A Texas banker's advice to peers: Be your own policy advocate
ST. LOUIS — Cynthia Blankenship's message is simple: Bankers must step up their individual efforts to influence lawmakers and regulators.
The vice chairman and president of Bank of the West in Grapevine, Texas, and its holding company, Greater Southwest Bancshares, wants to drive that point home to attendees of the annual community banking research conference co-hosted this week by the Federal Reserve and the Conference of State Bank Supervisors.
Blankenship practices what she preaches, having served as chairman of the Independent Bankers Association of Texas and the Independent Community Bankers of America. She still makes regular trips to Washington to discuss the impact of laws and regulations on her $462 million-asset bank.
Bankers must have “more regular communication, not only with congressmen and senators but with regulatory staff,” Blankenship said in an interview ahead of her speech set for Wednesday evening. “If you’re not present at the table sometimes, you can’t control the outcome.”
The keynote continues a conference tradition of bankers speaking directly to their colleagues, regulators and academics in attendance. Previous presenters have included Dorothy Savarese, Rebeca Romero Rainey and Gene Rainbolt.
“Looking at the conference’s previous speakers — I know most of them well — their speeches were very compelling and are intimidating to follow,” Blankenship said.
Here is an edited transcript of the interview.
What do you hope to accomplish with your keynote?
CYNTHIA BLANKENSHIP: The theme is making a difference and how community bankers can do that. I plan to discuss the need for community bankers to stay plugged in and be present at the table. We don’t need to become professional lobbyists, but we need to become advocates for our franchise.
I was the chairman of ICBA during the financial crisis, and it afforded me a lot of opportunities to get involved with what occurred and to be at the table when some of the regulatory rules, regulations and decisions were being made to protect the banks and consumers. I spend a lot of time, even today, in Washington.
Bankers seem to be vocal advocates already. What more can they do?
Most of the trade groups do a respectable job, but it is typically an annual fly-in. I’m talking about having more regular communication, not only with congressmen and senators but with regulatory staff. A lot of bankers don’t know how to do that; they’re intimidated or they just don’t have the drive.
If you’re not present at the table sometimes, you can’t control the outcome. I’ve been to D.C. four to five times this year with different groups. I think it is important to develop and keep those contacts. It is a two-way street, which is a great benefit. They can hear from people on the street about the challenges and the unintended consequences that are disruptors in our basic business model.
It is good to remind people in Washington that no two banks are alike, right?
It is true that one-size-fits-all regulation doesn’t work. We’re continuing to see that in areas like Basel III and qualified mortgages. Larger producers of mortgages that syndicate and sell tranches are one thing. A small bank that collects deposits and makes credit available on Main Street is totally different.
Those are longstanding concerns for banks. Are there newer issues in need of advocacy?
I’d say expanded HMDA reporting and the proposal for more reporting on small-business loans and the whole overshadowing on reporting. You have to wonder what they are doing with this. It gets to a point where we all hear reg burden, reg burden, reg burden. I think that’s a factor in the uptick in M&A activity. We have quadrupled our compliance staff [at Bank of the West]. It is too big of a job. Personnel costs go up. Operating costs go up. The ability to get a loan from Point A to Point B … is being impeded by preset timelines and disclosures. I think it is hurting the consumers’ access to credit.
There was hope with last year’s presidential election that things might get easier. Still optimistic?
I’d like to think so. There’s always hope. This is why it is so compelling for all bankers, and especially community bankers, to continue to turn on the hot water and keep those issues on the forefront.
It is easy to get complacent, and we’ve all learned to comply with the regulations rolled out so far. TRID really hurt mortgage credit. Over a three- to four-month period there were unexpected delays and learning curves. We had people showing up to close their loan only to have one little something push the closing back. It creates a lot of angst, disappointment and confusion for the consumer. We have learned to deal with that, but at some point we have to tell the story that these rules have to be tailored to the risk of the bank.
Our deposits have grown and we’re very liquid. The money is out there to lend, but the loan growth hasn’t kept pace. Loan growth is there but the yield isn’t. There’s so much private capital looking for a return. We’re facing competition on rate, not underwriting so much. Banks are scrambling for loans.
You recently met with acting Comptroller of the Currency Keith Noreika, who is mulling a fintech charter. Your thoughts?
I think fintech is obviously a very integral and necessary part of the future of banking. I think the charter needs to be carefully studied. Just with the ILC charter there could be unintended consequences. One of the future threats for banking will be the number of players.
While we want to deliver these products, safety and soundness have to be the biggest concern. The same goes with technology. In today’s world no one asks if a product is FDIC-insured, how it moves along electronic lines and how they are protected. No one asks those questions. There will be a challenge to keep the general public educated.
You’ve highlighted a lot of challenges. Where are the opportunities?
We are an almost $500 million-asset bank in a suburban market. We specialize in SBA loans and small businesses. We have a high degree of commercial real estate. We feel like this is a prime time for community banks to thrive. There are challenges that affect our bottom line, but we’ve always found a way to succeed. We’ve been picking up a lot of new customers and experienced and local bankers. As M&A activity continues, they don’t see themselves having a good environment with the conglomerate taking over their bank. Everyone says they know their customers, but community banks really know them. We feel we’re in an optimal position to take advantage of opportunities in our market.
You’re the third female banker to keynote this conference. What does that say about the rise of women in banking?
I noticed that, too. It was encouraging and refreshing. It sends a great message for younger bankers looking for a career. I was the first woman chairman at our state association and the second at the national level. Often I was the only woman in the boardroom. It is indicative of the industry’s transformation.