September 26, 2016
The community bank way of doing business, true for all small businesses, requires that we treat our customers well or we will not have customers. It’s that simple, though our legislators and regulators sometimes fail to understand that this is the way the real free market is supposed to work.
There is no need to saddle us with a community reinvestment act. There is no need to subject us to a consumer protection bureau. There is no need to scrutinize us for fair lending. If we fail to reinvest in our communities, or act in a way that harms our consumer/customers, or if we are not fair (and by fair I mean in the common sense definition of fair, not the Pharisaical definition of “fair”), we are punished by the marketplace.
For community banks, there is no Too Big to Fail government backstop. We will either satisfy the marketplace or we will disappear.
Furthermore, as a private business not dependent on a government safety net or a government tax subsidy, we must conduct our business in a way that provides a reasonable return to the owners of the business – our shareholders. No, shareholder is not a dirty word! These are the people who have risked their personal capital (not the public’s) in the belief that the business can provide a valuable service to consumers.
The requirement that we operate profitably forces us to marshal and deploy our limited resources in an economical and efficient manner or, again, we go out of business. There is no “not-for-profit” sham fueled by a generous public subsidy to provide a wide margin for error.
Without the requirement to pay their fair share of federal taxes to provide for the essential government services they enjoy, those advertising, marketing, salary and benefit, and branch location decisions are a lot easier at tax-subsidized credit unions
But despite these obstacles, it is community banks which are respected and trusted. That is precisely because we understand that what is good for the community is good for our Bank. After all, the community and the Bank of Zachary is the same thing.