April 2013
| Business World Magazine | 321
regulations, he says the ICBA is vigorously
advocating for a “tiered” regulatory model,
one that recognizes Main Street commu-
nity banks operate very differently than the
Wall Street model of the megabanks. He
believes policy makers are beginning to un-
derstand that one-size-fits all doesn’t work.
He is encouraged to see some legislation that
bifurcates policies between the two bank-
ing model. A good recent example includes
the qualified mortgage rule that poses new
standards in the way lenders qualify borrow-
ers, a safeguard against the massive default
on mortgages at the height of recession. The
ICBA advocated the rules could not be ap-
plied the same way. Unlike the rubber-stamp
actions and falsification of data deployed by
some banks before the bubble burst, com-
munity banks determine mortgages, one
customer at a time, after meeting face to face
and having clear and accurate information
as to that customer’s financial position. This
apparently resonated with the Consumer
Financial Protection Bureau and when the
qualified mortgage rule was put in place, it
included provisions that recognize the dis-
tinction between the large banks and that of
community banks.
Fine anticipates that key regulations will
further emerge, but he is confident there will
be differences in the application between the
Wall Street banking model and the commu-
nity banking model.
THE DISTINCT
DIFFERENCE
As much as it is important for policy mak-
ers to understand the difference in banking
models, Fine says it also imperative for the
public-at-large to understand the distinc-
tion. He says the Wall Street banking model
has been turned into a transaction system
that relies on through-put, securities trad-
ing, and reams of paper to paper transactions
rather than the person to person interaction
in which a community bank is engaged.
“Community banks follow a model based
on relationships. Everything revolves around
serving the customer. You can’t screw up.
Your word is everything and your reputation
is very important. Treat a customer badly
and you’re toast. Community banks are built
on trust, having a symbiotic relationship be-
tween the bank and customer... and those
relationships have helped build towns, com-
munities and the economic growth of rural
