National bank chief seeks financial protections for community banks

Former Oklahoma governor and American Banking Association CEO Frank Keating told an audience of mostly legal and financial professionals on Thursday (Sept. 17) that overly burdensome Dodd-Frank regulations implemented since the 2008 financial crisis are unfairly punishing community banks.

The affable Keating was the guest speaker at the regular luncheon of the Arkansas chapter of the Risk Management Association held at the Clinton Presidential Library in Little Rock.

In between spinning stories and telling jokes about his varied career as the only Republican governor in Oklahoma’s history to serve consecutive terms, a U.S. Attorney, associate U.S. Attorney General and adviser for Presidents Ronald Reagan and George H.W. Bush, Keating railed at length about the onerous rules community banks now face.

Keating said he decided to take the position with the powerful banking lobby after finding out that 90% of its members were considered community banks, or financial institutions with a billion dollars or less in assets. He told the lunchtime crowd that before he entered politics, many of his family members in Oklahoma had backgrounds in the banking sector.

“Many of you here who are bankers will appreciate the challenge of being a community banker today,” said the ABA CEO. “The challenge as a country … is that banking is a four-letter word.”

The 25th Oklahoma governor, who served in office during the Oklahoma City bombing, said the creation of the Dodd-Frank Act has put a burden of 11,000 new regulations on the banking industry without regard to the size of the financial institutions. Keating also told the audience that since the 2008 financial collapse, the U.S. has “lost a bank a day, seven days a week,” saying most have been acquired through mergers or takeovers.

“The small towns in Arkansas and the small towns in Oklahoma – who will help them if their community bank doesn’t?” Keating said.

Keating, who frequently refers to himself as a conservative Catholic Republican, also shared an odd relationship that he has with U.S. Senator Elizabeth Warren, a self-described liberal Democrat from Massachusetts who sits on the powerful Senate Banking Committee. Warren, a native Oklahoman, has famously pushed many of the Dodd-Frank regulations on the banking sector, and is largely responsible for the creation of the Consumer Financial Protection Bureau established under that act.

Following the financial crisis, Keating said the anger at the banking industry in Congress was palpable.

“Certainly, it was accelerated by Sen. Warren, who is a fellow Oklahoman that I say shamefacedly – but their view was that we are not going to do anything for big banks because the little banks will take advantage of it – and everybody will not live happily ever after.”

Keating added: “The regulators have applied these artificial European rules that are blowing apart the traditional good-service, community-service, customer-service banks. And the 11,000 pages are driven by the Federal Reserve. And they really don’t understand how community banks work.”

In other interesting and humorous homespun asides, Keating also told the audience he has kept an eye on the political climate in Arkansas, especially the recent takeover of both houses of the General Assembly and governor’s office by the state’s Republican Party.

“If you are a Catholic Republican in Oklahoma, now like in Arkansas, there are more Republicans than when I was in the statehouse back many years ago,” Keating told the business-friendly audience. “What you are doing here in Arkansas is … obviously hugely important. As a neighbor, we’ve watched what has happened with great interest – and on many occasions very jealously.”

In closing, the ABA chief said over the next few years, he hopes to lobby Congress to pass some Dodd-Frank reform legislation that will overhaul some of the bureaucratic rules on community banks. He said he also hopes Congress will be able to pass a tax reform package that will prevent another financial crisis from taking place because of America’s growing national debt.

If nothing is done, Keating said, “by 2025 every cent of federal tax revenue we pay will go to Medicare, Medicaid and Social Security, and there will be no money to keep the ships at sea and the lights on – there will be no money for anything.”