Jan 26, 2015
Regulation: When a Catch is a Catch and Enough is Enough!
At the expense of Dez Bryant, the Dallas Cowboys, and its faithful and unfaithful fan base, we have all been given a lesson in why the burden of regulation has stifled community banks and by extension, small businesses and consumers.
On the surface and in real time, the beautiful and acrobatic act of catching a football, switching the ball from the right hand to the left hand and extending out for a touchdown should have been enough to extend the Cowboys’ possession and set them up for a touchdown. Should have been that is.
But by slowing the play down and applying the burden of the “Calvin Johnson” rule, the NFL turned what was an act of pure athleticism and human achievement into a controversy that will only create a new interpretation of an already nebulous and undefinable rule. It is ironic that many of Bryant’s contemporaries on rival teams have publicly expressed their support for his catch while the fat cats at the NFL, many who would have trouble passing a sobriety field test in their most sober moments, have all shielded themselves behind “The Rule”.
Community banks have been playing the game by the rules and in countless ways on a day to day basis, making both routine and unbelievable plays that have transformed our small communities into vibrant and thriving economies. This despite countless rule changes by legislators who have never played the game. Not only are community banks burdened with unlimited “booth reviews,” also known as regulators, we have to operate under rules that should only apply to large, Wall Street enterprises who operate under entirely different circumstances and who have proven that rules only apply when deemed convenient.
The greatest example of this regulatory burden is the Dodd-Frank Act, drafted in 2009 and signed into law in 2010 as a response to one of the nation’s worst financial crisis ever known, the Great Recession. The act was a knee jerk reaction by Congress to suppress banks, all banks, in an effort to punish the very large banks whose bad underwriting and overall behavior created the mess. In an attempt to fix a problem, the system was slowed down to the point of stifling any legitimate banking enterprise from being able to do what they do best.
The Act is categorized into sixteen titles and, by one law firm’s count, it requires that regulators create 243 rules, conduct 67 studies, and issue 22 periodic reports.
The stated aim of the legislation is to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end “too big to fail”, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices and for other purposes.
The Act, though well intentioned, has created a tremendous burden on community banks to add compliance staff in an effort to adjust to new and sometimes nebulous rules that are often “open to interpretation.” Sound familiar?
However, as we have for decades, community banks will prevail. We will rally, lobby for our cause and in the end continue to be resilient, smart and able to react to whatever is thrown our way.