LEGAL
Do Tey Listen? By Keith Thornburg, Vice President and General Counsel
advocacy program is our membership. Bankers are our grassroots, and your ideas and experiences inform and forge our positions and policies. Your participation amplifies MBA’s voice. When you engage in your communities and with your public officials, our collective influence is the strongest.
Advocacy requires consistent, constant effort. Success isn’t achieved with one phone call, visit or conversation. Successful advocacy involves days, weeks and years of building relationships to establish trust, identify issues, share your personal stories and offer solutions.
Our industry has seen a significant decrease in the number of financial intuitions across the country. Tere were 15,158 banks in 1990. As of Sept. 30, 2020, there were 5,052 banks — a 67% decrease. Many factors have contributed to consolidation in banking, and consolidation has positive and negative impacts.
Losing the only bank in a rural community is devastating. Loss of a locally owned bank in a merger but retention of banking facilities can be detrimental to a community if the acquirer is not invested in that community. But if the merger is of two community-based banks, there can be a win-win situation when a stronger combined institution brings more resources to the community.
Bank mergers are subject to anti-trust review by the banking agencies and the U.S. Department of Justice to ensure a proposed merger will not result in significant anti-competitive effects. DOJ and banking agencies can stop a merger based on their finding that the market will become too concentrated.
Last fall, MBA submitted a comment letter to DOJ urging that the review process for bank mergers incorporate discretion to preserve community banking and not to rely exclusively on a formulistic application of a standard called the Herfindahl- Hirschman Index. Te law allows DOJ and bank agencies to weigh the convenience and needs of the local community and the stability of the financial and banking system against the competition concerns.
Most people have never heard of HHI. It is a statistical modeling system that has been in place for decades that defines
markets by geographies of the past. It does not account for competition in financial services in the digital era.
So, do they listen? In prepared remarks (
federalreserve.gov/ newsevents/speech/
bowman20210216a.htm) to the Conference of Community Bankers, Federal Reserve Governor Michelle Bowman, the former Kansas bank commissioner and community banker, said:
Bowman’s community bank background, combined with constant engagement on banking issues, is one reason her appointment to the Board of Governors presented an advocacy opportunity for our industry. Trough your individual advocacy and our group advocacy as an association, we influence policy and decisions within economic, political and social institutions, and we also can help determine who represents our interests in these institutions.
Yes, our elected and appointed officials do listen. But it takes constant, consistent engagement from each of us to build relationships and lines of communication and to support the appointment and election of leaders who know our industry and the benefits we bring to our communities.
THE MISSOURI BANKER 9
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