Edwards: IRS Reporting Proposal Could Damage Trust in Banks; Manchin Also Opposes

A controversial Biden administration proposal that would require financial institutions to report information on gross inflows and outflows of all customer accounts above a certain de minimis threshold could “fracture trust” that banks have built with their customers, former ABA Chairman Jim Edwards told Republican members of Congress during a meeting today. Also speaking on behalf of the banking sector were Clem Rosenberger, president and CEO of NexTier Bank in Butler, Pennsylvania, and Robert Fisher, president and CEO of Tioga State Bank in Spencer, New York.

“As community bankers, we work so hard on developing, building and maintaining trust with our customers,” Edwards, who is president and CEO of United Bank in Griffin, Georgia, told lawmakers. “The last thing I want them to feel when they walk into the bank is that we’re there to surveil them. It does not feel right that we would have this massive dragnet where we’re going to mine every bit of inflow and outflow of their account and then send that to the government.”

In addition to the significant cost and compliance burden such a proposal would create for community banks, Edwards emphasized that the proposal could also undermine efforts to promote financial inclusion and have the unintended consequence of driving consumers outside the banking system. He added that “in my 28 years of banking, I’ve never seen our customers more concerned or upset by a policy idea in Washington.”

The American Bankers Association has aggressively opposed the proposal at any de minimis threshold and continues calling on bankers and their customers to redouble their advocacy efforts by calling their lawmakers and urging them to reject the proposal.

Meanwhile, Sen. Joe Manchin (D-W.Va.) today came out in opposition of the proposal at any threshold, telling a reporter that “no one should be in anyone’s bank account.” In remarks at the Economic Club of Washington, D.C., today, Manchin also said that he’d spoken to President Biden about the proposal, telling the president “this cannot happen. This is screwed up.” As to the proposal’s fate in Congress, Manchin said: “I think that one is going to be gone.”