What about us?
That's what a group of bankers is telling regulators.
Senior executives at banking companies with assets of $7 billion to $30 billion have formed the Mid-size Bank Coalition of America. Banks in that range are in an awkward spot in lobbying matters: too big to be viewed as community banks but too small to have much in common with the biggest. The head of another bank trade group called it a "no-man's land."
Still, many of these banks face big-bank regulation in areas such as stress testing and interchange fee caps.
As policymakers wrote the Dodd-Frank Act, "it became clear on some key provisions that midsize banks were going to be unfairly affected," says Russell Goldsmith, the president and chief executive of City National in Los Angeles and the driving force behind the emerging group. "We really had no voice in Washington."
Goldsmith, whose bank has assets of $24.8 billion, loosely formed the group in late 2009 as Congress debated Dodd-Frank. Concerns arose when lawmakers were discussing whether banks assets of with $10 billion or more posed a risk to the financial system.
Regulation "needs to be right for our-sized company and based on the activities we're in," says Scott Smith, chairman and CEO of the $16 billion-asset Fulton Financial in Lancaster, Pa. "We need to make sure it's not a one-size-fits-all."
Concerns among group members grew as regulators issued more rule proposals. They have hired a part-time lobbyist and have unified to send letters to lawmakers and regulators. The group is well-heeled, with chief executives from 28 banks including First Horizon, People's United, TCF Financial and Associated Banc-Corp.
"What we heard in some conversations with legislators is, 'Oh, I hadn't thought about you in the middle there,' " Smith says. It "helped us create awareness that there's a group of us and we employ a lot of people and manage a lot of bank assets."
The group's members collectively hold assets of more than $450 billion in 41 states.
"It really does" make a difference, says Richard Evans, the chairman, president and CEO of the $21 billion-asset Cullen/Frost Bankers in San Antonio. "There's a small number of us, but we're important to the regions that we represent and our voice wasn't really being heard."
Members say they aren't looking to slight existing trade groups, where most maintain membership. Still, Goldsmith says his peer bankers "sometimes" disagree with the direction of groups such as the American Bankers Association and the Independent Community Bankers of America.
The midsize bank group backed a proposal by the Federal Deposit Insurance Corp. to amend insurance assessment rates for banks with assets over $10 billion based on risk-weighting.
Groups such as the ABA did not back it until the FDIC modified the proposal to ease certain reporting metrics. The proposal "more accurately reflected the level of risk and the big banks opposed it," Goldsmith says. "Having an organized group of midsize banks is a way for our perspective to be made appropriately."
Some trade groups agree that midsize banks get lost in the shuffle. "Banks between $10 to $50 billion are in a financial no-man's land," says Camden Fine, the ICBA's president and chief executive. "I'd say more power to them."
But power is key with lobbyists, and a loosely formed confederation may lack the financial clout of bigger groups.
"The key is the amount of money that you throw" at lawmakers, says D. Anthony Plath, a finance professor at the University of North Carolina at Charlotte. "The only way a third lobbying organization can be effective is if they can raise the kind of money it takes to get Congress' attention or be willing to be a team player with other groups."
The coalition has no immediate plans for big marches or things like that.
"We're not traveling off to fancy places," Evans says. "We just try to deal with issues over the telephone and conference calls and make a difference that way."
The group is drafting a comment letter for the Basel III final rulemaking proposals issued in June by the Federal Reserve Board. Nearly every bank would be effected by the proposals but midsize bankers are concerned most about the risk-weighting of certain real estate loans, such as interest-only mortgages.
"Those kinds of loans happen all the time at midsize banks," Goldsmith says. "Basel III could have an unfortunate and unintended effect of making it more difficult for midsize banks to lend money to qualified borrowers."