BANKTHINK

An Outrageous Way to Treat Small Banks that Want to Lend

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American Banker reported on the latest hurdle to be thrown up against good community banks attempting to access the Small Business Lending Fund in the article titled "Treasury Adds to SBLF Requirements, May Threaten Participation."

The SBLF was specifically designed to assist small banks needing capital to expand small business lending in their communities. ICBA fought hard to insure broad access to the SBLF by all community banks.

Now, the very banks that could benefit most from the capital face more hurdles in getting it. Banks that have plenty of capital don't need the program. Banks that could benefit from additional capital do need this program, because the private capital markets remain largely frozen. Notably, in many cases those are the banks with some sort of dividend restrictions on them — thus they are locked out of the program. So the banks regulators need to use reason and common sense here in their approach to the SBLF capital program.

Those that equate a dividend restriction with a "troubled" bank are way off base. There are many reasons for dividend restrictions that have nothing to do with whether a bank is "troubled" or not. Many banks have dividend restrictions that are in no danger at all of failing. Both state and federal regulations that deal with dividends are varied and complex.

Congress specifically expressed in floor speeches that CAMELS 1, 2 & 3 rated banks should have full access to the SBLF program. So there really should be no bait and switch games here with Treasury and bank regulators. Everyone from Congress to the administration says they want to encourage  community banks to boost lending, yet it seems that they are doing everything in their power to prevent that from happening with tortured and counterproductive requirements like these.

The examination climate is the harshest in generations, and now something like this is piled on — and policy makers wonder why community banks are hunkered down? Who the hell in government can they trust anymore?

The CEO's of Citi and BoA can pick up a phone and get tens of billions of taxpayer dollars and guarantees on their hundreds of billion in debt on a phone call — no questions asked without any assurance that the money will ever be repaid — but a typical community bank can't access a few million dollars to lend to Main Street America's small businesses. And Congress and the Treasury can't figure out why community bankers are upset and cynical about the process? Take a guess! I am upset and so is ICBA. These double standards have to end.

Camden Fine
President & CEO
Independent Community Bankers of America

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