U.S. banks are healthy and resilient but they face a “regulatory tsunami” that is creating challenges, particularly for community banks, American Bankers Association President and CEO Rob Nichols said today in an interview on Bloomberg Television.
“Regulations are super important, and you just want to get that calibration right,” Nichols said. “You don’t want it to be too loose, obviously, but you don’t want it to be too tight, which would impact credit deployment and capital formation.”
Nichols listed several regulatory challenges currently facing the banking industry, including the Basel III endgame capital rule proposal, possible congressional action on credit cards and a Federal Reserve proposal to lower the cap on debit card interchange fees. On the latter, Nichols countered an argument from merchants that lowering the cap would mean the savings could be passed on to consumers. There is no evidence that happened following the creation of the cap in the Dodd-Frank Act, he said.
“Every other industrial sector can charge fees for services,” Nichols said. “We think it’s important that banks should be able to do that too. Those revenues help keep the financial system safe and sound, which is critically important to the American people.”
Nichols was also asked about the relationship between banks and nonbank financial technology companies. He said that if fintech firms want to engage in banking activities, then they need to be regulated like banks. But he also noted that many banks work with fintech companies to enhance their customer experiences.
“If they want to do something bank-like, we’re all for competition, we just want a level playing field,” he said.
