Rules hurt small banks, says group’s incoming chairman

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Posted: Friday, May 3, 2013 12:00 am

John Stinner, chief executive of Valley Bank & Trust in Gering, is set to take over as chairman of the Nebraska Bankers Association tonight, and he brings with him a certainty that not all is fair in the banking world.

“Commercial banks are a whole different business model than investment banks,” Stinner said in an interview Thursday from the NBA annual convention in La Vista. “The costs are shared disproportionately by smaller banks.”

Stinner, who will take office today after an official election of officers and directors, is talking about the split in the banking business — the Main Street banks in Nebraska and elsewhere that mostly lend money and take deposits, and the investment banks and big-city institutions that make bets on real-estate and complicated financial instruments.

And it is a split that he says costs his members money. Attempts at preventing another string of failures such as Lehman Brothers and Countrywide Financial have led to a spate of new regulations for banks — all banks, regardless of size or risk profile. The new rules are led by the federal Dodd-Frank laws, passed in 2010. Dodd-Frank has been called the most sweeping new financial industry regulation since the Great Depression.

Problem is, Stinner said, it imposes the same new reporting and compliance requirements on small banks as large. And the average Nebraska bank, Stinner said, gets by with fewer than 40 employees; most, he said, don’t even have a lawyer on the bank staff.

“Small banks always pay a disproportionately higher share of the costs of these things,” Stinner said.

Stinner’s installment tonight as chairman of the state’s trade and lobbying group for bankers is scheduled to be one of the convention highlights. The convention started late Wednesday and includes a trade show, guest speakers and educational seminars for bankers. About 200 attended Thursday’s opening speech by outgoing Chairman Clark Lehr, CEO of First Nebraska Bank in Columbus. Stinner’s wife, Rita, sang the national anthem to open the event, with a strong a cappella performance. The event is being held at the Embassy Suites Omaha in La Vista.

Also speaking Thursday at the convention was Sal Giunta, the first living recipient of the Medal of Honor for combat heroism since the Vietnam War. The veteran of U.S. Army combat in Afghanistan addressed the topics of teamwork and sacrifice.

“What Is Right With America” is the topic scheduled to be addressed today by Sung Won Sohn, an economics professor in the California state university system. The Wall Street Journal has called him one of the top five economic forecasters. Later today, the schedule includes a talk by the author of the book “The End of Money.” He is David Wolman, an editor at Wired, who says the way people use and think about money is undergoing vast change.

Craig Brewster, the incoming chairman-elect who will take Stinner’s spot next year, said the bankers association is contacting legislators and regulators to alert them about small banks getting harmed by big-bank regulation. Only one Nebraska state-chartered bank failed during the banking crisis that started in 2008, said Brewster, CEO of Butte State Bank. About 97 percent of Nebraska banks remained profitable through the worst of it, he said.

“Banking has become a generic term,” he said. “Smaller institutions have always taken the brunt of new regulation.”

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