The Banking Community

What is ICBA’s mission and how is it put into practice?

ICBA was founded about 80 years ago by a group of Minnesota bankers in Sauk Centre. Our mission is to be the voice of community banks across the country. We want to maintain the independence of community banks, and we want them to thrive, prosper, and grow. Everything we do is focused on what community banks need, for education, legislation, products, or services.

Some of our priority issues are maintaining the separation of banking and commerce. We want to keep the farm credit system focused on ag lending, not lending to anyone in business. The farm credit system tried to expand its powers recently, but we wanted them to stay focused on ag lending and we were successful in doing that.

We’re fighting to stay competitive. Take credit unions. They are tax exempt; we are not. Because they are tax exempt, they can operate on a small margin, and consumers get a lower interest rate on a loan. It’s an unfair competitive advantage, so we’re trying to get that changed or at least give banks relief by giving them some tax-exempt income.

We also want to reduce regulatory and tax burdens for community banks. Banks get painted with a broad brush in Washington, and they have the same regulations on community banks as on a Wells Fargo or Bank of America. Even banks in towns of 200 people have to do reporting on terrorism and money laundering. That’s where the regulatory burden is absolutely huge.

What’s the solution?

Community banks should be looked at in a different light. The big banks in Los Angeles and New York and Chicago—there is no question they have different requirements and needs than a bank in a town of 1,000 people in northern Minnesota. The laws and regulators should recognize that and take it case by case. Sarbanes-Oxley is a huge burden on community banks.

Does ICBA impose any standards or best practices on its members?

We offer educational programs to talk about best practices and how community banks can be better. We have five institutes at ICBA that offer certification for professionals in internal audit, compliance, consumer lending, commercial lending, and information technology. We also do a lot of ongoing education.

The ICBA Web site says community banks work to increase home ownership to enhance economic stability. How has that goal been affected by the current housing crisis?

We’re still doing it. We want to see communities grow because if they grow, the bank grows. We encourage community banks to take care of the whole person—their small business loans, college education loans, mortgages. The community bank is serving the community. The home is in the community, the business owner who lives in the house is in the community.