IBAT for years has been espousing the absolute necessity of recognizing the stark differences that have evolved in the banking industry. Tiered regulation, recognizing that the risk profiles, activities and cultures of community banks and the too-big-to-fail conglomerates are dramatically different, is critical to ensure a future for our successful and important business model.
Two community bankers have weighed in on this issue over the past weeks. First, Tom Frost, Chairman Emeritus of Frost Bank, appeared before a Subcommittee of the Senate Banking Committee in Washington, DC on May 9. Mr. Frost made an eloquent and impassioned plea for separation of “traditional” banking from the more risky investment banking and other activities of the largest banks, much of which contributed to the recent meltdown. The hearing video is available online, and we believe you will appreciate Mr. Frost’s comments. His testimony starts at the 99:30 mark, and questions from the Senators commence at the 127:00 mark.
A blog by an attorney for a pharmaceutical company, Lee Cusenbary, in the San Antonio Express News not only recaps Mr. Frost’s testimony, but provides some interesting and relevant observations.
Additionally, former IBAT Chairman and President and CEO of HomeTown Bank, N.A. in Galveston, Jimmy Rasmussen, provided a thoughtful guest column to the Galveston Daily News that appeared on May 17. Jimmy, in a very understandable fashion, uses the recent JP Morgan Chase trading blunder to point out yet again the differences in the Main Street vs. Wall Street business models.