The Haves and Have Not’s

I have actually survived the worst 10 weeks of the year. You know the time period between when the NBA season ends and college and pro football begin. Sure I am a baseball fan (Go Orioles) but the season doesn’t get exciting until September.

So while enjoying this first weekend of the 2016/17 season, the difference between the college football haves and have not’s, got me thinking about the banking haves and have not’s. In college football, you have the schools that make up the power five conferences and then pretty much everyone else. In banking we have the big four (Bank of America, JP Morgan, Citi, and Wells Fargo), the second tier of banks, which includes super regional and regional banks and then everyone else. Much like how non-big five conference schools are struggling to keep up with those in the big five conferences, so are those community banks and smaller organizations struggling to keep up with the larger banks.

Post the financial crisis in an effort to clean up the banking sector; the government actually enacted regulation that makes it harder for smaller banks to remain solvent. Think about it this way, in an effort to stop making big banks too big to fail, government regulations are making many small banks, too small to succeed. The Dodd-Frank overhaul and other crushing regulations are placing additional expense burdens on smaller banks that are already struggling attempting to grow non-net interest income revenue.

Now that isn’t to say regulation and oversight aren’t needed, of course it is. But in an effort to help the consumer, some of the government regulation is hurting the consumer. Community and smaller banks are at the heart of many thriving communities, if regulation pushes out these banks, it will only lead to consolidation making the rich, richer. It will ultimately lead to less choice for consumers, which is the exact opposite of the motivation behind all this regulation.

So maybe, just maybe our representatives should understand what’s going on in college football. The rich keep getting richer. It’s easier to figure out who will get a shot at the championship, because the size and budgets of the schools dictate their ability to navigate the rules of the game. Hire the best coaches, build the best facilities, and recruit the top talent. To me, that sounds just like the world of banking.

Share your thoughts or push back if you disagree – lamont@digitalsince99.com , @digitalSince99