One of the groups that I spoke to this week was the Mississippi Bankers Association, made up of mostly community bankers. These are the same folks you sit with in church, talk to at your daughter's dance recitals and your son's Little League game, and the same people you bump into at Walmart or Home Depot on Saturday. They know you, they know about your family, they know your community, but what might surprise you is that thanks to the geniuses in Washington, your local community banker has been saddled with federal regulations that were created to "fix" the problems of the financial meltdown of 2008.
Just one itty bitty problem. Your local banker had nothing to do with the meltdown, other than having to follow other idiotic federal mandates that required them to loan money to people who were buying more than they could afford. But when Congress was completely in the hands of Democrats back in 2009--under the guiding hand of Harry Reid and Nancy Pelosi, the same crowd that shoved ObamaCare up our nostrils. Well, they gave us the Dodd Frank banking bill.
It was so wonderful that both its Senate and House sponsors retired shortly after passing it. Too bad they didn't leave Congress before they ever cooked up this pot of burned beans.
Well, now in case you wonder why the punishment for the financial crisis was handed down to the local banks who didn't cause it instead of to the big Wall Street banks whose reckless and feckless mismanagement did, well, let me break the news to you. Washington wasn't going to bite the hand that feeds them, so instead of putting the bad boy in the time-out chair, Congress stuck it to your local bank. And in so doing, they stuck it to you.
What used to be a routine loan process to buy a home, a car, or a boat, maybe start up a small business, or add on a room -- all that changed dramatically. The banker no longer made that decision on the basis of knowing you, and your work. Maybe knowing something about your assets, or your family. It all got reduced to looking at sterile rules designed by the people who don't know you, never will and who live 1,000 miles from you. Basically, power was removed from the people who know you best to those who know you least. And with the loss of that power in your community, it's another loss of freedom. Regulating banks isn't completely worthless. Making sure that your deposits are safely guarded, that loans are being made prudently, and that people's money is being cared for, that's all fine. But the best regulation of a bank is its customers.
One that charges too much for its services, or that maybe won't treat you respectfully when you don't have much, or make a reasonable loan. Well, they're not going stay in business because you're going to take your money and your business across the street or across town. But your federal government thought they knew better than dumb rednecks like you and me.
By the way, the Wall Street Journal recently reported that the average banker's salary in America is $49,450, while the average salary of the federal regulators at the FDIC, Consumer Protection Finance Board, or the Office of the Comptroller was $190,000 -- by the way that's more than Congress members make.
So the people who referee the game get paid on average more than 4 times what the people who play the game get paid. Imagine if the guys in striped shirts got paid four times what a NFL player made. We'd say -- well that would be stupid.
And that my friend is today's lesson from the Forrest Gump School of Government -- stupid is as stupid does.