CHAIRMAN’S C O LU M N
Level the Playing Field Randy Scott
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Chairman
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Arkansas Bankers Association
he 132nd Annual Arkansas Bankers Association Convention was a huge success, and it was great to see so many people in person again.
A comment that echoed more than once was that it seems fewer and fewer bankers attend each year, and that statement is true. The number of banks in Arkansas is declining rapidly, as it is across the United States. In 1931, Bert Lynch served as chairman of the Arkansas Bankers Association. Mr. Lynch was president of Farmers Bank and Trust, Blytheville, and is the only other banker from Blytheville or Mississippi County to serve as Chairman of the ABA in the past 132 years. In his day, 420 banks were chartered in Arkansas. We were amid the Great Depression, and it was two years before the FDIC was formed. I cannot imagine all the issues facing our industry in those years when bank failures were a daily occurrence. Today, the number of Arkansas chartered banks has shrunk to 84, but our concerns are very different from those of our predecessors. Our competition doesn’t come from the bank down the street; we are pitted against the non-banking sector, and those rivals are not burdened by the government regulations placed on our industry, nor do they have a tax encumbrance equal to ours. The Arkansas Bankers Association will continue to address those concerns in Washington, DC, in the coming year. With each of our issues, the message is simple: Level our playing field.
ECORA (Equal Credit Opportunity for Rural America) is one piece of legislation that has gained attention nationally and accomplishes precisely what community banks need to compete in a fair environment with Farm Credit. While we believe that ideally, Farm Credit should pay income taxes as banks do, this bill would remove taxation of banks on income earned through farmland loans. The bill, sponsored by both Senators Boozman and Cotton, shows promise of passage. We also need a level playing field with the credit unions. This segment is rapidly buying up banks across the United States, repositioning them under the tax-free shelter provided to credit unions, and removing tax-paying banks from the federal tax rolls. Credit unions walk and talk like banks, but they do not pay taxes like banks. Our federal government is looking for more revenues, so tax credit unions! This would level our playing field and stop credit unions from the buy-up of commercial banks. The third area of concern is cryptocurrency. Regulators must apply consistent oversight and supervision of these products
“I look forward to the next year as your association chair ... You can trust that I will be fighting for a level playing field for our 84 banks who call Arkansas home.” 4
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SUMMER 2022
for banks and non-banks alike to ensure that customers are protected equally, regardless of where in the financial marketplace they engage. Cryptocurrency initially was intended to disrupt banking by decentralizing finance, but consumers are increasingly seeking help from banks in the safe holding of these assets. Their digital and programmable nature allows cryptocurrencies to be used to facilitate financial activities that mirror the products and services of traditional institutions. However, significant regulatory uncertainty and an uneven application of existing rules lead to risks for consumers and our financial systems. Finally, we will continue to hammer Congress to give CFPB (Consumer Financial Protection Bureau) the authority to supervise nonbank lenders to ensure compliance with fair lending laws. In particular, the Bureau is not authorized to supervise nonbanks making small business loans. We ask for a level playing field from the CFPB—which has strong-armed the banking industry since its 2011 formation—on non-bank entities entering the banking market. The current lack of supervisory oversight for nonbank lenders significantly impedes the ability to detect potential discrimination in that market segment. We know our industry is ever in flux, and the Arkansas Bankers Association wants to make sure Arkansas banks are prepared for the many changes ahead. As an industry, we follow the regulations and pay our taxes, and we only want everyone who uses the verb “bank” to be treated equally. I look forward to the next year as your association chair, and while these may be hard-fought battles, they must be fought. You can trust that I will be fighting for a level playing field for our 84 banks who call Arkansas home.
