Opinion: Unshackle regional banks to jump-start economic growth

Regional banks need regulatory relief from the Dodd-Frank Act, which unfairly treats moderately-sized regional banks like the gigantic Wall Street financial institutions, says Zions Bancorporation Chairman and CEO Harris Simmons.

In an op-ed in American Banker magazine, Harris says regional and community banks like Zions Bank supply “the financial equivalent of oxygen to small businesses, while presenting a fraction of the systemic risk posed to our economy by the very largest financial institutions.”

Harris wrote:

Thanks to this one-size-fits-all $50 billion asset threshold for systemic-risk designation, regional banks have seen their costs rise, and their capital strained. Customers end up as victims, as banks have less flexibility to customize products to meet clients’ needs, and as the price of banking services increases to pay for this much more complex regulatory environment. If regulations on regional banks were eased, those banks would have additional capital — as much as $4 billion each year — to lend. This is because current regulations have resulted in a reduction of regional bank lending by 6% to 8% each year.


It is clear that the current system does not work. Former Rep. Barney Frank, a co-author of the Dodd-Frank Act, said in 2016 that the $50 billion asset threshold was set “too low,” which was a “mistake.” He noted, “When it comes to lending and job creation, the regional banks are obviously very, very important. I hope that if we get some regulatory changes, we give some regulatory relaxation to those banks.”


It’s time for our leaders in Washington to promote a regulatory environment that encourages business creation and growth. Support for regional banks benefits entrepreneurs, homeowners and other consumers who rely on these straightforward banks for loans and banking services. It’s time to change the inappropriately tiered regulations hindering these financial institutions that have always served their customers’ best interests. By properly measuring risk — using factors beyond mere asset size and gauging a bank’s entire risk profile — we can usher in a new period of economic growth by freeing up regional banks to do their jobs.

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