Ten years after the banking world stumbled as part of the Great Recession, 2018 has seen big changes in the industry, which has a strong foothold in the Gainesville area.
First came business tax cuts in late 2017 that affected all enterprise, not just banking, and then there was this spring’s rollback of the Dodd-Frank Consumer Protection Act.
The rollback, or the Financial Choice Act, scales back or eliminates post-crisis banking rules, making it easier to operate and offer small business loans. It was mostly aimed at small or community banks with less than $10 billion in assets.
The original law, spurred by concerns over runaway subprime lending that helped trigger the recession, had good intentions, “but it may have been bit of an overreach,” said Tim Evans, vice president of economic development at the Greater Hall Chamber of Commerce.
Still, “common sense tells you can’t loan funds to entities who can’t repay and continue to be sustainable.”
Certainly, bankers statewide were relieved when the rollback was enacted in late May.
“The winners today are the people and businesses in Georgia, as this bill helps banks of all types in every corner of the state,” the Georgia Bankers Association said in a statement.
“It cuts paperwork and costs, makes well-underwritten mortgages easier to provide to more customers and adds consumer protections. And, while it recalibrates certain capital and other regulatory thresholds, key protections remain but they’re now tailored to more appropriately reflect the variety in size, complexity and overall risk posed by different banks.”
United Community Banks, based in Blairsville and with branches in Hall County, has $12.3 billion in assets, so it falls in a group still subject to Dodd-Frank regulations.
“Prior to crossing that $10 billion mark, we had additional folks who were ready to help us with the regulations, with compliance, all the things that we experience,” said Will White, UCB president. “We strengthened our operations and our team to get ready for that.”
Asked his thoughts on the 2010 Dodd-Frank law, White said, “I think the whole intent was more consumer protection, to make sure consumers weren’t put in a place where they couldn’t repay loans.”
“But in trying to provide that additional protection, it did layer on a lot of additional requirements for lending,” he said. “Banks were asked to do more and document more, and that rolls down to the consumer.”
Hall County has a large number of banks, large and small, including national brands and community-based ones.
“There are a lot of business lending sources, and commercial banks are a bit part of that picture in coordinating different kinds of loan products,” Evans said.
Small Business Access Partners in Gainesville is one such entity. It’s a nonprofit company authorized by the Small Business Administration to lend to small businesses.
“Banks have been able to operate a little easier, “ president Lorra Lee said. “We see a lot of competition between community banks and larger banks for really good clients. A lot use programs like ours to help mitigate their risks ... and tie into a long-term fixed rate.”
And so, the loans turn out to be a sort of win-win for all parties — the banks have less invested in loans and the companies have the loan they need.
“Part of our target goals is economic development, meaning creating jobs,” Lee said.
And overall, banking is doing well locally, Evans said.
“At the moment, the economy is doing extremely well, and the two go hand in hand,” he said.
Mike Ryan, department head of economics and finance at the University of North Georgia’s Gainesville campus, said he believes bank regulation can be very cyclical, hinging on the economy and political will.
“It’s in the interest of timing, really, more so than the administration,” he said, adding that the traditional notion is Republicans “tend to be more pro-business and Democrats are somewhat more restrictive and guarded.”