By Colin Barrett, President/CEO, Tennessee Bankers Association
During a span of time encompassing April 3, 2020 to May 31, 2021, the Tennessee banking industry made 238,508 PPP loans totaling $13.5 billion that kept small businesses and the families who depend on them afloat during an unprecedented global pandemic.
Tennesseans benefited from your tireless efforts. Because of that, the banking industry’s reputation is polling higher among the public than at any other time during the past two decades. And I often hear of new business and expanded relationships for banks that have resulted from you being there for customers in a time of complete uncertainty.
Yet, the crucial role you played for your customers and communities is already being forgotten by those in Washington. We now find ourselves pushing back against recent proposals that would undermine your ability to serve your customers and community.
No legislative initiative in Washington has caught the attention of bankers and their customers quite like the attempt to have banks report customer transactions to the IRS. The initiative and reasoning are straight forward albeit misguided. If Congress can find enough money to offset the costs of a sweeping reform of social services programs, it can pass the legislation through a process known as reconciliation. In that scenario, it would only need a simple majority vote of Congress instead of clearing a 60-vote threshold in the Senate. Leadership believes that more reporting will lead to finding more unpaid taxes that would offset additional spending.
As an industry, we are concerned for multiple reasons. First, there is the invasion of privacy. If you have an account with inflows and outflows of $10,000 annually (or $833 per month), your gross transactions would be reported to the IRS, which will push people away from the banking industry. If you make minimum wage and spend your income, the IRS believes it needs information on your account. Most people who currently don’t have bank accounts are concerned about someone tracking their transactions. This justifies their concerns. Second, there is concern about data security. There are over 1 billion attempts to breach the IRS on an annual basis. And third, and the part that I have the hardest time with, is the lack of trust in the American people to the extent that every bank customer’s activity needs to be monitored by Washington.
In a recent visit to Nashville, SBA Director Isabel Guzman told the Nashville Business Journal that the Agency is “expanding our programs so that we can directly provide services to small businesses.” Only in Washington can an agency that failed so badly in direct lending with the Shuttered Venue Operators Grant and EIDL believe the answer to helping small businesses is to expand their direct lending. The highlight for the SBA has been the PPP, which would have been an abject failure without the banking industry successfully executing the program. SBA has tried direct lending before and failed each time. I’m confident history would once again repeat itself.
President Biden’s nomination of Saule Omarova as Comptroller of the Currency shocked those in the banking industry, and it marked the first time the ABA, ICBA and U.S. Chamber of Commerce have come out publicly against an agency nominee. But when a nominee has gone on record stating that the largest banks should be broken up and that community banks should be nothing more than utilities issuing Federal Reserve deposit accounts, you will stir a strong reaction. And to prove that bad ideas know no political party, Omarova was part of the George W. Bush Administration’s Treasury that questioned the importance of the state banking charter.
If you are reading this column, there is a great chance that we have discussed politics at some point over the years. And if so, you know that I am not a partisan individual. Politics can devolve into a circus that distracts from actual policy work getting done—work that often has strong consensus from both sides of the aisle. And I remain optimistic that if we make our voices heard and educate policy makers, cooler heads will prevail and we can successfully push back on these issues as well.
But these are not the issues we should be dealing with as an industry. Especially with the time, sweat and emotions you have put in to keep our country strong during the pandemic. This is one time where it is hard to not take it personally, and I absolutely do.