We live in a Parallel Universe…

The Stress Tests are over, and now it is time to get back to business…

For the “Too Big to Fail”, the world has been a place where excessive risk taking mistakes are rewarded, or at least not punished, where regulators only suggest, and where the rules are changed so no one gets hurt.

As we move past the recently released Stress Tests, let’s understand that although the world has sighed a breath of relief that the system is not going to fail, we must insist that this uncompetitive, government supported network of “Too Big to Fail” institutions must somehow be made accountable for their actions, pay a price for the intervention, and be forced to conform to a system where the rules apply to all.

There are many changes that need to occur in this post – Stress Test world… Certainly a tiered FDIC fee structure, and a tiered capital structure based on the risk taking of an institution, a closer look at the separation between banks and commercial entities, more responsibility for all phases of mortgage products, and the ability for the FDIC to regulate all institutions regardless of size.

It is also important to understand that it is the Community Banks, who operate every day by working within the framework of the regulators that regulate them, have understood that prudent risk taking is rewarded, and excessive risk taking is punished, have not been treated fairly in these strained times. 

Community Banks have not needed a dollar of taxpayer money, have maintained proper capital ratios, and have continued to lend throughout this crises. In fact, they are the only group in the banking sector that has increased lending, and have been there to protect the “little guy” on Main Street.

Any relief given to Community Banks will certainly find its way to the communities in which they serve, and not into the excessive pay packages that have been all too common at the “Too Big to Fail.”

There are a number of regulatory and accounting improvements that could be made to support the Community Banking system. These include, Tiered Regulation, Gov’t Assisted Insurance Program for classified assets, SBA enhancements, and differentiating the Community Banks when regulators perform their examinations.

Let’s not allow those with the enormous lobbying efforts to dictate the framework of this new environment…

We need to be heard…

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