The federal government was well-intentioned when it passed the Dodd-Frank Act in 2010 to regulate the banking industry. After all, the trauma of the Great Recession and the banks involved impacted us all. But there were severe unintended consequences. The one-size-fits-all approach to Dodd-Frank forced scores of smaller lending institutions to close down under the weight of burdensome regulations. Larger banks expanded their reach because they had the resources to weather these new rules.
As the president and CEO of Pinnacle Bank based in Scottsdale, I have firsthand knowledge of the challenges facing community-based lending institutions. Thanks to an exceptionally robust economy in the Phoenix area we weathered the storm and expanded, but it wasn’t easy.
With the passage of SB2155 and the president’s signature on this legislation, these storm clouds have been lifted. The legislation simplifies capital requirements for banks with less than $10 billion in assets. It also eases burdensome and unneeded regulations on trading and lending.
The bottom line is that Pinnacle Bank will be able to make more loans to more businesses, creating more economic opportunities. Throughout Arizona, other banks like ours in urban and rural areas will do likewise.
That is an intended consequence of this legislation and I applaud members of Arizona’s congressional delegation who supported this bill. All of the Republicans serving in the U.S. House from Arizona voted yes. They were joined by Democratic Representatives Krysten Sinema and Tom O’Halleran. Congressmen Raul Grijalva and Ruben Gallego voted no.
This bipartisan support tells me that sometimes government is willing to learn from its mistakes. One of them was treating massive nationwide lending institutions the same way as locally based community banks such as Pinnacle Bank.
Rolling back Dodd-Frank unlocks capital, while keeping in place regulations that ensure responsible lending. It makes more money available in local communities and will help local lending institutions flourish for years to come. Smaller community banks play a vital role in local economies. The vast majority of our investors and shareholders live in Arizona. We understand local trends, opportunities, and risks that Wall Street may miss.
Pinnacle Bank is Arizona based, business-oriented, and specializes in serving small businesses and the community.
Rolling back Dodd-Frank lets us do more of what we do best and it keeps the Arizona economy rolling in the right direction. The nation’s capital doesn’t get a lot of kind words these days. But they deserve it now, from us and many others, for the outstanding improvement this legislation is.
— Mike Thorell is president and CEO of Pinnacle Bank the former chairman of the Arizona Bankers’ Association
The views expressed in guest commentaries are those of the author and are not the views of the Arizona Capitol Times.