An association representing the country’s 6,000+ community banks has written to the Office of the Comptroller of the Currency (OCC), saying that regulators have clearly informed their members to be careful about offering small dollar loans to consumers. The authorities hold the view that community banks may use these products to prey on their customers. Agencies like the OCC and the Consumer Financial Protection Bureau are preventing community banks from fulfilling the demand for loans from small businesses and driving these customers into the hands of online lenders.
The Independent Community of Bankers (ICBA), has said in its letter, “ICBA has been very concerned about the regulatory advantage that now exists with online marketplace lenders and supports a regulatory framework for online lenders that is no less stringent than the framework that applies to community banks.”
In her message to the OCC, Karen M. Thomas, ICBA’s Senior Executive Vice President for Government Relations & Public Policy, has pointed out that community banks are prevented from taking “common sense lending decisions” as they are afraid that at a later date a bank examiner may come to the conclusion that in doing so, the law has been broken.
In a recent report, the Financial Times has said that community banks’ share of US banking assets fell from over 20% in 2009 to 18% last year. At the same time, the country’s five largest banks increased their share from 32% to 36%.