News for the Ninth

For more than 60 years, my late father Bill spent every day looking into the faces of family farmers and ranchers hoping to realize their dreams as they walked into his bank in St. Elizabeth. My father understood the importance of community banking the first day he started in 1940, and he
passed that understanding to me when I joined him in the family business. In a town of 300 that lacks both a stoplight and significant financial resources, the community always came first with our bank.

Now the federal government is redefining the role of a community bank all in the name of “Wall Street reform.” Few people I talk to at home, Republican or Democrat, would argue there is not a need for financial reform, but to achieve real improvements we must take the time to differentiate between firms whose actions have national and international implications and real systemic risk, and those which service communities by funding small businesses and loaning to local families. The American financial sector will be reformed, but it should not be at the expense of our local institutions.

Missourians understand that community banks did not cause the financial crisis and that they already carry daunting regulatory burdens. The regulatory reform legislation proposed by the Administration could subject all banks, regardless of size, to the potentially overreaching
rules of another new government agency, putting into effect new rules that have very little to do with correcting the deficiencies that led to the financial crisis. This new bureaucracy would have sweeping examination and enforcement authorities and the ability to restrict consumer access to credit. Big banks may be able to weather the regulatory storm, but some smaller community banks will be unable to stay afloat. The impact of this ill-conceived and dangerous plan will
destroy jobs by making it more expensive and difficult for hard-working Americans to thrive in a modern economy built on access to affordable and available credit. In my view, we do not need another layer of regulation. We need the existing regulators to just do their job and if they will not, then we need to clean house. We also need to scrap the idea of more government bailouts and the notion that certain institutions are too big to fail – implying that community banks are too
small to save. Large, failing firms should be unwound by declaring bankruptcy – just like the rest of us – so we are not forced to rely on regulators and taxpayer-funded bailouts to maintain financial stability.

My experience as a former bank examiner and community bank officer has shown me that managing risk is one of the most important things a bank, particularly a small community bank, can do. That’s why it’s poor regulatory business to have the same capital requirement for a bank
involved in high-risk lending or heavy concentrations of particular loans as you do for one that’s servicing a broad spectrum of small businesses.

After more than 30 years as a community banker, I am certain the current approach to banking reform and risk isn’t balanced and will give the big banks an economic advantage, which in the end will cause credit to be restricted and more costly to the small business borrowers.

CONTACT US: As always, for those of you with Internet access, I encourage you to visit my websitehttp://luetkemeyer.house.gov/ . For those without access to the Internet, I encourage you to call my offices in Columbia (573-886-8929), Washington, Mo. (636-239-2276), or Hannibal
(573-231-1012) with your questions and concerns. If you want even greater access to what I am working on, please visit my YouTube site <http://www.youtube.com/user/BLuetkemeyer> and my Facebook page <http://www.facebook.com/people/Blaine-Luetkemeyer/1358702716> .