress has missed the target of reforming Wall Street firms and brokers that caused the recent financial crisis and have instead hit the traditional banks. As a result, our customers and communities will suffer. Is this the kind of reform consumers had in mind?

Robert C. Fulp is president of BancorpSouth in Springfield. He can be reached at rob.fulp@bxs.com.[[In-content Ad]]

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