The Jan. 26 "Editor at Large" column on regulation of community banks, "Time for a Separate Regulatory Tier for Small Banks," struck a nerve with a variety of readers. We'd like to hear from you, too — scroll to the bottom to post a comment.

"Thank you for shedding light on a critical issue facing community banks and small businesses throughout the United States," wrote Harry S. Smith, the president and chief executive of First Bank in Strasburg, Va. "Let’s hope this is the beginning of positive change that will gain traction in Washington."

"Rather than moving to a different basis for supervision of banks with less than $1 billion in assets, I would hope that bank examinations by all regulators could be conducted in a risk-focused manner," wrote John Munn, director of the Nebraska Department of Banking and Finance. "I have observed federal regulators we work with being allowed less leeway in risk-focusing examinations and, when necessary, enforcement actions."

George Beattie, president and CEO of the Nebraska Bankers Association, wrote: "While there are several keys to a small community’s success, one common theme is for the community to have a local bank committed to the community. A regulatory environment that forces owners to decide whether or not it is time to hang it up or takes away their ability to conduct business is the single most significant threat to the survival and viability of rural America."

Justin A. Barr, a managing principal at Loan Workout Advisers LLC, said that "as a second-generation community bank turnaround consultant in the Chicago market, with a focus on exam preparation and regulatory capital defense," he sees "inconsistencies in the application of regulations in field on a regular basis."

Lawrence Baxter, a professor at the Duke University School of Law, wrote that he was "surprised at the accompanying graphic — until I realized that you had averaged the efficiency ratio for all banks above $10 billion. If one does another cut at the much more realistic cutoff level of $1,000 billion (at which point I think all the diseconomies of scale start kicking in the TBTF becomes a political necessity), you will find that efficiency ratios escalate. The only way those behemoths make money is through (a) the massive public subsidy they receive and (b) dangerously high leverage."

"Amen to your column today!!," wrote John Reich, a former director of the Office of Thrift Supervision. "I’ve been an advocate for such a proposal for several years and we developed a framework for a two-tiered system."

Cristin K. Reid, corporate president of Capitol Bancorp Ltd. (headquartered in Lansing, Mich., and Phoenix), said she has "been explaining to our boards that nothing will change until relief is given to the front line examiner who is held accountable for being too soft on a bank if it later fails or becomes troubled. There is no upside for them to apply an evenhanded approach, much less ever give the bankers, who know their community, the benefit of the doubt."

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