The president of the nation's 10th-largest banking company says Congress should cut small banks some extra slack when it comes to regulations.

Robert W. Gillespie, president and chief operating officer of Cleveland- based Keycorp, said keeping up with the blizzard of paperwork is tough even for a $66.8 billion-asset company like Key.

Community banks "should have fewer reporting requirements" than big banks, Mr. Gillespie told American Banker reporters and editors this week.

But he criticized the Independent Bankers Association of America, which represents about 5,663 community banks, for its stand against interstate branching and against the repeal of the Glass-Steagall Act of 1933.

"Their positions are out of date," he said. "IBAA is fast becoming seen as the dinosaur of the industry. They are folks who would like to turn back the clock. It is a losing battle."

Ronald K. Ence, the IBAA's director of legislative affairs, said that the trade group doesn't "oppose modernization" of the banking system, but that repealing interstate branching laws would put small banks at a disadvantage to larger institutions. He added that repealing Glass-Steagall could also put banks and consumers at financial risk.

"It really is burying your head in the sand to suggest that you can get rid of rules without consequences," Mr. Ence said.

Calling the trade group a dinosaur "just demonstrates that we are a rather painful thorn in their heel," he said.

Mr. Gillespie thinks there will be 5,000 banks by the end of the decade

He said that well-managed small banks exploiting a niche should thrive. A $200 million-asset bank in a town of 100,000 can create a "defensible franchise," he said.

"I know a lot of markets in Ohio that I wouldn't want to go into for all of the tea in China," said Mr. Gillespie.

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