UNITED STATES HOUSE OF REPRESENTATIVES COMMITTEE ON OVERSIGHT & GOVERNMENT REFORM
OVERSIGHT OF THE FDIC APPLICATION PROCESS
Wednesday, July 13, 2016
WRITTEN TESTIMONY OF MATT BROWNING
On Behalf of
National Association of Industrial Bankers & Utah Bankers Association
Good morning, Mr. Chairman and Ranking Member Cummings. My name is Matt Browning, and I am appearing before you on behalf of the National Association of Industrial Bankers (NAIB) and the Utah Bankers Association (UBA). I am a former member of the board and executive committee for both organizations.
Thank you, Chairman Chaffetz and Ranking Member Cummings, for holding this important hearing to review the Federal Deposit Insurance Corporation’s (FDIC) failure to approve new bank charters, and the impact of that failure to act on the banking system and our nation’s economy.
NAIB and UBA believe the lack of new banks is an especially important subject for Congressional review because of its effect on access to a stable supply of credit on fair terms. All providers of credit are important to the economy, but none have been more important to consumers and small businesses than banks and credit unions. Throughout our nation’s history, banks and credit unions have proven their ability to operate in all economic conditions, and they are unquestionably the best regulated. In recent years, however, banks’ role as providers of credit has declined, and the absence of new bank approvals is one element of that decline.
History suggests that banks have formed a core of credit providers in times of critical need, and we believe that studies would show these depository institutions are still best equipped to provide credit in times of downturn. Our regulatory policies and practices should reflect this central role of banks in our economy.
The David Eccles School of Business at the University of Utah has prepared a series of charts to illustrate this assertion, and those charts are appended to this statement. I believe these will help the Committee’s analysis of this important issue. One chart is particularly interesting. It shows a model developed by economists at the Federal Reserve Board of Governors that predicts an average of 30 new banks should have been chartered between 2009-2014.