Banking Law

While most of the focus of the mainstream press has been on bashing Big Bad Banks, especially in light of today's clobbering of Wall Street "banks" by "The One," behind the scenes a bitter war has been waged between the trade associations that represent community banks and the trade associations that ostensibly represent all commercial banks but more often than not seem to align themselves in lock step with the interests of the largest banks. Nothing typifies the kind of bitterness that's manifest in this bank-association-versus-bank-association rumble better than Cam Fine's blog posts on the subject of too-big-to-fail. Mr. Fine is the CEO of the ICBA, the nation's largest trade association for community banks. Cam's not afraid to mix it up.

In a post earlier this week, he expressed his frustration over the fact that many community banks are falling for the pitch of many bank trade associations that all banks need to oppose the entire financial reform legislative proposals, including reforms that would put a leash on the too-big-to-fail Wall Street and commercial banks. Cam believes that breaking up the largest banks is an essential reform that benefits community banks and he (as well as individual state independent community banks associations) has been urging community banks to wake up and smell the coffee before it's too late.

Sadly, many community banks blindly follow the ?we must all speak as an industry? siren song written by the best public relations people Wall Street can buy. 

And when the song has been sung to Wall Street?s satisfaction and this regulatory reform bill is finished, community banks will again find themselves on the short end of the stick, laboring under staggering regulatory burdens, scrounging for capital, struggling with narrowing margins and facing more bailouts of Wall Street titans.  And all the while, the ?shadow? banking industry will skate, and Wall Street will add however many hundreds of staff are needed to comply with new regulatory burdens imposed by the existing agencies.  They will continue to pay themselves ever greater bonuses based on their burgeoning profits, while community banks are assessed higher and higher premiums to pay for Wall Street?s sins.

Sometimes in a war, the enemy of your enemy is not, in fact, your friend. By the time you realize it, there's a bullet in your back.