Bank Watch

2 NC banks sign letter calling for easing of Dodd-Frank regulations

Sen. Richard Shelby, a Republican from Alabama, earlier this month unveiled legislation that raises the minimum asset size for a bank to be automatically deemed “systemically important.” On Monday, dozens of U.S. regional and midsize banks, including two in North Carolina, signed a letter in support of Shelby’s bill.
Sen. Richard Shelby, a Republican from Alabama, earlier this month unveiled legislation that raises the minimum asset size for a bank to be automatically deemed “systemically important.” On Monday, dozens of U.S. regional and midsize banks, including two in North Carolina, signed a letter in support of Shelby’s bill. Bloomberg

North Carolina’s BB&T Corp. and First-Citizens Bank & Trust Co. are among dozens of U.S. lenders who signed a letter Monday supporting a bill to ease federal post-financial crisis regulations on smaller banks.

The letter, signed by 62 lenders, applauds legislation unveiled earlier this month that raises the minimum asset size for a bank to be automatically deemed “systemically important.” Under the 2010 Dodd-Frank Act, banks with that designation must comply with a variety of regulatory requirements, including costly annual “stress tests.”

The legislation by Sen. Richard Shelby, a Republican from Alabama, is being called the biggest revision yet of Dodd-Frank, which was designed to prevent the kind of risky behavior that caused the 2008 financial crisis. Shelby is chairman of the Senate Banking Committee.

Winston-Salem’s BB&T and Raleigh’s First-Citizens, which both have branches in the Charlotte metropolitan area, are the only North Carolina-based banks that signed the letter. No South Carolina banks signed it.

First-Citizens declined to comment. BB&T did not immediately respond to a request for comment.

The letter, signed by regional and midsize lenders, praises Shelby’s proposal to raise the asset threshold at which a bank is labeled systemically important – from the current level of $50 billion to a new level of $500 billion.

Systemically important banks must undergo “stress tests” designed to make sure lenders have enough capital to survive a downturn. Among other requirements, such banks must also prepare “living wills,” blueprints for dismantling themselves if they get into distress.

In their letter, the banks point to their “traditional banking model” that makes them different from mega banks, which have a heavier focus on trading and other activities that fall outside of bread-and-butter banking.

The 62 banks argue that none of them “could be judged, by any conceivable measure, as systemically important.”

The banks also say the current $50 billion threshold has a detrimental impact on them. They say they have “been compelled to reallocate our budgets” to hire consultants and others to comply with new regulations, instead of loan officers and other employees who work directly with customers.

Such requirements “sap resources that we could instead deploy to extend credit and dynamically serve our local communities,” the letter says.

The letter is the latest push by smaller banks to raise the Dodd-Frank asset threshold.

In March, 10 regional banks from across the U.S., including BB&T, launched a coalition to oppose the $50 billion minimum. The coalition argues that the minimum is an arbitrary threshold and that smaller banks should not face the same regulations as large lenders.

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Twitter: @DeonERoberts

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