November's Elections Kick Off 2022's Congressional Election Scramble
Friends of banking around the country are closely reading the tea leaves in the aftermath of this year's November elections. Virginia (where President Joe Biden won by 10%) voted for their first Republican for governor since 2009. In New Jersey the GOP candidate came close, but did manage to improve on Trump's margins in 20 of 21 counties.

Our industry is looking for champions on either side of the aisle to back next year, especially with the announced retirements of past FOTB-backed senators in Ohio (Rob Portman) and Pennsylvania (Pat Toomey). We will be especially looking at supporting Members of Congress who oppose bad ideas like IRS monitoring bank accounts, Dr. Saule Omarova for Comptroller of the Currency, expansion of credit union membership thresholds, and postal banking.

With a 50-50 split in the Senate, the GOP just needs one pick up next year to be back in the majority, and all eyes are focusing already on eight key battleground contests: Georgia, Wisconsin, New Hampshire, Arizona, Nevada, and Florida. Democratic strategists point out that Biden won in six of these eight states, but Republicans believe the presidents low job approval will help them.

Other analysts broaden the swing seats to also include Ohio and Missouri.
North Dakota's
James Williams
Joins Banker Board

James L. Williams, III, CEO of BankNorth has been named to FOTB's Banker Board representing North Dakota. James started at BankNorth in 2005 and was named CEO in 2019. He has been in banking for 22 years. James is also the chairman of The Goose River Bank and a board member at Vantage Bank (MN).
IRS Reporting Requirement in Retreat
(But Not Dead Yet)

Thanks in part to banker outrage, the onerous IRS reporting requirement was NOT included in the House Budget Bill. However, both ABA and ICBA warn that we all must continue to advocate against this flawed proposal on behalf of our communities and customers. Like Rep. Andy Barr (KY) told the Friends of Traditional Banking leadership teams in August, "Your political activism is very needed and appreciated, and matters now more than ever!"
A Post Office is Not a Bank!

In the past few weeks, the U.S. Postal Service has quietly begun piloting banking services—such as check cashing, bill paying and ATM access— in Washington, DC; Falls Church, Virginia; Baltimore, Maryland; and the Bronx, New York.

This is one "pilot" that should be grounded before it takes off.

The USPS is the same organization that's billions of dollars in debt and is considering slowing the delivery of mail across the nation because it can’t keep up. You may therefore be asking, "What can be slower than snail mail?" We may be about to find out.

The Postal Service needs to get its act together and deliver the mail, not get into financial services that it neither understands nor is equipped to provide.

To be sure, there is a genuine concern that many Americans are “under-banked.” According to the Federal Deposit Insurance Corp., about 8.4 million households in the US are totally “un-banked,” and 24.2 million more are “under-banked”—meaning they have limited or no access to bank accounts, or ready access to financial services such as check cashing, ATM access, bill paying, money orders and wire transfers.

But let’s consider a root cause of this.

The number of un-banked households increased dramatically as the number of community banks across the nation failed -- even though community bankers play a critical role in providing credit, liquidity and investments to their communities.

The number of community banks in the US has been declining for the past two decades. In 1997 there were 10,700 banks in the US; in 2016 there were 5,600, and today there are fewer than 4,740 banks across the country.

Why did so many community banks close or agree to be acquired, and why are there so few new community banks opening up? I’ll tell you one big reason—the regulatory burden. Over the years, the government and regulators have created onerous requirements for banks, regardless of size or complexity. The government has set forth so many rules and requirements that it's very difficult to run a small bank efficiently and make a buck.

Logic and a sound mind would suggest that the government and regulators address the problem of “under-banked” Americans by promoting a comeback in community banks by scaling back on the regulatory requirements for smaller, more traditional and less complex banks.  Perhaps small community banks should be treated more like credit unions, which don't pay federal taxes and have less stringent requirements on data collection for bank secrecy and fraud reporting.

Community banks understand their communities, they are set up and experienced in banking, and have a track record.

Unlike the United States Postal Service.

Community banks were established in a democratic, capitalist nation to serve all types of folks. Over time, the government disrupted that purpose when it applied all kinds of rules to all banks, regardless of size, with many of the same burdensome requirements. Small banks can’t keep up with the rules. The answer to the concern of serving the un-banked, is to lighten the load for small community banks.

Opening up banks in a rapidly defunct post office makes zero sense. Take this idea and RETURN TO SENDER.

Virginia Varela is President & CEO of Golden Pacific Bank in Sacramento, California and Vice Chair of Friends of Traditional Banking

Cryptocurrency and Ransomware:
A Dangerous Combination
A message from our sponsor BankOnITUSA:

Financial institutions are constantly trying to stay ahead of cyber criminals and keep pace with government regulations to protect their information systems and their customers’ vital personal data.

A recent release from the Office of Foreign Assets Control (OFAC) is a reminder that the Government intends to hold liable any party subject to U.S. jurisdiction, even if they didn’t know or have reason to know that they were engaging in a prohibited transaction. That means if one of your customers is a victim of ransomware, and they fund a crypto wallet through an account at your bank to meet the ransom payment, your institution becomes part of the payment chain and might face civil or even criminal penalties.

This is further evolving how banks think of risk. Read the full article HERE.
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Friends of Traditional Banking is a non-partisan grassroots effort organized by bankers in 2012 to improve the political and regulatory environment for the traditional banking industry in the U.S. FOTB is the inverse of a PAC--instead of spreading a little bit of money to a lot of campaigns, they focus a lot of money on a couple of key campaigns.