Community banks are banking on Trump.
These smaller institutions feel they’ve been overburdened since the financial meltdown and need relief. As since the new president is a businessman who has said he’s concerned about small banks’ viability, they’re hoping for relief.
Steve Sefton, president of local Regents Bank, certainly hopes Trump can deliver on reforms. He’s been mired in red tape for years, he said.
“It’s like I’m digging ditch and people keep putting rocks in my way,” said Sefton, whose bank has four local offices. “That has a cost. A huge cost.”
Sefton could never really understand why smaller banks got hit with all the added regulation as well as the bigger institutions. The financial crisis was caused by the glut of bad housing mortgages, he said.
Today, small banks can’t afford to do mortgages any longer, he said. “The bar has been raised so high I can’t comply with mortgage loans,” he said. “Community banks got out of the mortgage business.”
According to a 2014 survey done by the Independent Community Bankers of America, 73 percent of respondents complained that regulatory hurdles were preventing them making more mortgage loans. The survey showed that many were planning to get out of that market.
Sefton’s bank provides loans to owner-managed companies primarily. “The commercial banker had nothing to do with the financial meltdown,” he said.
Yet they too are paying the price for new government policies, such as the Dodd-Frank Wall Street and Consumer Protection Act, Sefton said.
“I spend half of my day dealing with bureaucracy,” he said.
Trump has already met recently with community bank leaders to hear their concerns. They worry that onerous regulations are too costly and putting these smaller institutions out of business or cutting profit to the bone.
Big banks and lending companies can afford to hire the necessary compliance officers to handle the additional regulation, they say. Smaller banks cannot, so it places a greater workload on existing employees. The operations are less efficient.
Community banks are dwindling. There are more than 5,500 community banks in the nation, down 25 percent from 2008, when the financial collapse first began, according to the Independent Bankers Association. The banks have either closed or merged.
Trump has pledged help. "Nearly half of all private-sector workers are employed by small businesses,” he said during the recent meeting with bankers. “We must ensure access to capital to small businesses and for small businesses to grow. Community banks are the backbone of small business in America.”