Financial system can forge bipartisanship in Congress

Financial system can forge bipartisanship in Congress
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The banking system can be a bridge for working across party lines in Congress. What the industry does is neither a Democratic or Republican ideal but an American one. It helps people become homeowners and entrepreneurs. It provides capital needed to keep the economy moving.

Washington has entered a period of split government. If done right, this could be very productive for our country. It calls on both parties to come the table for discussions. It forces lawmakers to reach a settlement or compromise so both sides can meet halfway on legislation. Democrats and Republicans must remember that they agree on a vast majority of issues. We are Americans above all before we choose a political party.

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There are certain responsibilities that our federal government must fulfill that the private sector is unable to or cannot do. Congress creates laws. Those laws can help or hurt the economy. Speaker Nancy PelosiNancy Patricia D'Alesandro PelosiPence to pitch trade deal during trip to Michigan: report Julián Castro: Trump should be impeached for trying to obstruct justice 'in very concrete ways' Swalwell on impeachment: 'We're on that road' after Mueller report MORE and Representative Maxine WatersMaxine Moore WatersHarris says Congress should take steps toward impeaching Trump On The Money: Cain withdraws from Fed consideration | Says he didn't want 'pay cut' | Trump sues to block subpoena for financial records | Dems plot next move in Trump tax-return battle Dems seek to rein in calls for impeachment MORE, chairs the House Financial Services Committee, should focus on ways to improve the economy. They should reform legislation such as the Bank Secrecy Act to help the banking system redirect limited resources from compliance costs to lending.

For every $100,000 a bank spends in compliance costs, there is $1 million less to lend in the community. This is because of a rule that requires banks to have approximately 10 percent capital ratios. Many community banks now employ more compliance staff than lenders. The core of the Bank Secrecy Act and money laundering regulations was written in the early 1970s and desperately needs to be updated. The system is out of whack.

I hope Pelosi asks why Golden One, a $20 billion credit union in California, can afford to pay $120 million for the naming rights to the new $1 billion Sacramento Kings arena. Or why “nonprofits” like $92 billion Navy Federal Credit Union earned more than $1 billion in net income last year. Neither of these institutions nor any other credit union paid any state or federal corporate income taxes. That tax revenue could help pay for the needs of our children, seniors, defense, infrastructure, and many other priorities.

This year, the United States has the lowest number of banks in modern history. The House Financial Services Committee should hold hearings on ways government can encourage the creation of more community banks, which fulfill a special and unique role. More than 40 percent of small business loans come from community banks. In an entrepreneurial country like ours, that is an important and critical role for community banks. Most Americans are employed by small businesses. Many of those small businesses grow to be bigger businesses, employing even more Americans. Our nation needs a greater number of community banks.

There will be many distractions for Pelosi and Waters that could result in wasted opportunity and millions of taxpayer dollars to satisfy a political base. Their agenda should focus on giving people more opportunities to achieve the American dream. As an immigrant to this country, I witnessed firsthand how my blue collar parents worked hard to achieve that very dream when they bought a $32,000 home in Miami back in the 1970s.

I certainly hope the House agenda is also not to bash larger banks. It is important to remember that we need all banks of all sizes to have a strong economy. Should large global American companies that employ tens of millions of our citizens rely on Chinese megabanks for credit? Would that scenario be in our best national security interests? There is an unknown entanglement of many Chinese companies with the Chinese government. Where one entity ends and the other begins is very difficult to figure out.

The choice is clear. Our lawmakers can either seek ways to foster more community banks, update regulations that will help law enforcement and the industry redeploy resources from regulatory costs to more loans, and end corporate welfare for credit unions, or they can hold hearings to satisfy a political base. The time for bipartisanship on this issue is now.

Alex Sanchez is the president of the Florida Bankers Association.