WASHINGTON–A bank CEO who testified on behalf of the American Bankers Association before the House Subcommittee on Consumer Protection and Financial Institutions on Wednesday mentioned credit unions only in the context of the competitors in his market.
During the hearing, titled “Future of Banking: How Consolidation, Nonbank Competition, and Technology are Reshaping the Banking System,” two credit union-related bills were among the seven pieces of legislation considered.
But much of the focus was on the five people who testified, including Among those scheduled to testify before the hearing are:
Jim Reuter, CEO, FirstBank in Lakewood, Colo, who was the ABA’s witness, told the committee the future of banking is “bright, provided the policy environment continues to support growth.”
In his prepared testimony submitted ahead of the hearing, Reuter said nonbank competition continues to rise and that policy gaps that promote regulatory arbitrage and put the financial system and consumers at risk need to be closed.
‘Regulatory Arbitrage’
“Many nonbank competitors have business models that rely on a kind of regulatory arbitrage in which they can offer one or several aspects of the banking bundle while avoiding the full banking regulatory framework,” said Reuter, who is a past chair of the ABA’s American Bankers Council and Government Relations Council.
“We see this clearly in the rise of payments charters or ‘special purpose national bank charters’ that would aim to provide payments system access to companies that—because they do not hold insured deposits or do not lend—would not be subject to the same regulations as banks,” Reuter said. “In essence, they want a seat at the dinner table but without having to eat their vegetables.”
Reuter told the committee the most innovative technology will continue to come from private-sector leadership, and objected to the idea of the government offering consumer accounts, either through the Federal Reserve or through the U.S. Postal Service. Both CUNA and NAFCU have raised similar objections on behalf of credit unions.
Reuter told Congress advances like real time payments were available through banking industry innovation long before they will be available through a government-developed solution, he said.
Financial Inclusion
When it comes to financial inclusion, Reuter urged Congress to promote solutions such as Bank On-certified accounts, “which welcome all consumers into the regulated banking system and help to build a solid foundation for economic growth,” he said.
‘Going the Extra Mile’
In remarks similar to those many in credit unions often share with Congress, Reuter said in his prepared remarks that the bank, which has grown to more than 100 locations in Colorado and Arizona. Is in the business of banking, “everyone who works at FirstBank understands that our commitment to the communities we serve goes well beyond that. My bank, like many around the country, goes the extra mile in ways that many may not know. At FirstBank, our 300 bank officers sit on two to three nonprofit boards each, bringing support and leadership to hundreds of nonprofits in Colorado and Arizona.
“Ten years ago, we started a 24- hour online giving program to support nonprofits with a goal of raising $1 million dollars in 24 hours,” the statement continued. “In year one, we raised $8 million. Last year, when nonprofits were being stressed like never before, ‘Colorado Gives Day’ raised over $50 million for more than 2,000 nonprofits in just 24 hours—showing that our ‘Banking for Good’ tagline is more than mere words.”
Reuter said the bank also operates a multicultural banking center that supports more than 30 languages.