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Oklahoma bankers give treasury an earful

Monday afternoon more than 60 Oklahoma bankers met with Deputy Assistant Secretary for Consumer Protection Eric Stein to express their views about the proposed Consumer Financial Protection Agency (CFPA). It was “polite” but it wasn't a pretty dialogue.

The collective message from Oklahoma bankers was clear: “We're not the problem!”

One by one, the bankers explained their position: Traditional Oklahoma banks thrive and prosper when their customers and their communities thrive and prosper. They weren't the ones involved in the predatory, sub-prime, stupid lending activities that brought the nation's financial system to the brink of collapse one year ago, and they're angry they've been labeled as one of the “bad guys.” Without major changes, Oklahoma bankers will do what's necessary to kill this proposal.

The largest group of bankers to ever attend the OBA's annual Washington Visit listened to the canned talking points from Secretary Stein and the assistant to Michael Bar describing the so-called “need” for this new consumer agency:

  • The current system of multiple agencies overseeing consumer lending activities is broken and is not functioning properly. The proposal will bring together the current fragmented responsibility for consumer issues under a single, dedicated agency to protect consumers and promote access to financial products and services. The agency will help to simplify and reduce regulatory burdens in areas where current authorities overlap or conflict.
  • One standard will be developed to lay out specific standards across the board for banks and non-banks alike and, thus, level the playing field for all financial services providers.
  • Community banks will benefit from this new proposal because they will no longer be forced to compete against unregulated, unsupervised providers who pushed the market to bad practices.

“At about that point the packed room let out a collective groan and the meeting sort of went downhill from there,” said OBA President Roger Beverage. “To be honest with you, I've never seen anything like it in my career of working for bankers in various capacities. They were professional and articulate in using example after example from real life experience showing how banks operate and what this proposal will mean to bank customers. It was terrific to watch.”

Beverage noted it was clear from the discussion that the Treasury folks have no idea how their theories will play out on main streets around the country.

“They kept focusing on sub-prime lending activities and improper disclosures that encouraged people buy homes they could not afford,” he said. “Time and again bankers pointed out how things work in the real world, but the officials either weren't listening to what was being said, didn't believe it or just flat didn't care. They were 'right' and bankers needed to come along.

“Well, they're not going along at this point, at least willingly. I've just never seen such a large group of bankers so animated and so angry about a legislative proposal. When we left Treasury and walked back to the hotel, I don't think I've ever felt more pride or more privileged as a professional.”

Beverage said he invited Stein to visit Oklahoma soon and spend a day or two in some traditional banks that are dedicated to making their customers and their communities prosper, and to see how the real world operates.

“This isn't really all that difficult,” he said. “Bankers explained again and again how they work and expressed their willingness to help fix the problem that needs fixing. But it's not traditional banking. It's the outliers, the ones who weren't subject to meaningful oversight and regulation that caused our problems.”

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