The banking industry has undergone changes since the financial crisis hit. But New Jersey Bankers Association President and CEO John McWeeney told NJ Today Senior Correspondent Desiree Taylor that community banks in the state are doing well, increasing their lending by $17 billion since the financial crisis began. While his organization has some concerns with new industry regulations, he said members are complying with the law and representatives are meeting with regulators to address the issues.
McWeeney said members of the New Jersey Bankers Association recently went to Washington, D.C. to meet with representatives of the four major regulatory agencies — the FDIC, the Federal Reserve Bank, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau. About 35 bankers attended the meetings, which McWeeney said is a little more than other years because there is a lot of concern about the regulatory environment in the industry. He said he was pleased with the outcome of the meetings because they got to meet with senior level officials to share concerns and the officials, in return, gave the group an update. “So it’s a very good exchange of ideas and dialogue,” McWeeney said.
One area of concern for the organization is the Dodd-Frank law, which was approved in 2010 but is still being written. The legislation was a reaction to the recession and aims to increase oversight. “However a lot of the components of the law have not been specifically written yet. Congress passes the legislation then they turn it over to the regulators to actually write the rules and regs and it’s quite a cumbersome process for them,” McWeeney said. “We continue to have input and dialogue with the regulators on some of the laws that are still being written.”
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One of the concerns for the New Jersey Bankers Association is the cost associated with the new rules. McWeeney said while the organization has large banks as members, many are smaller community banks and the cost for them to comply is excessive. “Some of them are being forced to hire additional staff just to be able to read the law and interpret the law. They may have to go out and hire a consultant for different components of the law to make sure they’re in compliance,” he said. “That’s one of the concerns that we passed on to the regulators. It’s not so much the laws themselves but for the banks to have to comply with it, it’s quite costly.”
According to McWeeney, the 111 New Jersey-headquartered community banks are doing well since the financial crisis, increasing their lending by more than $17 billion since the end of 2008.
“That’s quite an accomplishment even though we still continue to feel the economy is somewhat soft, not seeing a tremendous amount of loan demand. But during that same time frame our banks here in New Jersey have increased their capital levels, deposits are up,” McWeeney said. “So they’re really very well positioned to help support an economic recovery here in the state and they want to lend money because they really don’t have anywhere else to put all these dollars and be able to earn a profit on it.”