ABA Offers Congressional Testimony on Community Banking Landscape

The American Bankers Association today provided testimony to the House Financial Services Committee on the state of U.S. community banking, as well as potential legislative reforms to ensure smaller financial institutions can continue meeting the needs of their customers, clients and communities going forward.

Cathy Owen, chair, president and CEO of State Holding Company and executive chair of Eagle Bank & Trust Company in Little Rock, Ark., testified on behalf of ABA and the Arkansas Bankers Association at the hearing, entitled “Making Community Banking Great Again.” Eagle Bank & Trust is a 104-year-old, $485 million state bank, with 13 branches in central Arkansas and mortgage loan offices in Arkansas, Idaho, Louisiana, Mississippi, and Tennessee. Owen, who also serves as ABA vice chair, noted that “banks of all sizes and business models are drivers of economic growth across our economy,” while highlighting the unique and critically important role that community banks play.

“Community banks are a very important part of this ecosystem and play a crucial role in both our local communities and national economy,” Owen said. “Community banks help local businesses thrive by providing them with credit, and by becoming trusted advisors that help small businesses make good financial decisions and manage their capital.”

Owen expressed gratitude to House Financial Services Committee Chairman French Hill for holding this hearing and for his robust agenda to reform the current regulatory environment and strengthen community banks, which have faced a tsunami of new rules from financial regulators in recent years. This includes a host of new initiatives pushed through in the waning days of the former administration by the CFPB that could have profound negative effects on consumers and the economy if they are not overturned.

“That is why we appreciate and strongly support the goals of the Chairman Hill’s ‘Principles to Make Banking Great Again,’” Owen said. “In that regard, we submitted detailed feedback on the Chairman’s plan, and many of the Chairman’s principles align closely with our policy priorities described in ABA’s ‘Blueprint for Growth in 2025 and Beyond.’”

The ABA Blueprint outlines several legislative and regulatory actions Congress, the administration and other policymakers can take to help banks, including community banks, drive a healthy economy, pursue rational regulation to preserve Main Street access to credit and capital, and foster a competitive and innovative financial services market. 

In her testimony, Owen detailed numerous actions Congress can take to support a healthy banking system and inject needed capital into local communities, as well as necessary actions to mitigate the effects of proposed and final regulations over the past several years that will reduce access to affordable credit. She also outlined how policymakers can foster a competitive financial services market and like-kind regulation to ensure a level playing field and minimize migration of financial products to less-regulated entities.

“The banking industry is the lifeblood of the U.S. economy, and banks of all sizes are poised to assist consumers and businesses across the country achieve financial success,” Owen concluded. “Despite challenges, we believe that the future of banking is bright, provided the policymakers make thoughtful changes to support growth and close gaps that promote regulatory arbitrage and put the financial system and consumers at risk.”

Read Owen’s full testimony.