As a former Virginia Military Institute cadet and Army officer, I've often sneered at the use of war as a metaphor. Again and again, policymakers have declared war on abstract ideas crime, poverty, drugs, terror. We've seen culture wars, gender wars, even wars on Christmas. The language of war is often used casually, particularly by individuals who have never donned a military uniform.
However, after more than 30 years in the community banking industry most of which was spent as the CEO of a community bank I've had my fill of the regulatory burden that plagues the nation's community banks and hampers economic growth in our communities. With all due respect to our military, it is time to declare war on excessive community bank regulation.
Coming from the head of a community bank trade group, this declaration shouldn't come as a shock. Community banks have long advocated banking regulations targeted to their smaller size and traditional, less-complex business model. As relationship lenders with a vested interest in the success of their customers, community banks suffer under the weight of one-size-fits-all banking policies designed for the largest and riskiest institutions.
Yet our regulatory burden keeps growing.
Take the quarterly reports, known as call reports, which all banks must submit to regulators roughly every 65 business days. The time bankers spend preparing these reports, which detail income and financial condition, has increased exponentially over the years, and it's time that could be better spent serving clients. This one report has grown from 18 pages in 1986 to 29 pages in 2003 to nearly 80 pages today. It has more than 670 pages of detailed instructions, with another 57 pages to be required under new capital regulations. In a recent survey, 86% community banks said their annual cost of preparing call reports has increased over the past 10 years.
Fortunately, there is a way to provide relief for smaller institutions that would free up resources that could be used to better serve local communities. Our proposal is to allow highly rated, well-capitalized community banks to file a short-form version of the report in two of the four quarters a year, while filing the full report at year end and mid-year, to provide sufficient information for regulators while significantly reducing the burden on local banks. It's not a panacea, but 98% of our survey respondents said the streamlined report would reduce their call report burden, and 72% said the reduction would be substantial.
Those results alone should catch regulators' attention, but ICBA is taking it one step further by circulating a petition calling on financial regulators to support streamlined rules. We are urging community bankers at all levels to sign it.
True, no single reform is going to eliminate community bank overregulation, but we need to start somewhere. Main Street institutions have been beating the drum on behalf of regulatory relief for ages. We need policymakers to work together to push forward tangible solutions to ease the burden on small banks and get them back to doing what they do best serve their communities.
Camden R. Fine is president and CEO of the Independent Community Bankers of America.