President Trump met with nearly a dozen community bankers on Thursday, pledging to ease regulations the industry says has stifled its growth.

Community banks “play a vital role in helping create jobs by providing approximately half  of all loans to small businesses. … [We want to] preserve our community banks,” Trump said during the meeting at the White House.

The meeting — dubbed a “listening session” — was also attended by Treasury Secretary Steve Mnuchin and Gary Cohn, head of the National Economics Council, as well as executives from small banks across the country, including Texas and Vermont.

“You’ll be able to loan. You’ll be able to be safe. You’ll be able to provide the jobs that we want and also create great businesses,” Trump told the bankers.

Trump’s statements echo his repeated pledges to dismantle financial- crisis-era legislation, the Dodd-Frank Act. The law was designed primarily to rein in large Wall Street firms, but small and medium-size community banks say they have been crushed under its new regulatory burdens.

“One-size-fits-all regulations are imposing unnecessary burdens on community banks that stifle lending and growth in local communities,” said Rebeca Romero Rainey, chairman of the Independent Community Bankers of America.

Community banks, they say, shouldn’t face the same sort of rules as megabanks such as Goldman Sachs or Bank of America. The smaller banks, for example, want to raise the $50 billion asset threshold at which banks face tougher oversight. And they are fighting proposed rules that would require banks to comply with the same reporting requirements when making a small-business loan as they do with a mortgage. That extra paperwork, and the threat of facing prosecution or a fine if it is not filed correctly, industry officials say, could scare some banks away from making small-business loans.

During the hour-long meeting, Trump encouraged Mnuchin and Cohn to address the regulatory burdens mentioned by the bankers within six months, according to an industry official who attended the meeting. He also said the White House is “very, very close” to announcing a nominee for a Federal Reserve Board seat reserved for a community banker, a position that has been vacant for more than two years, the official said.

“It was really clear, he is a businessman, he understands the relationships between lenders and borrowers,” said Camden Fine, president of the Independent Community Bankers of America. “He really drilled down and was very knowledgeable about several of the regulations the bankers brought up. He could empathize with them.”

“The whole tone of the meeting was we want to help the community banks on main street,” he said.

 

Rep. Jeb Hensarling (R-Tex.), chairman of the House Financial Services Committee, is preparing to unveil new legislation, as soon as this month, that would strip out significant parts of Dodd-Frank. Trump has ordered Mnuchin to issue a report by June recommending ways to ease banking industry rules. It is part of a larger Trump administration effort to roll back regulatory burdens across several industries, including the energy sector.

But Trump’s bid to ease the burden on Wall Street is likely to face stiff resistance from Democrats and advocacy groups who say banks need more restrictions, not less, to ensure there is not a repeat of the financial crisis that required big taxpayer bailouts nearly a decade ago. And despite the industry complaints, banking profits have reached record levels, they say.

Last year, the country’s nearly 6,000 banks — from large players like Bank of America to small community banks — pulled in more than $171 billion in profits, up nearly 5 percent compared with 2015, according to government data. Community bank profits have been rising even faster — 10 percent last year. The proportion of community banks that made a profit reached 95.7 percent last year compared with 78.8 percent in 2010 when the Dodd-Frank Act was passed.

This type of data shows, advocates say, that regulations are not holding back the industry.

Still, bankers may have a long wait before lawmakers dive into the potentially contentious task of passing legislation that strikes at Dodd Frank. Other priorities – health care reform and a revamp of the corporate tax code – are all expected to be completed first.

Instead, industry officials have already turned their attention toward the myriad of financial regulators, from the Securities and Exchange Commission to the Office of Comptroller of the Currency. Trump is expected to nominate new leadership for many of these agencies, which could weaken rules already in place without new legislation.

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