Bankers Frustrated by Dodd-Frank Act

by Paul Gatling  on Monday, May. 7, 2012 12:00 am  

"It's just more burdensome for small banks like us," he said. "We're just on the cusp of this thing. It's only going to get worse."

The Northwest Arkansas Business Journal spoke with several bank executives to gauge the law's impact thus far, specifically for community banks. Frustrations with the regulations are evident.

"It's gotten to the point where we have gone beyond the intent of it, and that was to give the consumer some good information," said Howard Hamilton, the northwest Arkansas regional president for Jonesboro-based Liberty Bank of Arkansas. "Now we're trying to protect the consumer on everything and anything you can imagine."

Others shared Cross' opinion. As one executive said, "I don't think you can find a banker in northwest Arkansas - well, anywhere in the United States - that's happy with what is happening with the regulations. But that doesn't mean we're going to start a revolt either."

And the state's top banking lobbyist supports the claim that the harm done by the massive cost of maintaining compliance and the complexity of the regulations will outweigh the good that might be produced in the future.

"That is my personal and professional opinion, yes," said Bill Holmes, chief executive of the Arkansas Bankers Association. "There are good aspects, but there is so much wrong with it that it's overwhelming."
Training Is a Focal Point
According to a report in the online column "Wall Street Cheat Sheet," Bernanke said the Fed would also attempt to clarify if and how a regulatory measure applies to the smaller institutions, rather than have banks waste resources trying to understand them.

That's exactly the kind of problem Cross and other community bankers are struggling with.

"We've had to step up our training," said Cross, whose family maintains a majority ownership in the bank. The locally owned institution, known as the Bank of Eureka Springs until 2008, has two branches in Eureka Springs, another in Holiday Island and one in Berryville. It will celebrate its 100th anniversary this month.

"Our training committee has become a focal point. You'd love it to be sales training and you'd love it to be help-the-client training, but a lot of it - 90 percent of it - is how-do-we-stay-in-compliance training. What do our people need to know so we don't step out of bounds, even if accidentally?"

Cornerstone's performance, Cross said, is what makes it frustrating when he sees community banks and larger national banks painted with the same brush.

"It's not necessarily going around and giving everybody a spanking for what they've done," he said. "That's not what is happening here. Most banks, especially community banks, have done a good job of taking care of compliance and regulatory issues. It's not like Cornerstone Bank has been out there doing the wrong thing so this is going to correct us. We're just having to deal with it."

Cross speaks for many in the industry. Wills is also immersed in the issue at the Bank of Gravett, which has four branch offices in Benton County.



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