Market Overview

William Greene: Dodd-Frank is the Wall Street Protection Act


William Greene believes Washington is unfairly pressuring "relationship Main Street" in favor of "transactional Wall Street." He believes current regulation compliance has become so unfeasible for banks with sub-billion-dollar asset bases, that we will see a whole wave of consolidation through mergers and acquisitions in the sector, just to keep up.

"Stop and think about this," the BankTenn chairman and CEO told CNBC's Squawk Box this morning. "In 1990 we had 15 thousand banks in America. Today there are 7,364. As you continue to have the crunch in community banks with all this overregulation, you have directors of various community banks, aging management, with a very high anxiety level. They think there is a new threshold: a billion dollars, that if you are under a billion dollars, you are not going to make it, because you can't handle all the regulations and you don;t have the legal staf to take care of you."

"Stop and think about this," Green continues. "91 percent of american banks today are under a billion dollars. 6,000 out of 7,364 are under $500 million. If you stop and talk about what is going to happen to them, and they'd have to be at a billion, you got six thousand banks sitting out there thinking: "What are we going to do next?" So there is a lot of pressure on the M&As right now."

Greene does not think this will be eminent in the current low earnings period in 2012, but should continue to heat up in 2013 through 2015.

Addressing the need for regulation that governs bigger banks without affecting the smaller ones, Greene notes, "Well, you are already having that. Dodd-Frank is really the Wall Street Protection Act, [not] Consumer Protection Act. It was mainly passed for the large Wall Street banks."

He then provides some statistics into the lopsided influence the bigger banks have on the overall market. "Of the 7364 banks, four banks in America control 40 percent of all assets. Five banks control 55 percent of assets, and less than 100 banks, or 1.2 percent of banks in America, control 90 percent."

He believes that the pressures on the smaller banks will result in a de-banking of a part of the population. "As a matter of fact, 76% of all people in America are employed by small business. The smaller banks, what we call community banks, make 40 percent of all loans to small businesses. And these banks are only 10 to 12 percent of banking business. And 61 percent of all loans under $1 million are made by these 6,000 small banks."

Greene does not believe Washington is hearing the concern, being hampered by what he calls a one-size-fits-all mindset. "That mindset could not be farther from the truth. Our model, independent banks and the model that I call transactional Wall Street as against relationship Main Street is totally different. There is no way, rationally, that the regulations should consider one size fits all."

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