While I'm sure some community bankers applauded Sandy Weill's recent call to break up our nation's largest banks, I, for one, did not. On the contrary, I believe talk of breaking up large banks endangers the entire banking industry – large, small and everyone in between.
While some banks made mistakes (and are largely out of business as a result), I am tired of seeing banks get kicked for errors made outside our industry and blamed for everything ailing the economy.
Every bank plays an important role in our economy. While smaller banks can't provide the financing and specialized services that Michigan's auto manufacturers and large multinational corporations demand, we do supply the credit needed by the auto dealer, the parts suppliers and other businesses that provide critical support for these large companies. We provide loans to their employees and to the retail stores where they shop. Large, medium and small banks are connected in ways that are mutually beneficial and essential to the overall economy.
Do any of us honestly believe that breaking up large banks wouldn't create a whole new set of problems for midsize and small banks? Our business has already been dealt a substantial blow by the Dodd-Frank Act, even though many in our industry thought its provisions were only directed at large institutions. There's already over 8,000 pages of proposed and final regulations implementing Dodd-Frank. Even the smallest community banks are now required to expend substantial time, cost and labor to make sure they don't run afoul of hundreds and hundreds of new rules. Let's learn a lesson from this experience: We lose when we are divided by others.
The strength of the banking industry — and the American economy — lies in its diversity. As trusted and reputable providers of financial products and services, banks of all shapes and sizes are inextricably tied to the growth and prosperity of the communities we serve. This interconnectivity and ability to easily meet the financing needs of everyone from local businesses to multinational corporations is what makes our country the world's premier financial center.
Bankers need to stand up against all attacks on our industry and our banks—large or small. We should take every threat against any bank seriously. No matter what any policymaker promises, an attempt to break up the large banks would hurt each and every one of us.
Art Johnson is the chairman and chief executive of United Bank of Michigan in Grand Rapids. He was the 2009-2010 chairman of the American Bankers Association.