FOR IMMEDIATE RELEASE
West Virginia Banker Speaks Out on Separation of Commerce and Banking
Loving Adds Community Banking Voice to Keep Big Box Stores Out of Banking
Washington, D.C. (May 10, 2007)—W.A. (Bill) Loving Jr., CEO of Pendleton Community Bank, a $185 million community bank, Franklin, W. Va., represented the Independent Community Bankers of America (ICBA) today at a news conference on Capitol Hill for the introduction of a United States Senate measure to keep commercial conglomerates from exploiting a loophole to enter the banking business. The legislation entitled The Industrial Bank Holding Company Act of 2007 was introduced by Sens. Sherrod Brown (D-Ohio), Wayne Allard (R-Colo.) and Tim Johnson (D-S.D.).
"The consumers and small businesses in my community depend on local institutions like mine for their credit needs-a service my bank has provided since 1925. They like doing business with us, and we like doing business with them. We know them. We know their families. We know our customers by more than just their credit score, because we live and work together."
The measure would maintain the wall that separates banking and commerce by closing the industrial loan company (ILC) loophole. West Virginia has 68 community banks which would potentially be affected if big box stores are allowed to own a bank.
Allowing commercial firms to own banks concentrates economic power, jeopardizes the impartial allocation of credit, poses serious conflicts of interest, and places the safety and soundness of the nation's financial and economic system at risk. Under current law, owners of ILCs are exempt from regulation and supervision under the Bank Holding Company Act. The Brown-Johnson-Allard bill will remedy this by not only prohibiting commercial firms from owning ILCs going forward, but also ensuring companies that own ILCs are subject to federal oversight and regulation.
"Opponents of this bill argue that allowing companies like Wal-Mart, Home Depot and others into banking is good for consumers and small businesses because it will increase competition. However, nothing could be farther from the truth. I suspect they would have made the same argument to other local businesses before Wal-Mart moved into their neighborhoods-local businesses that no longer exist because Wal-Mart drove them out of business. The same fate could fall upon community banks across our country and to the small businesses we lend money to. Our local communities will have the life drained out of them as local dollars historically used for reinvesting back into our communities are siphoned away. What are the prospects of our small business customers obtaining much needed capital or loans from banks owned by their competitors? You be the judge. "
"The truth is that allowing banks to be owned by commercial conglomerates does not increase competition, it reduces it in the long run. "
ICBA has been leading the national effort to maintain the separation of banking and commerce. For more information, visit www.icba.org.